Home inspections are your opportunity to get a professional opinion of the condition of the home. For most home purchases, the Agreement will be contingent on a home inspection which means that you’ll be able to terminate the Agreement due to the results of the home inspection. The exact details of how to terminate are in your Agreement of Sale but most transactions look something like this . . .
- Inspection Period
All home inspections, and any follow up inspections for further evaluation, will need to be completed during this initial period. Before the end of the period you’ll need to submit a written reply to the seller either accepting the property as-is, terminating the Agreement, or negotiating repairs. The Inspection Period is typically 10 days.
Note: The Agreement of Sale allows access to the home for inspections at two times during this period so follow-ups and additional inspections will need to be coordinated to adhere to that schedule.
- Negotiation Period
If you’ve requested that the seller make repairs prior to settlement and/or that the seller provide a monetary credit so you can make repairs, you’ll have a designated period for negotiation. This period typically lasts 5 days.
- Buyer Decision Period
If you haven’t reached an agreement on addressing repair items by the end of the Negotiation Period you’ll enter a period where you can continue to negotiate or decide to accept the property as-is or terminate the Agreement.
Arranging Your Inspections
You’ll want to arrange your inspections for as soon as possible since there’s a limited time frame for a response. It’s often the case that the home inspector will recommend further evaluation by a specific type of contractor for some items, ie. the electrical system, plumbing issues, condition of the roof, heating and air conditioning, or mold. You’ll want to have time to arrange for these additional inspections if you decide you need more information.
Typical inspections include a general home inspection, a termite inspection, and a radon test. When you contact a home inspection company they will typically arrange for all of these inspections, as requested.
You can use any licensed home inspector (or licensed professional engineer or architect) that you like. My list of trusted home inspectors is below.
Who Should Attend?
If at all possible, you should plan to attend your home inspection. It’s a great opportunity to see what the inspector sees and to ask questions about the home in real time. If it’s not possible to attend then you’ll typically get on a phone call with the inspector at the end of the inspection for a summary. You’ll also receive an inspection report detailing the inspector’s findings.
The PA Agreement of Sale is clear on who can attend the home inspection . . . the parties to the transaction, the real estate agents, and the home inspector. It’s rare that the seller or the seller’s agent would attend a home inspection. Bringing others to the inspection can be a breach of contract and my impact your ability to get a refund of your deposit if you choose to terminate the purchase agreement.
As a real estate agent I don’t really have a job at the home inspection, however, I’ll make every effort to attend. If I’m unable to attend then we’ll plan to talk at the end of the inspection to discuss the findings. I’ll also get a copy of the inspection reports and we’ll talk in more detail then. If you absolutely want me to attend I’m happy to do so, we’ll just need to coordinate schedules when setting up your appointment.
What a Home Inspection Is (and Isn’t)
More home sales fall through due to inspections than at any other time in the home sale process and home inspections are stressful. It’s difficult to have someone spend a few hours picking apart the home that you love. It’s stressful to decide what’s important to you. Negotiating inspections is stressful. The best way to minimize the stress of home inspections is to understand what to expect and to understand what a home inspection is (and isn’t).
A Home Inspection Is . . .
- An opinion of the condition of the home at the time of inspection
- A look at both major and minor issues
A Home Inspection Is Not . . .
- Pass or Fail
- A Building Code Inspection (codes vary by municipality, change regularly, and homes don’t need to be upgraded every time a code changes)
- A list of items that the seller must fix to sell the home (repairs can be negotiated)
What to Expect at Home Inspections
Your home inspector will perform a non-invasive visual inspection of the home. Unlike Holmes on Homes, they’re not tearing into walls to uncover things that can’t be seen with the naked eye. A typical home inspection will take about 2 hours but will vary depending on the size and condition of the home. Your home inspector’s job is to note the condition of the home, not to provide input on negotiating inspection issues.
Note: If you plan on taking measurements, please do so at the home inspection as you won’t have access to the home again until your final walk through per the Agreement of Sale.
The Home Inspection
The home inspector will look for issues with the major systems of the home and note the condition of the systems. They will also note whether these issues are major or minor. The home inspector will look at the . . .
- Roof & Siding
- Heating/Air Conditioning
- Electrical System
- Signs of Moisture Infiltration
- Structural Concerns
- General Safety Concerns (ie, presence of stair railings)
- Functionality of doors and windows
Common Special Concerns
- Sewer and Water Lines
Sewer and water lines run from the house to the mains under the street for homes that are on the public sewer and water systems (vs. those with septic systems or wells). Sewer lines can be scoped with a camera for an assessment of condition. This would be a separate and additional inspection performed by a plumber with a camera.While any home can have a damaged sewer line at any time, the homes that are most at risk for issues are older homes that haven’t had their lines replaced. A cast iron sewer line typically last about 80-100 years. I recommend getting the Philadelphia Sewer and Water Line Insurance. It costs a little over $100 year and provides coverage for damaged sewer lines (sewer and water lines are not covered by homeowner’s insurance plans).Whether or not you choose to get a sewer line inspection is up to you. The basic test of the sewer line is when the inspector runs water. If the water isn’t backing up in the sewer line it’s a good sign and that, combined with sewer line insurance, is enough for the vast majority of home buyers especially since the sewer line could be fine today and damaged tomorrow. If there are specific issues, ie. a large tree above the sewer line, evidence of a sewer backup, or a big wet spot in the yard near the line then further evaluation with a camera is probably warranted.
- Knob and Tube Wiring
Knob and Tube wiring is 1st generation wiring. It was installed in homes from the 1910’s and into the 1940’s. Knob and Tube wiring should be expected in homes built before 1940 unless they’ve been remodeled completely. The presence of Knob and Tube wiring is typically not considered a material defect and replacing it would be considered just an upgrade of the electrical system that a homeowner should consider doing since the wiring is very old. Though very common in older homes, of which we have many in the Philadelphia area, it’s also good to know that it may be difficult or expensive to get homeowner’s insurance on a home with Knob and Tube. You can learn more about Knob and Tube here.
Many homes have stucco exteriors. A major concern with stucco is water penetration that causes damage within the walls of the house. This is of particular concern with a particular form of stucco called EIFS that was often improperly installed several years ago. Unfortunately, a stucco-specific inspection is invasive so it’s not part of a home inspection nor would a seller allow damage to be caused to their home. Your home inspector will do a visual inspection for areas where water can enter and they will likely write that ‘additional investigate should be performed by a stucco specialist,’ but that’s usually not a viable option.
- Central Air
Central Air conditioning systems can only be turned on when the temperature is warm enough. If it’s too cold the inspector will be unable to test the system without causing damage.
There are millions upon millions of types of mold, some of which are dangerous and should be remediated. Your home inspector will look for evidence of mold during their inspection. If evidence is found then you should get a mold test. To perform a mold test the mold inspector take a sample to send to a lab for testing. EPA guidelines state that mold can be treated with bleach if the area is less than 10 square feet. You can find out more about mold remediation here.
- Lead Paint
Few home purchases are contingent on a lead paint inspection because it’s assumed that there is lead paint in any home built before 1978 when lead paint was outlawed. However, you may still want to test for lead paint for your own knowledge and safety so I though this would be a good place to include it. You can find information on lead paint here.
- Sewer and Water Lines
The termite inspection will typically be performed during the general home inspection. The termite inspector will look for evidence of termites and other wood-destroying insects, either active or past, and note any damage they can see that appears to be caused by termites or other wood-destroying insects. If they find damage they can only point it out, not comment on the extent of the damage. Further evaluation of damage would need to be performed by a contractor or structural engineer.
Termites live in the ground everywhere in the Philadelphia region so it’s fairly common to find evidence of termites in homes. Termite treatment should be performed annually for every home in the area. Treatment typically costs $800-$1000. Generally, we’d ask the seller to provide termite treatment prior to settlement. Some loans will require proof of treatment and certification from a contractor or engineer that any potential structural damage is either superficial or has been repaired.
Radon is an invisible carcinogenic gas that’s released from rocks and can seep up into homes. Just about every home in the region will have radon. The EPA recommends remediation if levels exceed 4.0 p pico curies per liter. It’s very common that homes in the area have radon levels that exceed the EPA guidelines.
If a radon test is being performed the inspector will install test equipment in the home for a 2-3 days (another reason to get your inspections arranged for as soon as possible). After they pick up the test equipment they will send a report detailing radon levels. If levels exceed the EPA recommendations we’d typically ask that the seller install a radon remediation system prior to settlement. These systems typically cost about $1,000 to $1,500 to install depending on the size of the basement, whether or not the basement is finished, and the exterior material they would need to drill through in order to install the remediation system.
The Inspection Report
Within a day or two after your home inspection you’ll receive the inspection report. The report will typically range from 35-50 pages depending on the size of the home and the number of issues noted. A good home inspection report will note the severity of issues on a scale ranging in some form from ‘Major Concern’ to ‘Minor Concern’ to ‘Monitor.’
Major Concerns/Material Defects
Major concerns, also called Material Defects, are items that are . . .
- Not functioning at the time of inspection
- AND expensive to repair
- AND structural or safety issues
You’ll generally have a good amount of leverage in negotiating material defects. These items devalue the property and would have to be disclosed to another potential buyer, likely with a dramatic decrease in the property value.
Minor concerns typically don’t need immediate repair or replacement and, if they do, they’re not particularly expensive. You should expect a lot of these minor concerns on just about any home inspection. Negotiating these items typically isn’t successful as their presence doesn’t devalue the home and the seller has probably been living with them unaware and unbothered for some time. I suggest focusing your negotiation efforts on the major defects.
It’s almost guaranteed that the home inspector will recommend further evaluation by a licensed professional for certain items in the inspection. Home inspectors are generalists and some items may be best referred to a specialist. Most buyers make the decision whether or not to pursue further investigation based on the likely potential cost of the issue.
Budget for Repair/Replacement
Many items on your inspection report will be noted as ‘budget for repair or replacement.’ These are typically items that are functioning though they are either nearing or beyond their useful life expectancy (they’re old). As long as the item is functioning it’s going to be pretty tough to negotiate, especially if the seller has already noted the age in the Seller’s Property Disclosure or it’s easy to see that it’s old with the naked eye.
Reply to the Inspections
Once all of your inspections are complete and we have the inspection reports, we’ll put together a written reply to the inspections within the timeline spelled out in the Agreement of Sale. For most purchases you’ll have the option to . . .
- Accept the Property As-Is
- Terminate the Agreement
- Negotiate Repairs
Terminating the Agreement
If you decide to terminate the Agreement you should get your deposit money back as long as you stick to the timelines and criteria laid out in the Agreement of Sale. Generally, you’ll be able to terminate the Agreement during the initial inspection period or in the Buyer Decision Period after the negotiation period.
The seller may make release of your deposit money difficult. They will need to sign a release for the broker to release your funds and, even though it’s in the Agreement of Sale, they may feel like they ought to be able to keep your money. This often happens if they don’t understand the details of the Agreement of Sale. Sometimes it takes a bit explaining for them to understand that they’ve already agreed to release your funds. If they don’t agree to the release it can escalate to a mediation process. This really shouldn’t happen, but it is possible so I want you to know about it in advance.
Should You Terminate the Agreement?
Terminating your agreement is a big step and shouldn’t be taken lightly. But, there are many cases where it’s absolutely the best decision. Making the decision to terminate the Agreement should be made solely by you since it will be your home.
If you choose to negotiate repairs you’ll submit a request to the seller during the initial Inspection Period detailing your requests. The inspection report will usually be included (the seller is entitled to it upon request and we want them to see what the inspector wrote). In my experience with negotiating inspection issues you don’t get more by asking for more. A laundry list of minor issues typically makes the seller angry and defensive and less willing to work with the buyer. You’re almost always better off sticking to about 3-4 items to negotiate. If there’s more than that you may be better off finding a different house anyway.
You can either ask the seller to make repairs prior to settlement or, in most cases, you can ask for money toward the repairs. If asking for money toward repairs it would usually be in the form of a Seller’s Assist which is a credit toward your closing costs at settlement. For the most part you’ll be better off dealing with credits for repairs instead of having the seller make the repairs. Sellers are busy packing and moving and, more importantly, the quality of the work probably won’t be satisfactory to you (though it may be to your home inspector). Disagreements about the quality of repair work and delays in timelines due to scheduling can cause more stress so most buyers will prefer to deal in credits if at all possible.
Known issues, whether disclosed on the Seller’s Property Disclosure Statement or issues that can be seen by the naked eye, are difficult to negotiate after an inspection as they could have been known when the offer was made and factored into the offer at that time.
Titan Home Inspections
ValueGuard Home Inspections
Mike Kelley, Michael Baltrush, Dave Bollinger, Steve Haslam, Jason Liszkiwicz
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