The home inspection process

1. Determine your home's value in today's marketplace
2. Find out what is currently available for sale in your area or neighborhood
3. Estimate the proceeds from selling your home
4. Determine what needs to be repaired or upgraded before you sell
5. Make necessary repairs – find qualified contractors
6. What's the best way to sell your home?
7. Decide whether and how to use an agent or sell your home yourself
8. Determine your sales price
9. Sign a listing agreement with a real estate agent
10. Create a proactive home marketing plan
11. How to handle showing your house to potential buyers
12. Get showing feedback
13. Provide property disclosures
14. Continue home marketing efforts & price adjustments
15. How to negotiate home selling price upon receiving an offer
16. Sign all real estate contract documents
17. Order title insurance commitment
18. The mortgage application process: track the buyer's progress
19. The home inspection process
20. The title process & closing the sale of your home

Perhaps the most critical component to consummating a successful real estate transaction, the home inspection process can serve many purposes to both buyer and seller.

You are under contract – what does that mean?

At this point, the property is "under contract" and the buyer is undertaking their "due diligence" in determining both the condition of the property and the correctness of their offer in terms of price. The inspection can be cause for relief or introduce yet another round of negotiations between buyer and seller depending upon what is revealed in the inspection report – the product of the inspection process.

 

Typically, the buyer has the right to terminate the contract upon inspection for any reason whatsoever. In most states, the buyer is not obligated to provide the seller with any reason for an inspection objection, afford the seller an opportunity to "cure" the objection condition, or provide the seller with a copy of the inspection report.

 

Buyer's inspection

In recent years, it has become popular for buyers to hire home inspection companies to inspect your house as provided in most real estate contracts. These inspectors will carefully examine your house, looking for any problems with the structure and its mechanicals (furnace, air conditioner, plumbing, etc.) and fixtures (flooring, trim, sinks, faucets, doorknobs, etc.). Any items that appear to need repair or are not properly functioning are noted in the inspector's report.

 

Here's a link to a sample home inspection report from Buyer's Inspection Group in Greenville, SC. (You will need Adobe Acrobat Reader to view this document)

 

The buyer will typically use this report to ask the seller (you) for repairs or improvements. You can either choose to make the repairs at your cost, refuse to make the repairs, or offer some amount of money to the buyer to cover the cost of repairs. This is a common occurrence, so be prepared to negotiate with the buyer during the inspection period. If you are proactive, you should keep this in mind when agreeing to the original contract price back in step 15 (negotiating price after receiving an offer). Know when you agree to the contract price that the buyer will likely come up with some items during the inspection, and ask for either a price reduction or repair of those items.

 

For this reason, it may be wise for a seller to order their own "pre-inspection" in order to both assess the general condition of their property and to make necessary repairs in order to mitigate any potential inspection items that may come up once the property is under contract. The potential downside to this is that the seller may become aware of potential defects in the property that he or she will then be obligated to disclose. Any such conditions would likely be identified by the buyer anyway, upon receipt of their inspection report.

 

Advantages to pre-listing home inspections

Another advantage to identifying potential inspection issues early on is that the seller can then "disclose" them to potential buyers and offer an "allowance" via a price reduction or credit towards the purchase price. In this way, the seller may avoid the actual expense in making such repairs prior to the sale of the home.

 

In response to an inspection report that identifies significant issues like a leaking roof, radon remediation, outdated electrical panels and the like, the buyer may elect to reduce their offer significantly, much to the chagrin of the seller. A seller may then elect to make the demanded repairs, reduce the sales price, or stand firm and risk having the property fall out of contract and return to the marketplace again for sale.

 

If the seller is aware of defects, repairs, etc., that their home may require prior to putting the property on the market for sale, and cannot or doesn't want to make those repairs at that time, then it may be a good idea for the seller to have some reputable contractors provide written bids for repair to use in the negotiation with the contracted buyer. When the contracted buyer receives their inspection report, they will then likely obtain their own contractor bids. In the negotiation, the buyer will often use their highest bids for repair in asking the seller for a price reduction, and the seller should be equipped with their own competitive bids for repairs that they can use to negotiate with the contracted buyer.

 

At any rate, a seller should be prepared to negotiate both price and repairs with contracted buyers once the property is under contract. Next Step: The title process & closing the sale of your home