The inspection phase of a transaction is usually the most complicated, stressful, and difficult part of the transaction. The inspection phase can be broken down into five major components: purpose, timeline, who can inspect, what can be inspected, and negotiations.
First, a purchase contract on its own does not allow for inspection. An inspection addendum with negotiated terms must be added to the contract to allow for inspections. Waiver of inspection is highly discouraged by all reputable agents, and should only occur under specific circumstances. Those circumstances will vary depending on the conditions of a purchase.
The Purpose of an Inspection
That said, the purpose of an inspection may be defined as the buyer’s timeline to discover all things of material defect with the home and determine what issues, if any, with the home must be addressed or warrant compensation. Although a buyer’s response to the inspection is completely subjective, the purpose of an inspection is NOT to simply create negotiations to lower the price. It is NOT to ask for superfluous repairs or updates. Inspections are meant to define health and safety hazards or issues that endanger the immediate or semi-immediate integrity of the home. Once those items are identified, repairs or compensation may be negotiated to address such issues.
Who Can Perform a Home Inspection
Initial inspections may be performed by either the buyer or a home inspector licensed by the state of Washington. Secondary inspections, if allowed under contract and recommended from initial inspection, must be performed by a licensed professional qualified to perform inspections within whichever attribute of the house requiring a closer look. A buyer’s cousin that used to build houses and has an “understanding” of construction is not qualified or permitted to provide an initial inspection, secondary inspection, or written report to the buyer. (The only inspection that does not require a licensed “home inspector” during the initial inspection phase is the sewer inspection. A qualified sewer inspection company could be a licensed plumber, a licensed contractor, or a licensed home inspector. More on sewer inspections in a moment!)
What the Inspection Includes
The initial inspection may include everything within the property that is allowed by the agreed contract. When the inspection is complete, the inspector should provide the buyer with a review of the inspection and all items of importance. A report will then be supplied with pictures and a summary of those items discussed in the review. This report is the buyer’s property and may only be supplied to the seller by a willing buyer with the seller’s written permission. Inspectors should be able to describe the condition and issues of the home in plain terms to the buyer in order to create proper awareness and not misunderstood fear. Most buyers are inexperienced in the world of home repair and have a tendency to overthink and over worry about all issues, not just those of significant importance.
The Timeline of an Inspection
The boilerplate timeline for a buyer to conduct their initial inspection/sewer scope and deliver a response to the seller is 10 days unless an extension is needed for secondary inspections. The response may be a termination by buyer of the transaction, request for repairs/concessions, a request for those secondary repairs we discussed, or the buyer may decide to move forward without asking for repairs if none are needed.
If repairs are requested, the response should be a concise summary of what items should be addressed and by who. Details are vitally important here. For example: Let’s say a buyer finds dry rot within the siding of the home. The response must do more than indicate the existence of dry rot. It must indicate where it is, who will fix it, who will organize the repair, how it will be fixed, and how any finish work must be completed. It would probably read something along the lines of, “Seller to have licensed and bonded contractor repair and or replace as needed siding with dry rot found within the southeast corner of the home with like materials and construction standards matching remainder of home and repainted to match home’s existing color scheme.”
It is also important to note that a buyer’s agent may also negotiate monetary concessions for repairs in lieu of the seller performing them, if that is desired by the buyer. Once the response has been submitted to the seller, that seller will have three days to agree, disagree, or offer an alternative. If the seller disagrees or offers an alternative to the buyer’s request, then the buyer will have three days of their own to do the same. If an agreement can’t be reached within these last three days, then the inspection contingency is effectively waived and the buyer/seller proceed to closing with no repairs or concessions being agreed upon.
To avoid this situation, it is vitally important for a buyer to have a good agent that understands the importance of good negotiations and communication. Lastly, if an agreement is reached regarding any repairs, then the seller will have until three days prior to closing to complete them unless otherwise stated in the contract.
Negotiations as a Result of the Inspection
The timeline for negotiations can be complicated, and as the old saying goes, “Everything is negotiable.” An experienced real estate agent will have the creative know-how to navigate this timeline and reach a conclusion that can usually satisfy both parties. Agents typically have a plethora of referrals to many contractors available to provide estimates and define actual costs for repairs. This is vitally important to create an understanding of the weight to most repairs and provide solid evidence for any negotiations regarding such repairs.
The Importance of Sewer Inspections
Sewer inspections should ALWAYS be performed, even on new construction. Cities with a majority population of older homes, such as Tacoma, have more than their fair share of crumbling sewer lines. These lines are typically made of concrete, but other products include clay, terra cotta, cast iron, orangeburg (think cardboard tube, but coated with tar, or terrible plastic products). And who can say how well these products were installed. Simply put, these products and their installations are old news, inferior, and all on relatively short life expectancies. On the other hand, newer constructed homes may be required to use modern products with exceptional life expectancies that were installed with modern code, but that doesn’t mean mistakes still won’t be made. Sewer inspections on newer homes are just as important as they may find product defects or those mistakes made during installation. Most sewer repairs start at a whopping $7,000 and most sewer inspections are around $200. (Is your peace of mind worth $200? We think so!)
As you tackle this part of the homebuying process, you’ll want an experienced, knowledgeable real estate agent by your side. A quality agent equals power to negotiate, knowledge to educate both parties, an understanding of complicated timelines, and less stress.