Monday, July 21, 2008

I thought I'd talk some about home inspections today, as I am in the middle of hashing out agreement on some inspection issues on a house I sold a week or 2 ago.
In Colorado, the contract is very specific about buyers rights when it comes to inspection. If the inspection(s) show anything the buyer does not like, they have 3 options. Either accept it anyway, ask the seller to fix it, or walk away from the deal. When the buyer asks for things to be fixed, the seller does not have to fix it, in which case the buyer either accepts the house as is, or walks away.
I for one do not like to see deals die over inspection issues. I've seen some silly stuff, where the seller feels they don't have to fix things because the buyers got "too good of a deal", or "the prior seller wouldn't fix it for us", or "we didn't care that it leaked, why should they", or "we never got cancer from radon", or "the seller of our house we are buying wouldn't do it" and on and on.
In Colorado Springs, we normally get an ASHI or NAHI certified (not licensed, there is no license for home inspectors here) inspector to do a general inspection. It typically costs between $250 - $300, and the good ones do a very thorough inspection of the mechanical aspects of the property, making sure everything works, that outlets are wired properly, roof, siding and window conditions, etc. Radon is an issue here, we generally recommend radon testing ($100) if there is a basement, if there is no basement it is not as common to test for it. Termite inspections are only done if there is some evidence of wood destroying insects. While they do exist here, termites are not very common. Occasionally a structural inspection is called for if there is evidence of problems found by the general inspection.
There are a couple of principles that I think should make this process more civil, and although not all buyers, sellers or other agents may agree, I wish more would consider it at least.
1. If you see inspection issues before you write the contract, include them in the contract, or at least alert the seller when writing the contract. It is risky to assume the seller will fix something that is obvious and unsatisfactory after the contract is accepted, since they are assuming you are ok with those items that are obvious.
2. The 3 S's, Safe, Sound and Sanitary. If an item falls into one of these categories, it is generally a reasonable inspection item to ask for. Buyers, inspection is not Christmas shopping, you are not looking for ways to improve the property over what it is, or otherwise figure out how to enrich yourself at the sellers expense. Strictly cosmetic items should be off limits, unless they are damage that occurs after contract. I like to think of most of the inspection report as a "honey do list" for the buyer after they close, since all homes have normal maintenance items that are somewhere in the middle of their cycle.
3. The Golden Rule. Do unto others as you would have done unto you. If you would not want to buy a house with a leaky water heater, don't ask your buyers to. But vise versa, as a buyer, if you know you can take care of some of the issues easily yourself, you might not want to trouble the seller, who may be stressed out of their minds with other issues.
4. Materiality. Some requests are maybe in a grey area, but if they aren't expensive, and they make the buyer feel more comfortable with the process, in a buyers market like today, the seller should be considering doing the request anyway. It works the other way in a sellers market, the buyer should consider carefully any requests they make that send the seller looking for another buyer.

It has been hot and dry, so I got started in sanding and staining my deck this weekend. I finally broke down and installed the window AC unit in the master yesterday, I have to say that it was nice, given it was still 75 degrees or so at 10 pm last night (that is unusually warm here). It is beautiful, clear and cool (60's) this morning, like it is most mornings in Colorado Springs in the summer.

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