The Inspection Contingency

If the offer you accepted on your home has an inspection contingency then you may be interested in this information.  Most inspection contingencies are timed for  7-10 days from offer date. This timing allows the buyer to select an  inspector, get on their  schedule, have the inspection and then decide  what requests they are  going to make of you.

A few notes on Home Inspections first

Most of the housing stock we have in Greater  Boston and surrounding communities is USED. We guide our buyers that the purpose of a home  inspection is to inform a buyer about what he or she is buying, not to  renegotiate the sale price of a home. No home is perfect no matter how  well maintained. It is the job of all home inspectors to highlight  maintenance issues, look for pests and insects, point out needed  repairs, assess structural condition and scrutinize major systems like  plumbing, electric, heat and roof. Every home inspection, even in the  best maintained home, turns up multiple issues. Commonly we find that a  chimney or wall needs re-pointing, that fireplaces aren't lined (new  building codes require linings - however old fireplaces are often triple  bricked which may in fact be a better, but more expensive way to build a  chimney than today's current code requires). It is not uncommon for  some electrical wire to be loose or not properly boxed or for homes to  have knob & tube wiring. Expect to have to upgrade electrical  service; today's buyers have needs for computers and equipment that many  sellers never faced. We see that ropes in windows are broken, that  older kitchens and baths do not have GFI outlets and that lots of  physical things that currently exist do not meet updated building codes.  The older housing stock has older waste pipes, water services, heating  systems, roofs, exterior shingles and gutters, fascia boards and  plumbing. It is typical for roofs to be installed without vents, and  insulation not to be in keeping with your homes inspector's  recommendations.  Powder Post beetles and termites have left their  damage scars in virtually all basements in older homes - one inspector  comments that there are 2 types of homes in Massachusetts 1) homes that  have had termites, and 2) homes that will have termites in the future;  so be aware that an inspector finding multiple 'issues' is 'normal' and often most sellers have no idea. Buyers should be making an offer that budgets for having to address  some of the issues an inspector finds during an inspection.

During the inspection

First and foremost, you should not be home while the inspection is occurring.  It makes the buyer uneasy, the buyers agent uneasy, and more times than not when a seller is at home during an inspection they tell the inspector something that they really should not have told them.  Your listing agent should not be at the inspection also.  I am surprised continually at how many listing agents attend inspections to the detriment of their client, the seller. If an inspector uncovers something that is serious and the buyers exit the contract because of it, the listing agent is LEGALLY REQUIRED to disclose this information to future buyers. An inspector is considered a professional and if that professional identifies an issue with the home then the listing agent needs to disclose.   

An inspector spends time walking around the house with the buyer, explaining everything he/she sees -  whether it be good or bad. A good  inspector will explain the  maintenance aspects of the home moving  forward, tell the buyer what are not  issues now but could become issues and  what to look for to prevent  those issues, and also the positives of a  home. A buyer learns an awful lot  about the home during an inspection.  Most inspectors prepare written  reports that can be emailed/posted/given  to the buyer that detail everything  that was found during the inspection so  that they can spend some time  afterward reviewing the notes and 'mulling' the  inspection. Also, as a listing agent I would always caution a seller about  requesting a copy of the inspection report. If you don't know of an  issue around your home then you cannot disclose what you don't know.

I  often explain the inspector as being a little like a triage nurse.   He/she look for evidence of bigger issues, and if that evidence exists,  then the buyers get a specialist in to inspect further. For example, most general home inspectors look for evidence of pests whether they be  mice,  ants, termites etc. If evidence is found then they will recommend getting a professional in to investigate further, who will provide a  quote  for remediation and treatment.

Radon

Often tested  at the same time of an inspection are Radon levels in  the basement.  Radon is a carcinogenic, radioactive, odorless gas that  the EPA  recommend mitigating at levels of 4 pico-curies per liter, or  pCi/L or  higher. Radon comes from the natural (radioactive) breakdown of  uranium  in soil, rock and water and gets into the air you breathe -  because  you spend so much of your time at home, then your greatest  potential  exposure is at home. There are two types of tests commonly  used around  the time of the home inspection. Active or passive. Active  testing is  where a computerized piece of equipment is put in the lower  level of  the house 2 days prior to the inspection. Over the next 2 days  it takes  hourly 'polls' and records the radon level, the barometric  pressure,  the temperature, the humidity and whether the unit has been  moved  during this time. At the end of the time, a printer is hooked up  to the  equipment and a printout of every hourly reading over the last 48   hours is produced along with the average radon level found. The passive   test is 2 tubes that are placed in the lower level and then 2 days   later are collected, put in the mail to a laboratory, and then a few   days later you get the average radon results for the 2 day period. If   the radon levels come back high, generally, the buyer will request the seller to have a mitigation system installed prior to closing, or will credit the  buyers with a monetary amount to help the buyers with the cost of   installing the mitigation system.

3 Possible outcomes

There are 3 possible outcomes to an inspection.

1. The buyer is concerned about everything the inspector found, and they don't want  to move forward on the home any longer. They can exit the  contract and  get their deposit back, provided that they have exited the  contract  before the inspection contingency date. 
2. The inspector found very  little in the way of issues around the home  and they move forward with  the purchase without requesting anything of  the sellers.
3. The inspector found some issues with the home. Two courses of action are then possible:
   1. The  seller agrees to repair/replace/address some issues prior to  closing.  Let's say that the inspector found that the furnace had not  been  serviced in the last 10 years, then they may ask the sellers to  service  the furnace prior to closing. The buyers are asking the sellers to do something  to the  home before they take ownership. Anything that requires a  licensed  tradesman to take care of requires that the sellers provide  receipts at  closing to show that the work has been done.
   2. The seller agrees  to credit the buyer some money at closing to take care  of an issue found at  closing. Let's say that the inspector finds that  the furnace is on its  last legs and he/she doesn't believe that the  furnace will last the  next winter, then the buyers may ask the sellers to credit a portion of  money toward replacing the furnace when they have  purchased the home.

After the inspection

Once  the inspection is complete, now comes the negotiation over the  results  of the inspection. So long as the inspection response is  received by  the sellers, or listing agent, by the date of the inspection   contingency then negotiations can occur over the next few days until   the Purchase and Sale date. 

A house, generally, will not inspect   'cleanly' - there will always be items found during a home inspection.  Putting on a buyers hat at the moment, the best result for the buyer is to get the most items addressed, by  the  seller. We always advise 'reasonableness'. If a buyer  is  reasonable with their requests to a seller as a result of the   inspection, then 75% of the time, the seller will be reasonable in   return. In almost 100% of occasions if a buyer asks the seller to fix   everything, or request an inflated credit to take care of the items,   then the seller will say no to everything and will not negotiate. Depending on the experience of the buyers agent, we generally don't expect the buyers to negotiate on items that were visible to  the eye: tree roots uprooting a sidewalk, tree limbs or trees to close  to the house, cracked tile in the bathroom or cracked windows, rotting  bulkhead doors, gutters that are broken or disconnected, etc. Sellers  expect that the buyers will have carefully viewed the home prior to  making an offer, and that problems that are in plain sight have been  taken into consideration when the made the offer.  Once  the seller and  buyer have agreed over what is going to happen as a  result of the  inspection, then the agreed items are incorporated into  the Purchase  and Sale agreement. 

We remind buyers that the purpose of the home inspection is not to  compensate the buyer for  the perfect house, but to make the buyer aware  of the items they will  need to address when they buy the home.

If  you have any questions about anything raised here then please don't  hesitate to reach out to any one of the team. We would be more than  happy to help.