Inspections – Holy crap I wasn’t expecting that!

I will preface this by saying I am NOT a home inspector.  I am a realtor, I am a salesperson.  I am speaking based on my observation of having witnessed over 200 home inspections.

Every home has a litany of issues and is prone to some decay, as to be expected of any used, aged structure that is perpetually exposed to the elements and has water, fuel and sewage running through it on a continuous basis.  Heck, even new construction has its share of issues, and it’s the home inspector’s job to identify and magnify them.  This may come as a shock to first time home buyers, particularly those city dwellers who have only known apartment living, but it’s a fact.  If you anticipate anything other than a 23+ page “scary” detailed report from any home inspection, if such a notion makes you want to run for the hills, then you may need to readjust your expectations and perhaps consider condo living.

Homes are very heavy structures built into soil.  Soil shifts and, consequently, so will the house over time.  This is called settling, it’s normal, and likely accounts for most of the cracks and unevenness you encounter.  Having said that, a house does it’s settling thing for about 10 years after it’s built and then it should kind of be settled.  If there is evidence that a house is continuing to settle after 40 years, then something else is going on, and a quality home inspector will be able to help assess whether that is happening. Did you ever see the realtor on HGTV drop a marble on the floor and watch it roll to see how even the floor is?  well, there is limited usefulness to such a test.  Since homes all homes are prone to settlement, I don’t know how much that will help you diagnose anything, unless of course the marble goes shooting 25 miles per hour as soon as it’s dropped.  But in that case, in all likelihood you will not need a marble to detect such unevenness.  Your motion sickness brought on by walking through the house will give that away.

There is normally a small handful of items that will come up at inspection that you will want to address with the seller.  If there are more than a few major issues, you might re-consider this purchase.  What constitutes a major issue?  Any defect that affects the safe habitability of the home and is difficult and/or costly to rectify.  Mold, for example, would be a potentially major issue depending upon its location and how pervasive it is.  A broken or faulty boiler would be another, as a boiler can cost anywhere from $4k-$7k to replace.  A deck that is falling apart is something I commonly see, and what I would consider major.  Decks can cost $12-15k or more to replace.   Some issues are not so major, but they are health/safety related, and worth addressing with the seller.

Bowing retaining walls are common, and a favorite of home inspectors, who make a beeline for them as soon as they pull up to the house.  If a wall is showing signs of bowing (which is quite normal – they ALL do), the inspector will write “maintain” or “repair” in the report depending on how bad it is.  Here’s the thing about them, they are retaining soil.  Soil gets wet, and when that happens, soil will expand.  The soil is being retained and has nowhere to go and will push out the wall.  There is not anything on the other side of the wall to offer resistance, and so bowing will ensue.  This is called physics.   Over time, retaining walls bow, and after some undetermined amount of time, depending on the climate and texture of soil it is retaining, they will need to be replaced.  It can be costly to do so, but rarely is there an immediate need for replacement. If it’s bowing that badly, it’s usually glaringly obvious, even to the naked, untrained eye, and likely something the seller is aware needs to be addressed.  The cost of retaining wall replacement depends on what materials you use.   Railroad ties, which are wooden planks, are obviously more cost effective over stone.  Stone looks much nicer and is a little bit lower maintenance, and generally lasts a longer time.  One thing that puzzles me are the stone retaining walls without those little culvert pipes to assist with water drainage.  I’m baffled as to why a contractor would install a wall without this, unless it was at the insistence of the homeowner wanting to save a few bucks.  Walls will not bow as much if there is a path of relief for water runoff.  Anyway, many of my buyer clients freak out about bowing retaining walls (heaven forbid it fall down and a pile of dirt ends up in your yard!  AHHH!) and raise it as one of their MAJOR issues.  They usually request a credit for repair.  Sellers will sometimes concede.  I find it interesting that when I visit these home owners a year or two after they move in, they have done absolutely nothing about the bowing retaining wall.  And it looks exactly the same as it did when they moved in.  When I bring up the hazardous wall that made them almost walk away from the house a couple of years ago, it is often causually disregarded as a non-issue.  I don’t mean to imply that a bowing retaining wall is always a trivial issue.  Don’t get me wrong, in some cases retaining walls are a critical component of the home’s structural integrity.  For example, there are homes that are built high on a hill and retaining walls are holding up the soil that is actually holding up the house.  Those are retaining walls that must and are taken seriously.  If they are not installed correctly, or are well past life expectancy and are leaning at a serious angle, that is a very major concern.

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To be honest, in this competitive market, there’s often a finite amount of issues a seller will likely be willing to address.  And if you won the house in a competitive bid, I would be very careful about asking for much if anything at all that is not health/safety related.  Are there older utilities? Is the water heater or boiler at the end of it’s anticipated useful life, but still functional?  Sellers will not generally warrant the future performance of utilities, so requests for replacement will not usually be well received.  Having said that, if there is more than one major utility at the end of it’s anticipated life, requesting a home warranty sometimes gives buyers a sense of security.  A home warranty, such as those offered by American Home Shield, is a yearly plan that insures your central utilities and appliances.  If anything fails after you move in, the warranty company will send a service repair man out to make any necessary repairs.  The plan itself may cost around $500 per year, and often times it’s a no brainer for a listing agent to buy it for a buyer that is griping about old utilities.  It’s an easy and cost effective way to smooth things over and make the buyer feel more confident about moving forward.  I personally think these are a colossal waste of time.  Here’s the catch about home warranties:  each time your utility is on the fritz they send a repairman out to you for a “nominal” fee of $200 a pop.  When a old utility starts to fail, my experience is that it craps out quite often, and the repair visits are frequent.  Your appliance needs to literally explode for them to be willing to actually offer replacement.  Normally they just keep coming out with spit and scotch tape to patch it up, cumulatively costing several hundred dollars in site visits.  I’ve never had a buyer receive a home warranty and renew it the following year.  There is usually regret for not having saved the money that was spent on useless repair visits to actually purchase a replacement.

Whatever repairs or credits you decide to request of the seller, it is recommended that you make them as soon as possible, preferably as soon as the home inspection is performed.  Buyers who wait for written inspection reports to come in foolishly risk losing the home and wasting their own time and money.  The home is not under contract, and every day that elapses is an increased chance another competitive offer will come in.  Despite the risk, many buyers, particularly first timers, will feel the need to “digest” the home inspection, or await the written report to figure out what they want to negotiate.  That written report can take days to produce, and there is nothing in it that will reveal anything you didn’t see first hand at the home inspection.  There is no advantage to waiting.  When the inspection is just performed is when it is freshest in your mind and you have the greatest understanding of the key issues.  You know at this point what you really want addressed by the seller, so tell your agent and get on with it already.   The faster you do so, the faster you can get to contract signing, and the less chance you have of losing the house.

Many buyers wait for the inspection report to come back in order put together a punch list, itemizing almost every item therein, and asking the seller to resolve them all.  These are usually the buyers who poorly guided, and whose expectations have not been set.  In this competitive market, it is not easy to get a seller to address even a handful of serious issues, and you therefore have to be precise and smart about what you ask for in order to achieve the desired end goal.  Unfortunately, too many buyers go into a home inspection thinking there will be one or two minor things that arise, but the rest of the time will be spent taking measurements and picking out the kids’ bedrooms.  On the other hand, there are some buyers that are properly advised, know that there will be many issues and the seller is not going to rectify every issue on their punch list, but they still need to feel like they got a deal somehow – that they won.  It’s interesting to watch these buyers win their battle but lose the war.  They will present a laundry list of 35 items, 33 of which are quite minor (i.e., chipping paint, creaky floor board, etc).  The seller will then opt to address several minor items that are cost effective to fix and, without fail, ignore the two issues on the list that are major and costly.  At that point, the buyer has very little leverage.  The seller is addressing much more than expected or anticipated.  For the seller it’s a win, of course, because they can skirt having to address the big ticket items and still appear very accommodating.  Interestingly enough, these types of buyers seldom realize that they should have just gone for the two major issues.  They are just so excited to feel like they got the seller over the barrel, taking care of 33 of the 35 items on the list… they WON.  So what if they are left with mold in the attic and a broken well pump, the seller is changing ALL of the kitchen knobs and putting a $2 self closing hinge on the garage door!  Such buyers cannot see the forest for the trees, and the fine art of negotiation is completely lost on them.   The worst case scenario (and I’ve seen this happen often) is where the buyer presents their 35 items from the inspection report to the seller, and rather than respond, the seller calls the back up offer, rattles off the items from the list (or worse, the inspection report itself) you just graciously provided to them, and asks that buyer if they would be willing to waive their inspection and these issues.  The back up offer, recognizing the triviality of the items on the list, and eager to steal the home, may very well do so, and you may then find yourself, and your punch list, unceremoniously kicked to the curb without so much as reimbursement for your efforts.

The takeaway? Be thoughtful about what you wish to negotiate and do not overshoot or you could end up shooting yourself in the foot.  Identify the key issues, big ticket items that would be costly or tremendously inconvenient to resolve on your own, and that are health/safety defects or affect the habitability of the home.  I urge you, for your own sake, let the cosmetic issues go.  If you come across an issue in the home and are uncertain what category it falls under, ask your inspector.  He will be able to offer guidance.  Above all, under NO circumstances should you furnish the seller or listing agent with your inspection report.  Doing so can result in giving leverage to another buyer, and potentially losing the home.  You paid good money for that report.  It is proprietary and belongs to you.  Do not share it with anyone except your own team.

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