Tuesday, October 1, 2013

Home Inspections: Foreclosure or Traditional Sale?

I have a couple of buyers under contract.  It's at this point in the buying process that I emphasize the role of the home inspection.  The key to a smooth transaction and happy buyers and sellers is making sure both parties understand the terms they agreed to in the contract regarding the inspection and repairs.

The home inspection is not to be used to negotiate a further price reduction or concessions from the seller, unless latent (hidden) material structural problems or improperly functioning systems are discovered.

In a traditional sale, the buyer has a right to an inspection during the agreed-upon inspection period.  Per the new FARBAR Purchase and Sale Contract, cosmetic items (visible items not affecting the structure or function of the property) the seller is NOT obligated to repair as a result of the inspection are outlined on page 5.  Major systems such as roofs, HVAC, and pools, are required to be in working condition (performing the function they were intended for).  The seller is only obligated to make repairs to bring a major system into working condition as defined in paragraph 12(ii) on page 5.  Age or remaining life span as outlined in the home inspection IS NOT a reason to ask a seller to repair or replace a major system that is in working condition.  This means roofs, HVAC, pitted marcite in pools, etc.

Home inspectors are required by law to estimate the remaining life span of major systems.  The disconnect occurs when the inspection report comes back and the buyer asks the seller for a price reduction because the home inspection says the AC system is 13 years old.  If it's working, the seller is not required to make repairs or replace the system.

In a foreclosure or short sale, the buyer makes an as-is offer with right to inspect.  Per the new FARBAR As-Is Purchase and Sale Contract, the language governing the home inspection is on page 5 paragraph 12.  In an as-is contract, the buyer knows upfront that the seller is making no repairs to the property.  The buyer may, in their sole discretion, terminate the contract and deliver written notice to the seller before the end of the inspection period.

My role as your buyer's agent is to help you understand the age and condition of major systems of the home during your visit, and to help you take these items into account as part of your offer in either a traditional sale or a distress sale.


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