Most homebuyers will request a home inspection as part of their homebuying agreement. This is a contingency dictating that within a specified time, generally 7-10 days, an independent home inspector can visit the property to test for structural and system defects, and assess how all the systems work together.

Major defects found during an inspection could cause buyers to walk away from a deal. According to industry estimates, 10-15% of home sales fall through because of issues discovered during a home inspection, although the exact percentage varies depending on market conditions and the severity of the defects. The National Association of Realtors (NAR) puts that percentage even higher at 25%.

To avoid losing a buyer under contract, it’s prudent to do a pre-listing inspection, advises David Morris, a licensed general contractor and the CEO at A-1 House Inspectors, Inc. in Fuquay-Varina, North Carolina. “[A pre-listing inspection] helps sellers understand the condition of their home and what repairs a buyer might ask for,” says Morris, whose firm has inspected around 30,000 houses. “We recommend having the inspection a few months before listing so sellers have time to make any repairs they deem important before the buyer’s inspection.”

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What the Inspection Entails

Both a pre-listing inspection for sellers and a contingency inspection for buyers follow the same process dictated by state licensure boards.

“My advice to sellers and buyers may differ slightly in regards to what repairs we consider more important, but the reports are only facts based on observations deduced through testing and operation,” notes Morris. Having a pre-listing inspection done, though, can become a double-edged sword for sellers because it gives them knowledge of the repairs needed, which then typically must be disclosed upfront to potential buyers.

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Cosmetic Versus Safety

While cosmetic repairs, such as replacing missing cabinet hardware or small cracks in the driveway, may grab a buyer’s attention, the emphasis on what to repair — or what repairs a buyer can reasonably request — should be on safety issues and defects that will lead to significant damage if they’re not corrected. In other words, if the buyer feels they would be “at risk” living in the home without an issue being resolved, it’s probably prudent to ask the seller to make the repair or provide funds for the repair to be made after the sale and before they move in.

The type of repair requested can determine who will cover the costs. Major repairs relating to the home’s structure and systems will most likely be covered by the seller, as these would be considered essential for the home to function properly. Other, less urgent repairs may fall on the buyer. Some sellers will put a cap on how much they will allow for repairs so read the back-and-forth paperwork carefully. If a seller refuses to do a needed repair or provide monetary compensation, the buyer can usually walk away from the sale with no penalty within a certain time frame.

“Sellers will often want to move on without having to sink a lot of additional money into the property, while buyers tend to lean toward making sure the home is both safe and won’t become a money pit,” Morris says. “That said, we’ve seen termite damage so extensive it was a wonder the house hadn’t collapsed, to really cool features such as hidden staircases and rooms in historic homes, and a handful of houses considered to be haunted.”

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Repairs to Make or Request

Following the home inspection, buyers should short-list crucial repairs and stay away from nit-picking about grease stains or chipped paint.

Common major repairs include:

• Structural — Foundation problems can be costly to repair and something buyers will want to know about in advance of buying the home.
• Heating, Ventilation and Air Conditioning (HVAC) — Broken HVAC systems can cause fires and other dangerous situations and should be considered a major safety concern.
• Electrical — Sparking outlets or non-working outlets should be addressed by sellers before listing the home and are well within the purview of buyers to ask to be repaired since these can lead to gas leaks and other life-threatening situations.
• Plumbing — Plumbing problems can lead to water leaks, broken pipes, and damage to other parts of the home, so they are on the “must-do” list for both buyers and sellers.
• Roofs — Broken shingles, cracks or splits in the flashing material and other roofing damage are reasonable repair requests, as these problems can lead to additional (and costly) damage down the road.
• Pest Damage — If a home inspector notes pest problems on their report, it’s probably a good idea to hire a separate professional to gauge the extent of the damage and provide an estimate for remediation.

Also, some states have specific laws on repairs, so it’s advisable to ask a real estate agent to guide you.

In the highly competitive Raleigh, North Carolina housing market, buyers will need to provide sellers with a “due diligence fee,” once an offer is accepted ranging from $5,000 up to $30,000 in multiple-offer situations. This fee is nonrefundable if they back out of the deal for any reason, including if the home doesn’t appraise for its sale price or there’s a crack in the foundation. “I counsel buyers to look for obvious indications of problems, ask questions, and understand they can lose their due diligence fee if they don’t move forward,” says Debbie Van Horn, a real estate broker and relocation specialist with 21 years of experience.

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An Ounce of Prevention

No seller wants to spend tens of thousands before listing their home or have to renegotiate the purchase price to allow for needed functional repairs.

“Staying on top of home maintenance issues is paramount for homeowners as this prevents a lot of work piling up when you are ready to sell,” Morris says. “The added benefit of both timely cosmetic and functional repairs is that you get to enjoy them while living there instead of just improving the house only to move out soon after.”

We’re Here to Help

Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AMS Military Mortgage Advisor, a licensed mortgage loan originator, will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.

Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!