Some experienced investors buy foreclosure properties cheaply without even having seen the property. However, most buyers shouldn’t buy a property unless they have had it thoroughly inspected by qualified professionals. Inspections are a necessary part of the homebuying and selling process.
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Sellers should be leery of buyers who offer to purchase without an inspection contingency. A well-inspected property protects both the buyers and sellers from after-closing claims that can be time consuming and expensive to resolve.
Many sellers have presale inspections done–usually structural, pest (“termite”), and home inspections–before they put their homes on the market. A question is when to have the inspections done: a resonable time before the house goes on the market or after repairs that sellers know about are remedied?
Often sellers opt to have inspections done just before marketing so that there are fewer defects for inspectors to find. This can be problematic if there isn’t enough time to make the repairs you’d like to have done before the listing goes on the market. In this case, the list price might need to be lowered to account for the defects.
It’s not a good idea to have work in progress when your home is being shown to prospective buyers. But, you could delay the marketing while work is done.
This may or may not be a good idea depending on current market conditions.
The marketing of a property was recently delayed because the structural pest report revealed approximately $65,000 of damage.
There was no way to have the repairs done within a couple of weeks. It was a five-week job. In addition, the magnitude of work made it unsalable to most buyers who were intent on buying in the area. Must buyers don’t have the cash to pay for this amount of work.
And, it’s difficult to find a lender to finance renovations.
Selling a house that needs a lot of work as a fixer is not a good option in today’s market. There aren’t many speculators currently buying homes to fix up and resell, particularly if the work needed is infrastructure repairs, not a gorgeous new kitchen.
House-hunting tip: Sellers who receive a “bad” report should get opinions from other contractors. In the case of the house mentioned above, the sellers were able to reduce the amount of the repairs by quite a bit by talking with more than one reputable contractor.
Make certain, if you do have someone other than a licensed structural pest contractor do the work, that he will guarantee his work for the buyers, and that his bid is a firm one. That is, if he finds more work than expected, he will take care of it at no additional cost to you.
Use a contractor who will stand by his or her work. It’s a good idea to have the original pest inspector do a reinspection after the work is complete to make sure the house is clear of any active wood-pest infestation. If not, the contractor should take care of whatever he missed at no additional cost.
Sellers who have presale inspections done well in advance of marketing their home and then correct some defects will want buyers to be aware of the work they addressed. One way to do this is to create an addendum to the report in question and list the items that have been repaired, either by the number referenced in the report or by the report page number where the defect is described.
Dian Hymer is a real estate broker with more than 30 years’ experience, a nationally syndicated real estate columnist, and an author.