By Phil Immel
Question: Do you recommend getting a home inspection during escrow?
Answer: Absolutely. Even if you are buying a new home from a builder.
Depending on the size of the home or condo, inspections cost about $450-$700 for a typical home. The more square footage, the higher the price, because it takes longer to do. If the home you are buying has a pool or spa, casita or ADU, there is an additional cost.
It is a wise investment for generally under $1,000. Think of it like buying a used car. There are many components that make up a car or a house. “Caveat Emptor” is a legal term that means “Buyer Beware.”
In the multi-page residential purchase agreement, you will sign a form that strongly urges you to do an inspection and of the importance of this for the buyer. This is to protect you because even new homes have flaws.
Inspectors are licensed specialists and understand how to build a house and properly maintain it. Just like with any contractor, there are good and not-so-good ones. Typically, your real estate agent works with one or two per month and knows which ones are competent.
It’s a specialty. That’s all they do. Usually, it takes 2-3 hours depending on the size of the home and amenities. The Guru recommends that you attend the last 30 minutes for the professional inspector summary.
Don’t follow the inspector along the entire time if you show up at the beginning. Let him or her focus without any distractions. Upon completion of the inspection (usually within 24 hours), you will receive approximately a 30-page detailed report that includes photos of all the inspector’s findings.
Next, you and your agent will review the items so that you can decide what you would like the seller to correct or to request a credit at close of escrow in lieu of repairs. If a credit is agreed, after the close of escrow, you can engage contractors to repair the important items you found in the report.
Quite often, a qualified handyman can correct many items without you having to hire a licensed contractor. Ideally, you should use licensed specialists for all electrical, plumbing, roofing, HVAC (heating, ventilation, air conditioning), etc.
Once you receive the report, you should schedule one hour of time to review it with your agent, ideally in person or at least by phone. I categorize noted items into A, B and C priority. “A” priorities are the health and safety items.
For example, nonfunctioning electrical plugs, missing GFCIs, a water heater that is improperly strapped (per CA earthquake codes) or not up to code, inoperable or old smoke/carbon monoxide detectors.
Any detector that is more than 10 years old must be replaced to the new 10-year life “non-removable battery” type.
“B” priorities are items such as leaky faucets, cracked windows or cooktop burners that don’t work. “C” priorities are generally cosmetic “fixes” but do not impair the operation of the home. An example is chipped countertop tiles or fogged windows.
Always ask the seller to repair “A” priority items and most “B” items. Don’t ask for “C” priorities, or you may be expecting too much and jeopardize the sale.
The only items a seller must do as per CA state laws are proper water-heater strapping and having operating smoke and carbon monoxide detectors. Check your local city guidelines but usually that means one smoke detector in each bedroom, hallways on each level of the home, and carbon monoxide detectors on each level.
Beyond that, it’s a buyer/seller negotiation. A buyer submits a reasonable proposal to the seller and the seller can: 1. Refuse to do anything; 2. Accept all requests for repair; 3. Negotiate a shorter list of repairs; or 4. Offer a credit in lieu of repairs that the buyer will receive upon close of escrow. In shorter escrows, a cash credit is often the norm.
Q: Are home inspections a contingency of the sale, and if so, can you explain?
A: Yes, traditionally the California Association of Realtors (C.A.R.) standard purchase contract provides for a 17-day contingency period (unless otherwise negotiated) from acceptance.
If, for some reason, the seller refuses to do repairs or limits your requests, you can cancel the contract during this time frame and get your earnest money deposit back.
However, that may not be the sensible thing to do in the big picture. Every home is unique; therefore, you may not find a better overall deal.
Be wise. Follow the advice of your realtor and enjoy your new home.
Have a real estate question? Email Phil Immel at phil@realestateguru.com. Visit realestateguru.com. The Guru has more than four decades of experience listing and selling homes in South Orange County. As a licensed real estate broker, Phil majored in Real Estate at San Diego State University and is also an expert in mortgage, title, escrow, appraisal and negotiations.
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