Bethesda Real Estate and Home Inspections
In this, the era of more intense scrutiny of environmental issues, it’s important to understand how the disclosure of your home’s condition affects the success of your real estate transaction. Frankly, real estate is just so darn expensive that buyers are predisposed to jitters and the added stress of not making “the wrong decision” about so much money can cause much to go awry…
One of the most contentious parts of the real estate transaction revolves around property condition and paragraph 7 of the Regional Contract. Under the contract you’ll have certain obligations in relation to your property condition.
The language is simple:
7. EQUIPMENT, MAINTENANCE AND CONDITION
Purchaser accepts the Property in the condition as of the Contract Date except as otherwise provided herein.
Seller warrants that, except as otherwise provided, the existing appliances, heating, cooling, plumbing,
electrical systems and equipment, and smoke and heat detectors (as required), will be in normal working
order as of the Possession Date. Seller will deliver the Property in substantially the same condition as on
the Contract Date and broom clean with all trash and debris removed. Purchaser and Seller will not hold
the Broker liable for any breach of this paragraph. Seller will have all utilities in service through Settlement
or as otherwise agreed.
But simple rarely means easy!
I’d like to ensure that all parties are as educated as possible in the transaction to avoid the confusion and misunderstanding which can often derail a perfectly good offer. By understanding what you must and/or should fix you’ll go a long way towards assuring your future buyer of the overall condition of your home. The terms “normal working order” are among the most contended of all terms in the contract.
The seller is obligated to turn over the home with appliances, heating and cooling, plumbing and electrical systems in working order. Anything that comes under this heading by rights the seller has already obligated himself to fix. It’s those items that are not covered so clearly under this heading that cause problems and doubt to creep in. In a more buyer oriented market, when there is an abundance of real estate available from which buyers may choose, it is very likely that sellers will take offers with contingencies as part of them. Among these are:
- Home inspection
- Radon Testing
- Termite Inspection
Home Inspection:
The very words strike fear in every party to the transaction. But with proper preparation for all parties this can be a time of discovery for a buyer to understand how their home operates as well as to ensure that items which must be in working order, per the contract, are and to negotiate with the seller for items that the buyer feels should be in working order. These nuances cause most of the stress in the transaction because each party can dig in their heels much to their own detriment over both minor and major issues.
Before ever putting your house on the market, it is beneficial to go through your home with a “buyer’s eye” and ensure that everything is in working order. As long time residents we become “house blind” and just overlook those little deficiencies and quirks but you can bet a buyer isn’t going to overlook them. Items to look at closely:
- All appliances:
o Do they work?
o Are lights working as they should?
o Do the doors close?
o Do the LED lights work?
o Are the temperature controls working?
o Do the cycles run correctly?
o Do the timers work?
o Do all burners turn on?
o Are vents properly fastened?
o Have they been properly serviced under a contract?
o Does the air conditioning adequately cool the home?
o Has the furnace been checked for a cracked heat exchanger?
o Are the filters clean?
o Does the gas fireplace work?
o Are garage doors working? Remotes?
- Electrical:
o Are there outlet covers in place?
o Did you get permits for work that was done in the home?
o Do all outlets work?
o Is your electrical panel wired correctly? (there are often miswired or burned out fuses in the panels which inspectors will always note)
- Plumbing
o Are there leaking faucets?
o Any old evidence of leakage that you’ll need to disclose?
o Do the shower valves properly turn off/on the flow of water
o Do the drains work?
o Any leaking shower pans?
o Toilets running constantly?
o Toilets not draining or leaking?
o Outside faucets dripping?
o Are the shut off valves working correctly?
- Miscellaneous
o Do you have keys for all locks?
o Warranties for appliances? Manuals?
o Is the house clean?
o Are the windows sparkly clean?
o Do you need touch up paint?
o Are there pet odors?
o Are there odors in the carpets?
o Do carpets need to be replaced or cleaned?
o Are the hardwood floors in good shape?
o Do the windows have screens in good repair?
o Do the windows actually open and stay open?
o Can you put half your stuff in storage?
Unless you have had a professional inspection of your property very recently, it’s likely you don’t know the status of many of the items on the above list. But it’s important to accept that you’ll be responsible for the repair of any defects, known or unknown, so better to ensure that what can be fixed beforehand has been dealt with. Yes, even if you bought it that way in the first place… A stressed out buyer presented with a list of defects in a home will start to second guess their purchase if they doubt the home is sound. While even the best maintained home will likely have home inspection issues, one with much deferred maintenance is likely to cause a very stressful negotiation with a buyer less inclined to want to continue. For every item they see on this list you can bet they are wondering, “what else didn’t they fix?” And they will grossly overestimate the cost of repairs, causing yet more doubt to creep into their purchase. Save yourself the trouble and just fix it all!
Often a buyer doesn’t understand what is required and what is a suggestion from the inspector for general upkeep. Typically I’ve seen home inspectors cite many items that are not technically part of the seller’s obligations. Nonetheless, a cautious and now nervous buyer may well expect that all items on the inspector’s list be fixed, required or not. As an example, although windows are not included as a must repair item that doesn’t mean that if most of them require the balances to be replaced so they’ll stay open that it won’t be a major point of contention in the negotiation process. The same goes for bad paint jobs, loose railings, chipped or missing flagstones, clogged gutters and older roofs.
It’s in this area that we negotiate the most to find acceptable means to move forward. The seller has the right to say no to any of the additional repair requests and the buyer has the right to void the contract. When you’ve come this far in the transaction it’s completely debilitating to have a buyer walk away from your property over home inspection issues. My recommendation is to set yourself up for success not failure. Get everything repaired and present your home as a perfect product.
Termites
16. TERMITE INSPECTION
The Purchaser at Purchaser’s expense or Seller at Seller’s expense, will furnish a written report from a pest control firm dated not more than 30 days prior to Settlement showing that all dwelling(s) and/or garage(s) within the Property (excluding fences or shrubs not abutting garage(s) or dwelling(s)) are free of visible evidence of active termites and other wood-destroying insects, and free from visible structural insect damage. Any extermination and structural repairs identified in the inspection report will be made at Seller’s expense.
Most lenders commonly require termite inspections to ensure the structural integrity of the home. They are a very common occurrence in every home and if you have a long standing contract with a pest company to inspect for and treat all active infestations you are likely to be fine. There may still be some prior joist damage that is considered structural and will need to be repaired. Because a buyer’s loan may depend upon this, it’s not negotiable and unless your home is falling apart from termite damage, it’s likely to be more in line with minor carpentry repairs. If you have not had a pest inspection in recent years then you may want to have a company come out and do a thorough exam. The buyers will still do their own within 30 days of closing, as per the contract language.
Radon
Radon is a naturally occurring gas that is everywhere in this country. Remediation for it is very simple and inexpensive but the health consequences of allowing radon to collect in numbers above that which the EPA has declared safe are too damaging to take lightly.
Home inspectors can often do tests that will expose a radon level above the 4 picocuries per liter considered safe. They will place canisters in your home for a few days and then send the results to a lab for measurements. If the readings are above the recommended levels then a corrective measure is available to allow the radon to vent to the outside. Usually the cost is in the $1200 range.
If as a seller you exercised your right to say no to this correction the buyer may well void the contract at this stage since the health hazards are too great to risk. As a seller you now have the obligation to let the next purchaser know that you have elevated levels of radon in your home. Given the overall cost of the transaction, it is sometimes more wise to remediate the problem rather than go through yet another inspection process with a future buyer.
With the proper preparation you as a seller can have a great deal more success and less stress by taking the time to go through your home with a thoughtful approach to full disclosure and repair. There is never a time when it is appropriate to cover up issues. Either repair them or disclose them. Litigation is far too expensive and will cost more than any repair to your home.
As part of my process for listing a home for sale I will prepare a list of items that will be flagged for repair and those that are likely to be points of contention. Because I work so often with folks in the housing trades I have very good contacts who can handle the work properly both prior to listing your home and through any inspection issues that arise.
