Your Pre-Purchase building inspection is complete, your inspector went over the report with you explaining the defects and his recommendations….now what do you do?
- You have entered into the agreement to buy the house assuming there are no major hidden defects. The inspection has now uncovered defects. What can I do?
- The first thing you need to do is sit down and read the entire home inspection report for yourself. When your building inspector is reviewing your report with you it can get a little overwhelming if there are many defects or things you don’t fully understand. I always recommend you take the time to read the inspection report in it’s entirety for yourself. Your report could potentially save you hundreds possibly even thousands of dollars, so it’s probably worth your time to read it completely.
- Your inspector is your expert on your side and he knows your new home intimately now, if there is anything in the report you don’t understand, talk to your inspector. Ask all the questions you need to until you fully understand. Let me assure you there is no such thing as a silly question. A good inspector prides himself on being able to help his client understand his report findings.
- Now you should decide what defects you are concerned about, prioritize them. This is a very personal thing as everyone has different priorities. But you should also review your list and decide which ones are typical for a property of that age. Which ones are fair wear and tear. It is unreasonable to ask for some defects to be repaired. (For example; scuff marks and small chips on the passage wall in a 50 year old home that had 4 children raised in it would be typical, however the same defects in a new home would be considered in a different light) You must be realistic and consider the age of the home in relation to the defects found. (another example would be the corrugated galvanized short sheet roofing on same 50 year old home may show signs of rust or corrosion. This is typical for a property of this age, however this would be considered a major defects if found in a 5 year old home) Again this is where you need to talk to your expert, the inspector. You need to prioritize the defects into things you will accept and ones you need to get quoted for repair and renegotiate your offer. You need to decide if the scope of this project is more than you bargained for after you became aware of the condition. Are there some major defects or safety items that are cause for immediate concern?
- Since a home inspector is a generalist and not a specialist, you will most likely see recommendations for further evaluation on certain items. Recommendations from specialists that fall outside his field of expertise. (For example, if a home inspector notes some significant movement and cracking in the foundations, he should recommend you consult a structural engineer for further detail). These specialists will bring in specialized tools and testing equipment to further troubleshoot these problems and let you know the cost associated with repair. If your home inspector recommends a further investigation, I strongly recommend you get this done prior to confirming the sale.
To Repair Or Not To Repair
- Your ability to re-negotiate may be limited by the exact wording of your building inspection contingency clause. It is common to see clauses restricting you to structural or safety items only. Some clauses document repairs over a certain dollar amount. This can dramatically limit your ability to re-negotiate. And this is why we strongly recommend you use a much broader building inspection clause. In my opinion the simpler the better, something like “subject to a satisfactory building report” Your legal advisor determine the exact wording for you before you sign the agreement. This type of clause includes all the systems and components of the property and does not restrict you to structural or safety issues only. However all that said, I believe you should always ask anyway.
- Using your priority list of defects and written quotes for the repairs. You are now in a strong position to renegotiate. Before you go into any re-negotiations you must decide if you want the seller to make the repairs before settlement, or if you want to seek a reduction in the contract price to allow you to undertake the repairs yourself after settlement. Everyone has different thoughts on this but here’s mine. I recommend you negotiate a reduction in the price using written quotes as the basis to verify the costs. My reason for this is due to past experience I’ve inspected the repair work completed by many sellers and in most cases these have been completed on the cheap, in hast and by unqualified contractors. In some cases they have had to be re-done again to reach a satisfactory outcome and delayed the settlement date.
- However if you negotiate a satisfactory price reduction to allow you to manage the repairs after settlement, you have time to choose your contractors, the time frame is not squeezed into the contract period and you have full control over the project and the time frame to suit you.
- At this point you should sit down with the Realtor and/or your Buyers agent and put your case forward. Weather you ask the seller to complete the repairs or the you ask for a reduction in the agreed price, the realtor and/or your buyers agent will negotiate to keep the agreement alive. I must also fore warn you to be prepared for a flat out NO. Some sellers will not re-negotiate at all and are willing to risk loosing your sale to prove it.
- Be prepared to be more creative in your re-negotiations, (for example; I once saw a buyer re-negotiate to include a ride-on lawn mower in the settlement valued at $2500 in stead of replacing the broken leaking skylights also valued at $2500) another example I saw the other day was the seller agreed to pay the buyers furniture Removalist costs in lue of repainting the bedrooms. The seller then went on to get a better two for one deal with the Removalist. Some times you have to look outside the square for other ways to get a better deal done.
The key points I would like to stress from the point of a home inspector are:
- Read the entire report!
- Follow up on the home inspectors recommendations for further evaluation
- Read the entire report! (Ok…I know I got this one already but it’s very important.)
- Get all the experts on your side, lawyers, inspectors, buyers advocates