Cathy's Home Buying Tip #6
The First Thing To Do When You Go Under Contract
I often tell my First Time Home Buyers that after successfully negotiating their first contract, there is truly only one thing they need to concentrate on next....the home inspection. Don't worry about anything else until you complete this step. Here's a couple of reasons why plus some details to help you through the home inspection...
- There are usually 2 contingencies pre-written into every purchase contract. One is regarding the lending side, the other is the home inspection. The home inspection contingency allows the buyer to exit the contract legally as long as the buyer informs the seller prior to the end of the buyer's home inspection period. This in no way is to be taken advantage of by the buyer who merely decides a few days later that they no longer "feel" like they want the property anymore. A contract is a legal piece of paper that each buyer will need to take very seriously. However, should the buyer discover something they are extremely concerned about (usually during the home inspection), then the contract contingency allows them the opportunity to exit the contract legally. Examples of findings that may be of significant concern to buyers might include such things as major termite damage that has compromised the structure of the home or extensive mold found in areas of the attic or basement. Typically, these are items that the buyer couldn't see or didn't know about when they first toured the home prior to placing an offer. Now that they have found out about it after the fact, they may no longer wish to move forward and purchase the property.
An important item to note here is that if the buyer wants to exit the contract, but fails to inform the seller in writing and does not provide this communication prior to the end of the inspection period, then the buyer legally must take the property in an "AS IS" condition. For example, if the contract calls for a 10 day home inspection and the buyer takes until day #11 to decide that they want out, then the buyer would be in breach of contract because notification was outside the 10 day inspection period. If the contract is breached, then seller would have claim to the buyer's earnest money and could sue the buyer in court.
Another clarifying point to make here is the actual counting of the days for the home inspection. The first day of the home inspection countdown legally begins the first day AFTER the last party signed the contract. Therefore, if the last party, whether it be the buyer or seller, signed the contract on the 15th of the month, then the 16th is counted as the first day of your home inspection period.
- After the contract is signed, the buyer's agent will inform the buyer that they need to choose a home inspector to schedule the home inspection appointment. The buyer's agent usually provides several home inspector suggestions to the buyer. The buyer can choose from this list or research on their own to come up with the inspector they want to use. Whichever inspector the buyer settles on, the buyer then calls that inspector to set up a convenient day and time for the inspection to take place. Home inspectors always know there is a short time to complete inspections and can usually be available within a few days. However, in busy times, the buyer may need to contact several inspectors in order to find one that is available within an acceptable amount of time.
Buyers may wish to have one or several inspections done on their property. It is totally up to them. A basic inspection runs between $350 - $400. Many buyers who are purchasing single family homes may also have a termite inspection done, which runs between $50 to $60. Buyers can also do a radon inspection to see what radon levels may be within the home. Radon inspections are usually around $150. When the buyer calls the inspector, the buyer informs the inspector if a termite and radon inspection is desired. If so, the inspector takes care of ordering all of the these together. The buyer will usually receive a small discount for doing all three together (home inspection/termite/radon) and will pay the home inspector one price for all. However, if additional inspections are desired, then the buyer will take care of ordering and paying for those separately with the respective companies (ie. chimney, roof contractor, etc.)
Just a word here about Radon. Radon is a naturally occurring gas the comes from the ground. It is actually the decomposition of uranium in the soil and if the home is sitting on one of these deposits, then there is a good chance those who live in the home are breathing it into their lungs. It is odorless, tasteless and you can't see it. It is the #2 cause of lung disease in the US with cigarette smoking being #1.
If the radon inspection is 4pCi/L or higher, then radon mitigation is recommended as per EPA guidelines. (Cost between $850 - $1,200.) Simply put, mitigation involves placing a pipe in the ground (basement) that goes up and out of the home. Since gas would flow to a level of least resistance, the gas underground finds its way to the pipe with the help of a fan (usually located outside the home) that pulls the gas up and out of the property, eliminating much of the gas that would flow into the actual home. There is a monitor attached to the pipe inside the home that displays the current radon level so one can always monitor to make sure the levels stay under 4pCi/L.
Radon mitigation is traditionally taken care of by the seller due to the fact that they have been notified by the buyer that there is a high level of radon in their home. If the buyer doesn't move forward with the purchase of the home, and the seller does not do the mitigation, then the seller must disclose the high radon levels to the next potential buyer. Therefore, the seller will usually take care of this.
The licensed inspector the buyer selects will obtain the necessary approval to go into the property on the day and time they both choose. The buyer can meet the inspector there and be present with him throughout the entire inspection. This is a good way for a buyer to learn more about the mechanics of the home first hand, including items such as where the shut off valve is to turn off the water main and where the sewer clean out is located. Most inspectors are open to answering questions as they proceed through the home.
Realtors and owners are not usually present during the inspection....just the home inspector and buyer, if the buyer so chooses. If the buyer can make it to the inspection, this is also a good time for them to take any needed measurements of rooms and window sizes. At the end of the inspection, the buyer will be responsible for paying the total bill to the inspector, so buyers should always ask the inspector upfront what the total cost will be and be prepared to pay in person if they are attending the inspection.
- The inspector will provide the buyer with a summary report of the findings, complete with several photos, usually within 24 hours of the actual inspection. Most of the home inspection information the buyer will already know if the buyer was present during the that inspection. When the report is received by the buyer, the next step is for the buyer to review the findings with their agent and go over any issues that are concerns for the buyer. If there are a couple of significant items the buyer would like to see repaired before closing, a repair addendum can be written up asking the seller to do these. However, the entire home inspection report is not to be considered a list of repairs to write up for the seller to fix...only those items that are deemed important by the buyer. Additionally, the seller can always choose not do the repairs, do only some of them, or address all of them. However, if the repair requests are reasonable, most sellers will respond favorably.