By Joe Boylan on Monday, 13 February 2017
Category: General News

The Home Inspection

You’ve been out looking at homes. As a matter of fact, you’ve seen a lot of homes, so many that when you walk into the right one you know it immediately. Your Realtor writes an offer and you work out the pricing and other terms, you are “under contract”.

Then it hits you, you really don’t know much about what you are buying, you know how the house looks and feels but is it in good condition? Are you buying a “Money Pit”? Buyers assume that home sellers are keeping secrets about the real condition of their home. Sometimes they are, but most of the time they're not. The Colorado real estate contract specifically states:

"Sellers shall disclose to the buyer, in writing, any latent defects actually known by the seller."

Although disclosure certainly helps, it's by no means a guarantee and still doesn’t help us with what the owner doesn’t know. This is when the homework starts, literally.

The Colorado real estate contract also has certain contingencies written into it in order to protect the home buyer. Contingencies for the purposes of a real estate transaction simply means conditions. In other words, when a condition is met we move forward, otherwise, we don't.

The Colorado Real Estate Contract affords the buyer the opportunity to inspect the property as well as any inclusions that are part of the sale. Here is the paragraph from the contract that talks about the inspection contingency:

This clause contains several important terms:

When you look at the language about deadlines contained in this clause, it should become apparent just how important it is to perform within these time frames. Failure to do so could result in loss of earnest money or worse, loss of the opportunity to purchase the property. For sellers, failure to meet these deadlines could result in losing a potential sale.

Now that you understand the clause, it's time to talk about the actual inspection. The most important decision you can make at this point is who is going to do the actual inspection. Your Realtor can give you a list of good inspectors. Additionally, friends that have recently bought homes are more than happy to share their inspector's name, especially if it went well. You can also search the review websites like Angie's list. Please, If you take one thing away from this article, choose a professional, not a friend who has experience in the trades or building homes. It's fine to ask your friend about a specific item that might fall into their field of expertise after the inspection but please don't bring them to the inspection. At this point in the process, all you should be trying to do is get an over all idea of the property condition. If during the inspection, red flags show up, we would defer to a specialist (Plumber, Electrician, Roofer, etc...). You can think of the inspection like your annual physical, You go to a general practitioner for your physical, you wouldn't go to a specialist until you know you needed one. This is how you need to look at the inspection, just like you wouldn't allow your general practitioner to operate on your brain, your inspector shouldn't work on your electrical system.

Although home inspectors are not licensed, they are certified. The certifying organization for home inspectors ASHI the American Society of Home Inspectors. National Association of Home Inspectors NAHI was a second organization that certified inspectors at one point in time they ultimately went under and their members moved to ASHI. Here is an interesting story on NAHI and its demise. Home inspectors with the certifications follow a strict set of guidelines when it comes time to do the actual inspection. It's a good idea to look over those guidelines prior to the actual inspection. You can download a copy of these guidelines from the ASHI website or just click here and download them right here: ASHI Standards. If you have an area of concern and don't see it mentioned in the guidelines, ask your inspector to take a look at it. They are generally happy to oblige unless inspecting the item puts them in danger of bodily harm or potentially causes damage to the home. Unlike the inspectors on television home shows, real-life, "certified" inspectors won't damage a property during the inspection.

Onto the inspection itself. The best thing a buyer can do at the actual inspection is to follow the inspector, closely! The inspector will usually get to the house a little early so they can walk the exterior and get the roof inspection done before the buyer gets there. This helps expedite the entire inspection process and since they aren't going to let the buyer get on the roof with them (liability insurance rules) it helps avoid having to say no if the buyer asks.

A good inspector will explain what they are seeing, especially when there is a problem. If you don't understand what's going on, it's imperative that you ask questions and seek clarification. This will pay off especially when it comes time to put together the Inspection Objection.

At the conclusion of the inspection, the inspector will summarize their findings. Some inspectors will actually produce and print a report on site. If they don't have this capability, they should mail or e-mail you a thorough report with enough time to put together your inspection objection.

The inspection objection is a document itemizing what the buyer deems to be unsatisfactory physical conditions they want to be corrected on the property prior to closing. Generally, we see three potential approaches when putting together this document, here they are:

The first is written without much thought and simply asks for everything and anything the inspector found. This type of request is generally met with anger and resistance by the home seller and is more likely to produce a complete rejection of everything the buyer asks for then it is at producing any kind of constructive resolution. This is why we suggest buyers actually follow the inspector, this way they get a sense of what is really a big deal, what's not and what's just normal maintenance. Inspection objections are the fastest way to kill a real estate transaction. And asking for everything is the best way to get nothing while losing the deal and the money you paid for the inspection.

The second type of inspection objection is the one where the buyer asks for nothing. This is fine if the buyer has participated in the inspection and legitimately believes there is nothing that needs to be done. The other reason to use this tactic is when the buyer really wants the house or feels like they are getting such a great deal they don't want to jeopardize the transaction. So, they are essentially waving the inspection contingency. If this is the route you choose to go we think it's important to note that it's still a good idea to do an inspection in order to get a good sense of the over all property condition.

The third type of inspection objection is the one where the buyer participates in the inspection, thoughtfully considers everything the inspector found, seeks advice from their Realtor and any appropriate contractors in order to get a sense of how much repairs might cost. Once they've done this, they put together a realistic list of repairs they would like the seller to take care of prior to the closing. Having done their homework, this buyer knows how much things cost so if the seller comes back with a monetary alternative resolution, the buyer knows where they stand, what's fair and what's not. This type of negotiation tends to net a better result at the end of the day.

The inspection phase of the real estate transaction can be difficult to navigate but with the right preparation and a little knowledge, the inspection phase of the transaction can produce a win/win.