(This is an update, published May 2021, from an original blog post published in January 2019.)
A day or two after the home inspection, a buyer’s real estate professional will be in touch to share details of the inspector’s report. Don’t panic! Home inspectors tend to always uncover something wrong in and around a home.
The inspection report is an unbiased assessment that details issues and recommendations related to the home. Since they are expected to attend the inspection, buyers shouldn’t be too surprised by the findings.
This is where buyers and their real estate professional should review the report and plan a response. Most issues will likely be minor and keep the home-buying process on track. In fact, some buyers are satisfied with the findings and make no requests of the seller.
Still, a buyer will want the licensed home inspector to offer an honest review of what issues are serious and may need immediate attention. Sometimes the findings are so serious that buyers terminate the agreement and have their earnest money returned.
The report is generally produced in two parts. The first is a simple checklist of items reviewed and a rating of good, fair or poor. The second part of the report is a narrative, a summary of the inspector’s findings and his/her recommendations for repairs or remediation.
Buyers can direct follow-up questions to the inspector for clarification. They paid for the report and might as well understand every aspect before preparing the next steps.
When reviewing the findings, buyers should focus on major aspects of the home – electrical, plumbing, roof/chimney, foundation – and look for issues that could affect health and safety, such as mold, asbestos, toxins, Radon or missing handrails and carbon monoxide/smoke detectors. These are items that should be addressed by the seller before closing the deal or, without seller concessions (credit for repairs), the buyer should consider rescinding the deal within the accepted timelines.
If necessary, the buyers’ broker will notify his/her counterpart to seek additional inspections. Each step in this process should be conducted immediately, as time is of the essence (and few inspectors work nights, weekends or holidays). Buyers generally have 10 days to get the home initially inspected – with traditional home inspectors and specialist inspectors. Failing to meet the agreed timelines could put a buyer at fault and risk the loss of the earnest money deposit.
While having the inspection(s) conducted, buyers should also do their best to secure bids from contractors to make the major repairs. The information gathered during this step will be included in a formal response to the seller. In the best approach, buyers should ask that the seller not only address the most concerning issues but that they use buyer-approved contractors noted in the inspection response. Note: Buyers only get one shot at submitting a request for repairs, unless they are negotiating the terms after the seller responds to the initial request. Buyers cannot submit separate requests.
A buyer’s broker should be as specific as possible about the repairs being requested – such as, “Seller shall hire ABC [the contractor identified on the repair estimate] to perform all the work identified on the attached bid.” The relevant portion of the inspector’s report should be attached to the repair request(s) as validation. (Buyers should share these details with their lender, as the information may impact terms of the loan.)
Warning: Sharing any other parts of the report with sellers – if not requested – is essentially a breach of the purchase-and-sale agreement and will lead to the waiving of the home inspection contingency and possibly prompt the seller to terminate the contract.
(The seller typically has three business days to respond to the request for repairs. That portion of the process is covered in a seller-focused blog post but it’s worth noting if sellers respond early to the request, then the buyer’s reply period starts the day after the seller’s response date – not after the previously agreed seller response timeline.)
Buyers should be ready to bend a little and seek compromise – including accepting cash at closing to handle the repairs later – but don’t let the seller dictate the terms of the repairs and contractors for something that will soon be a buyer’s problem. Buyers should want the satisfaction of knowing who performed the work and that those contractors can be contacted after moving in if any issues return. (Admittedly, in a sellers’ market, the chances of even conducting an inspection after mutual acceptance are slim. That is why sellers are offering to pay for their own inspection before listing the home or giving buyers the option of having one conducted in advance of submitting an offer.)
The spirit of the inspection contingency is to identify major health and safety issues that should be addressed by the seller. It is not a vehicle to negotiate cosmetic repairs. Anything a buyer did not ask the seller to fix or provide financial concessions to in the final purchase and sale agreement are in the buyers’ lap to fix. That’s their honey-do list already started – even before moving in!
Bottom line: Reading, understanding and quickly acting on the inspection report are some of the most important steps to ensuring a new home is in good condition, satisfactorily meets a buyers’ expectations and is ready to be enjoyed.