Beyond state mandated sellers property disclosures, and the home inspection report, buyers can find out a home's history of property damage by purchasing a Home Seller's Disclosure Report report from the Comprehensive Loss Underwriting Exchange (CLUE).
Most real estate purchase contracts will protect the buyer by adding an inspection contingency that allows the buyers to seek further concessions from the seller should undisclosed major defects be found, or else to withdraw from the contract altogether. However, the terms of the contingency also shields the seller from the often frivolous demands of the buyer to make numerous minor repairs.
For instance, the presence of a couple of ungrounded electrical outlets may only cost a few dollars to replace. The $500 contingency level is not met, and the buyer has no contractual right to ask to have them updated or withdraw from the contract. However, a rusted or 'piggy-backed' breaker box revealed during an inspection, could cost $1,000 or more to repair. Since the repair is more than $500, the inspection contingency gives the buyer the right to ask the seller to remedy the problem or risk your withdrawal.
However, there is an another element of the contingency that must be considered - that of 'disclosure.' If the seller disclosed the breaker box problem before you made the offer, then your purchase offer should have taken the repair into consideration. The inspection of the box is moot because you already knew about the problem and were told it would have to be repaired even before you made the offer.
Similarly, the home inspector points out that the roof shingles on a one story home should be replaced immediately because they are badly curled and disintegrating. The seller may argue successfully that the condition of the roof was obvious to anyone making an offer and was already discounted in the agreed upon purchase price.
However, if the the rusted breaker box problem was revealed only as a result of the home inspection, or the roof is on a two story home and the condition not readily apparent from the ground, the inspection contingency should allow you to notify the seller of the problem within a stated time period and negotiate a remedy to fix the problem. Since your offer was based on these items being sound, further negotiation may be in order to remedy the situation. The seller may decide to pay to fix the problem before closing, or simply reduce the selling price by an agreed amount. You could even decide to share the cost of the repair.
It should be pointed out here, that the seller is under no contractual obligation to repair anything - and could say that the home is being sold 'as is.' If you really want the home, you will have to accept it 'as is.' However, if your contract has an undisclosed repair contingency and the cost of the undisclosed repair is more than the contingency amount specified (in our example $500), most contracts will allow you to withdraw and take your earnest money with you, should the seller refuse to negotiate a repair to your satisfaction.
Note, however, that few contracts are ever worded to allow you to withdraw from the contract unilaterally, without giving the seller the opportunity to make the repairs; or to change your mind about buying the home when the seller is willing to make the repair. To do so could put your earnest money in jeopardy. Consult with an attorney before you make any decision concerning a withdrawal from your contract.
No single issue will cause more consternation among the parties in a real estate contract than the home inspection. In recent years it has come to be known as 'round two' of negotiations and the inspection report a 'wish list' for buyers. The home inspector, in a natural effort to flaunt expertise, may point out many things in the '50s home you're purchasing, that would, in fact, be code violations if the home were built today. That does not mean that the home is unsafe. If that were the case, all the homes built in the '50s would have burned or toppled to the ground long ago. In fact it's been shown the the old 'knob and tube" electrical wiring of the early 20th century is actually safer in terms of short circuits than many modern day systems.
In short, the seller, in most cases, has no responsibility to 'bring the home up to code.' If the furnace is older, but still functions - it's considered to be in good 'working' condition and the seller has no obligation to replace it. An older furnace should have been discounted in your original offer. The same is true for older appliances, or an older garage door opener without a laser 'trip beam.'
Let your REALTOR be your guide. S/he knows what inspection issues are important to the health and safety of your family and how to negotiate for their repair without killing the deal.
The American Society of Home Inspectors (ASHI) and The National Association of Certified Home Inspectors (NACHI) have developed formal inspection guidelines and a professional code of ethics for its members. Membership to ASHI or NACHI is not automatic; proven field experience and technical knowledge of structures and their various systems and appliances are a prerequisite. Being certified by ASHI or NACHI or both does not guarantee a quality inspection, but it certainly should be a minimum prerequisite.
Be wary of inspectors that tell you they also do abatement, such as for radon gas, mold, lead based paint, foundation or furnace repair, or roofing. They could just be looking for another way to get into your pocket. Also, steer clear of part-timers for obvious reasons.
Home Inspectors in Ohio do not yet have to be licensed by the state, although some progress has been made in that direction. Until then, if you find an inspector on your own, ask a full time real estate professional in your area for his or her opinion of the inspector's past performance before you hire one. REALTORS do a pretty good job of weeding out the riff-raff in the market place. It's easy to become a home inspector, but it's difficult to do the job correctly.
Rates for the service vary greatly. Many inspectors charge about $250 - $400 for an average two-story home - but costs will go up with the scope of the inspection.
RE/MAX Valley Real Estate recommends completing a home inspection in any home purchase, new or old. The job of a good home inspector is not just to uncover current problems, but also to instruct homeowners on how to avoid potential trouble, or at least make them aware of those things that will eventually wear out and become problematic. As you go through the home, a good inspector will give you tips on maintenance and proper care of your mechanical systems, tips on how to avoid such future bugbears as water infiltration and mold, how to make your HVAC system work more efficiently summer and winter, and finally, list indicators that may point to impending difficulties.
More importantly, just because the home is new doesn't mean an inspector will not find problems. Remember, no matter how well respected the builder may be, he hires a lot of work to be done by subcontractors who can't be watched or checked 100% of the time. It's not at all uncommon to find toilets that are not securely bolted to the floor, bathroom and kitchen vents with unattached ducts, gas or air conditioning leaks, cabinet doors that don't align evenly, loose shower heads, garage doors that don't close properly, and . . . well, you get the idea. Houses are complicated, and it's a safe bet to say the perfect house has yet to be built. Because your inspector finds some problems does not mean your contractor did a lousy job. Judge your contractor on how quickly and how well he responds to the issues presented.
Finally, be sure to ask the builder to provide you with copies of the various inspection reports that were required on the property as per local building permits, the architectural plans, and land surveys. Give these to your inspector to review. All these will help him do his job of informing you of the condition of your home, and what future difficulties you might encounter.
Although not always possible, the pre-closing inspection should take place after the sellers have vacated the premises, but before you close on the property. This should take place within a 24 hours period before settlement.
By inspecting the property, you're protecting yourself and your property from sellers who knowingly or sometimes unwittingly fail to live up to the letter of the contract. The pre-closing walk-through offers some insurance that the sellers have abided by the conditions written into the agreement. If your walk-through determines that they haven't, you still have enough time to take action and demand fair compensation before you release the funds to buy the home.
What should your walk-through look for? Well, make sure everything is as it was since the last time you inspected the property (probably at the formal home inspection). Make sure nothing has been damaged as a result of the move-out; look to see that the agreed upon fixtures are still in place and operating as they were. Also look for possible undisclosed material defects (foundation cracks, mold, etc.) that may have been hidden from the prying eyes of your home inspector when all the seller's belongings were still in the home.
It only makes sense to scrutinize, and then thoroughly scrutinize again, the largest purchase you will probably ever make.