When you buy real estate, there are many issues you need to consider that will help lower the risk of having a major problem with your purchase. One of the more important items, and there are many important items, is to have a home inspection done before you purchase the property. Almost everyone has heard that this is needed when you buy, but the actual inspection itself is just one piece of the overall property inspection pie. Let’s discuss a few issues you should consider.
First, you should get recommendations from friends or associates for a home inspector, and you don’t necessarily need to use the one your real estate agent suggests. Use one who is properly licensed, insured, and has been in the business for a long time. Talk to them on the phone and let them know that you plan to inspect the house with them so that you also fully understand the condition of the property. Make sure the inspector is okay with your asking lots of questions and that he (or she) has provisioned enough time to do the inspection and answer all your questions.
Also, make sure your real estate professional checks a week beforehand that the key to enter the unit is available, plus the utilities like water, power, and gas are turned on. Otherwise, the inspector won’t be able to do a complete and proper job.
In most purchase contracts, you have a 10 to 17-day timeframe to have your home inspection done. If you don’t like what you find, you can typically cancel your contract and get your earnest money deposit back (EMD). However, those terms on inspection periods, EMD, etc. are all governed by the terms you agreed upon with the seller, so negotiate and read your contract carefully.
During the inspection, you need to put together a list of everything that needs to be done to get the property in the condition you want it. And that is your job, not the home inspector’s job. As you walk through with him (or her), note cosmetic items like paint, carpets, flooring, landscaping, and other issues which are important to you to repair, replace, or renovate. You also need to add items to list that he notes, like if the water heater is 20 years old, or the air conditioner is dead. Then, you need to get bids and estimates from home contractors, handymen, or home repair retailers and add up all the items that need work. This total cost will give you a feel for how much it is going to cost to put the property in good shape.
Beware: Most people do not add up all the costs of what needs to be fixed during their home inspection. And even if they do, they usually miss lots of items and way underestimate the actual costs to get work done. As crazy as it sounds, some people don’t even go to the home inspection to list what needs work! This is the biggest mistake a buyer can make. If you do not do the hard work upfront to make a list, get bids, and figure out costs, once you close escrow and the costs are exorbitant, you only have yourself to blame.
With your cost estimate totals, you now can have your real estate sales professional make a list of repairs and dollar amounts that you can request the seller to repair or credit you with at closing. Use your home inspector report and contractor’s bids to negotiate as much as possible. The seller may say, "No way, take it as is," or they may do some of the work or provide a purchase credit. Once you’ve negotiated with them, you must make the decision to either terminate the deal or move forward and close escrow and take title to the property.
Other inspections that you might need could be mold, radon, soil, etc. Talk to your real estate professional, the home inspector, and others that know the local market conditions and issues you should consider. You also need to inspect the homeowner's association documents, if applicable, your title abstract and title insurance, your dwelling insurance policy, and all the disclosures that the seller provides about the property.
Taking the time to have a home inspection done and adequately review all the information about the property, both physical and legal issues, will best help you reduce the risk of something going wrong once you take title to the property. It’s a lot easier to do this upfront and know the situation and issues than to clean up a mess after you own the property. Good luck!