Home Inspections
Many buyers choose to have their new home inspected by a licensed home inspector prior to closing. The home inspection contingency is pre-written into the offer to purchase so buyers can simply check the box and write in a deadline if they want to have an inspection. For buyers, the inspection is a chance to learn more about their new home in a short period of time.
For sellers, the inspection can be a source of anxiety. Sometimes inspections uncover issues that need to be dealt with in a way that can negatively impact the sellers’ proceeds from the sale. That is, sometimes sellers need to make repairs or lower their price if an inspection reveals a latent defect.
Home inspections may include some or all of the following areas:
- Exterior: Siding, windows, decks, patios, electrical, drainage
- Roof: (weather permitting)-roofing material, chimney, vents, skylights, gutters
- Garage: Interior and exterior-operation of overhead doors and openers, wiring, overall condition
- Electrical Service: Removing panel covers when safe, service sizing, wire sizing, testing of outlets, lights and switches
- Water Heater: Examination for leakage, safety features, age of units, overall operation
- Heating and air conditioning: Operating heating unit, operating air conditioning unit (if outdoor temp has been above 60 degrees for 12 hours), source of heat in each room, overall condition of units, condition of heat/air conditioning delivery system, age of units
- Plumbing and laundry: Functional flow test, pipe, drains, locations of water and gas shut-off valves
- Fireplace and Appliances: Examination of fire box (if possible), overall condition
- Interior rooms: Windows, doors, stairways, outlets, switches, fans, bathroom fixtures, signs of water leakage
- Attic space: (if applicable) insulation type and approximate R value, ventilation, signs of water leakage
- Basement: Foundation type, basement walls (if not finished), signs of water leakage, structural elements
What is a Defect?
The inspector will be looking for defects. A defect, as defined in the WI offer to purchase, is:
“A structural, mechanical, or other condition that would have a significant adverse effect on the value of the property; that would significantly impair the health or safety of future occupants of the property; or that if not repaired, removed, or replaced, would significantly shorten or have a significant adverse effect on the expected normal life of the property. Defects do not include structural, mechanical, or other conditions the nature and extent of which buyer had actual knowledge or written notice of before signing this offer.”
Testing Vs. Inspecting
Home inspectors are not permitted to perform testing on the property without prior authorization. This means that a normal home inspection does not include a test for Radon gas or a test of the septic system. These tests may be performed by the inspector or other professional if such testing is made part of the offer to purchase.
NOTE: Per the standard Wisconsin offer to purchase, an inspector IS allowed to test for carbon monoxide and LP/natural gas leaks if used as a fuel source.
Repair the Defects or Lower the Price?
First, we must check the offer to make sure the seller has the right to cure the defect. If so, it is often easier to simply renegotiate the sale price of the property rather than actually make the repairs before closing.
Making the repairs to everyone’s satisfaction can become difficult because the buyers’ and sellers’ interests can be opposed. Sellers often want to get the work done quickly and in the most cost-effective manner possible (so the deal doesn’t fall through!) Buyers generally take a longer-term view with regard to defects. They will be living in the house (or they will at least own the house) for years, so they often prefer the work be done correctly above all else.
We have seen examples of this in practice, where the buyers thought the sellers were cheapskates, and the sellers thought the buyers were nit-picking unnecessarily. Sometimes these situations can be avoided by simply renegotiating the price.
With that said, sometimes lenders will require that a defect be cured before closing. After all, they have a vested interest in making sure the property is safe for the people who will be making the monthly payments!
Contact Us
* Indicates a Required Field.