In part 1 of this series, I talked about walking away from a home when the property is overpriced and the seller isn’t being realistic. Sometimes you can open up the discussion with an offer and be surprised that a seller will be willing to accept a lower offer than you expect. And sometimes they don’t want to budge. You don’t know until you start that conversation.
If you are able to agree to terms, after you receive the executed contract and disclosures and turn in your initial earnest money, it’s time to schedule the inspection. This is the biggest hurdle to overcome in a lot of transactions because until you look under the hood of a car, you don’t really know what you’re buying.
What to Expect at an Inspection
Not only should you never skip the inspection, but you should only have a licensed inspector do the inspection for you – not your uncle who works in construction, not your cousin who just became an electrician – someone who does this day in and day out and will know what to look for and how to protect you.
An inspector isn’t just looking for items that may be defective, or a health/safety hazard. They are also there to explain how different components of the place work, what you’re responsible for, and recommendations on maintaining the various systems in the home. You don’t have a landlord anymore to do these things for you, so pay attention during your inspection.
The main objective of an inspection is to identify health and safety hazards. They will make note of every small item that they see, but it’s only the major ones we are concerned with. These are the items the seller needs to fix, or provide a credit for to fix. I generally recommend asking for a credit so you can have it fixed yourself, knowing the standards to which it is completed.
However, there are major issues uncovered during an inspection sometimes that are justification for walking away from a home. In my career, it’s only been a handful of times, but it’s generally due to an issue that is awfully costly to mitigate and the buyer 1) didn’t want to deal with it, with or without the seller’s help, or 2) was concerned this may be an ongoing issue or bring up problems later on.
Objectively Looking at the Home’s Condition
Houses are not perfect. Generally you aren’t buying new construction and there are going to be things wrong with a home. It’s when it crosses that line of seriousness to know when to walk away. Maybe the basement has a leak that can be patched up by a waterproofing company, but is it a sign of a weak foundation or just an isolated incident? I can see this scaring a buyer; however, it’s not necessarily a reason to walk.
Or what if it’s worse, and you have horizontal cracks in the walls of the foundation. That could be a larger issue, and one where it’s definitely recommended to walk away. Maybe there’s water in the walls that you couldn’t see during showings, and the seller may not be aware of. While it happens, and can be fixed, there could now be mold issues, or leaks from the roof meaning a new roof is in order. While the immediate issue can be repaired, there could be more down the road and it’s probably best to walk away from the home.
There are times that no matter the condition, the buyer just wants the home. If that’s the case, it’s important to not only have the seller address the issues or provide a credit, but also have funds in an escrow account to address future potential problems resulting from the current situation. This is where having an experienced and knowledgeable attorney on your side is crucial. Protect yourself and tread forward carefully.
Many issues can be avoided up front by knowing what to look for when touring homes, and asking the right questions from the list agent. This is where having an experienced buyer agent comes in handy. By utilizing the experience of your agent, inspector, attorney, and lender, you can avoid major problems within a home or an association before you’re in too deep.
If you or someone you know is planning to buy or sell in 2020 (or 2019 still!), feel free to send them my contact info! I treat all clients equally, pushing to get the best deal possible.
Andrew Hasdal – 847.373.8114