The answer lies in the inspections. This is an important consumer protection provided to the buyer of Real Estate which allows the buyer time to kick the tires and check under the hood, so to speak.
Buyer's Inspections are a very important of the Home Buying process, and by default they matter a lot to the seller as well. Any contract has a 17 day period for buyer's investigations (or longer if you change the timeframe). During this time it is the duty of the seller to provide the buyer with all Statutory Disclosures required by law and the Buyer should conduct any and all inspections that they deem necessary. These inspections include, but are not limited to:
- Wood Destroying Pest Inspection, an inspection that investigates the whether the structure has current infestation of wood destroying organisms such as: termites, fungus, dry rot, wood boring beetles, etc (called section I); conditions that may lead to infestation(s) (called section II); recommendations for conditons to be inspected and repaired by other trades people (i.e. roofers) and informational notes about the current condtion of the house, such as plumbing existing over finished drywall or freshly painted surfaces.This inspection will also have a diagram denoting the location of each condition and a corresponding number based on what type of problem is present. These Numbers will also have a bid to fix the condition.
- A Home Inspection, that investigates the Systems of the Home: Plumbing, electrical, etc. It also has information regarding the health and safety of the home.
- A Roof Inspection, examines the roof and will make suggestions and cost of repairs to guarantee the water tightness of the roof for 3 more years.
- Investigations of local building codes, can you build, subdivide or add a mother-in-law?
- Neighborhood makeup - do you like the neighborhood?
- Personal factors - are you getting a divorce, having another child, getting married and if so, will this house work for you?
- Review of the disclosures - is there something that has been disclosed that you can't live with? Has someone died in the last 3 years in the house?
- Square footage - is the home the correct square footage?
- ETC.
You get the idea...
If you discover some adverse condition during this time period, the buyer may also make a request for repairs or other corrective action (including but not limited to a credit from the seller to the buyer or a new negotiation of the price). This request should be given to the seller before the 17 day inspection timeframe is up. A buyer may also cancel the contract as a result of the information discovered or disclosed during these inspections. The seller is bound by the contract to return your earnest money deposit.
Once a Buyer is satisfied with their inspections or has negotiated with the seller for repairs, they would release their investigation contingency. When the inspection contingency has been released, default on the part of the buyer will result in the loss of the buyer's earnest money deposit.
The most important inspection (at least with residential real estate) is the Wood Destroying Pest Inspection. They are so important that Completed Pest Inspections are filed with the Pest Control Board and can be searched for on the pest control board website . For a small fee, a buyer can obtain a copy of a past Pest Inspection.
For my money the best Inspector in our area is Mike Strickland, not only is he a nice guy, but he's a straight shooter, which I like an appreciate.
When Listing a Home, I ask the seller to get a Pest Inspection up front. Why should a seller do this? It's because a seller can price the home correctly if there is Pest work that needs to be completed. You can also usually avoid a secondary negotiation after the inspection timeframe. The Buyer won't come back on the seller to ask for a credit for the work that they already knew about.
Even if a home is purchased as-is, inspections should be performed. You want to know what as-is, is!
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