Inspections aren’t just a “nice to do” when buying a home. Inspections are part of the overall buying strategy. Here’s how …
Targeted Inspections
Waiving inspections was all the rage during the hotter than hot market in 2022 but now that we’re experiencing a more balanced marketplace, waiving inspections is rare, even when competition is steep. Some buyers are conducting more targeted inspections on key features of the home like the roof, HVAC system and foundation, but they’re not often waiving inspections entirely anymore.
Credits vs. Repairs
Many buyers want to stay in control when issues come up after an inspection, so instead of asking for the repairs, they’ll work with their agent to include cash credits that will cover the cost of these repairs. While direct cash credits are not allowed in the escrow process, the same process can be accomplished through a seller “credit” in escrow towards the buyer’s actual closing costs or an adjustment in the purchase price or a combination of both of these in the instance of a larger negotiated “credit” amount. The adjusted sales price is usually the preferred seller option as it can save thousands on seller closing fees as well as save the buyers property taxes in the long run as taxes are initially based on an amount that is 1.25% of the closed purchase price.
Pre-Offer Inspections
What makes an offer strong in a competitive, hot market? Simplicity. Sellers want an offer that’s not only strong but also as uncomplicated as possible. Buyers who conduct pre-offer inspections can add these details into their offer, which means the sellers aren’t surprised by a costly repair (or cash credit) that may delay the closing. So, when is a pre-inspection right for you? Pre-inspections are often completed by buyers in a probate or auction property situation where no inspection contingencies are considered in an offer. Sometimes sellers will complete pre-inspections on their property and hand those over in advance to a buyer, which can help avoid or limit credits down the line by disclosing any known defects up front. This, however, can be a double-edged sword as if a seller does do inspections up front “pre-sale,” they become a mandatory disclosure to any potential buyer.
Inspections, Inspections, Inspections
Inspectors today aren’t coming in, kicking the tires, turning faucets in the bathroom and shower and saying, “Yep, this is good.” It’s a lot more detailed than that … especially if it’s a buyer’s market. Today, in all kinds of markets, when a buyer is represented by an experienced agent, they’ll often have a minimum of five to six inspections on a property. This will include a general inspection, fireplace inspection, sewer, separate pool inspection if there’s a pool, separate roof inspection, electrical and HVAC inspection as well as an environmental “mold” inspection as that can lead to expensive remediation issues now or down the line. A general inspector can get the job done but it’s always best to defer to an expert in their respective fields.
Realistic Options
An experienced agent will guide a buyer through not only the inspection process but also what happens next and what’s required to move forward. They’ll likely have referrals to get bids on these repairs. Sometimes a fix that seems expensive is really simple and other times, an inspection issue, when not addressed before closing, can turn into a $20,000 headache down the road. For my own house, we learned this lesson the hard way! When we bought our home 25 years ago, it wasn’t popular at the time to complete sewer inspections and just figured the sewage would just flow downhill. What would an inspection really do? Of course that turned into a $20,000 repair for us later on and it’s now a valuable lesson imparted onto our buyer clients: Complete multiple inspections and don’t ignore issues.
Thinking about buying this summer? Let’s talk about what the right inspection strategy might be for you!
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Andrew Manning • REALTOR® • Berkshire Hathaway HomeServices California Properties • DRE: 00941825 • 818-380-2147 • andrew@andrewmanning.com