May 6, 2010, 5:00 am

What To Check When Selling/Buying a House

by: The Financial Blogger    Category: Properties
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We recently came back from the inspection of our new house. I am very excited as we will be moving in only 6 weeks! Once you have decided after shopping for your house and you have an offer that is accepted, the very last step before signing to buy the property is to get an inspection done.

Are inspectors another way to waste our precious money?

This will be my 3rd house I own and I am still reluctant to use an inspector. Nonetheless, I did it for my last 2 properties. I sometimes feel like having an inspector look at the house is just like paying for an expensive extended warranty. They take about 2 to 3 hours to look around the house, note a handful of things that could be improved and leave you with a report with no accountability. They mention in the report that you must use “experts” to verify each outlined points… $600 for being told that I “might” or might not have problems with my house… Do I really need this?

What an inspector is really useful for

I was actually really happy to have one for my latest house. Not because I doubt there was something wrong (the house was built in 2006) but because I am not a handyman and the inspector was able to give me quick tips on how to really take care of my house.

He pointed a few things that need to be fixed in order to keep my house clean and straight as a nail. I was happy to be able to ask him questions about potential renovations and repairs on the house. He also explained to us how our radiant heated floors work (we have them on all three levels!).

So I think that an inspector is great thing to show you how to take care of your house and to make sure that there are no major problems. For that, I really like having an inspector before I make my purchase.

The inspection is not made for negotiating

Believe it or not but my buyer tried to pinch another 5K off of my price after the inspection! If you have had an inspection before, you know that they always find 10,000 potential problems with your house.

Well the guy took all the  minor defects (such as 1 panel of cracked vinyl, nail holes in my doors (no joke!), a small crack in the joint of my ceramic shower, etc….) and came back to me offering 325K instead of 330K. I was so upset! I just told him to keep shopping for another house if he doesn’t want to pay 330K!

In fact, the only time you can negotiate after an inspection is if you have major defect to repair (like $15,000 to invest in the foundation, change all the windows because the frames are rotten, etc.). So if there is something major that you were not aware before your offer, you can come back. But if it’s not the case, you are not in the offer – counter-offer process anymore, you have to take the house as is.

So overall, having an inspector in your house is a good thing. However, just don’t take everything they say to mess around with they seller 😉

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Comments

Your blog is good and I liked it and I think for many more to learn about finance that you are writing.

I’ve bought 3 properties. The first inspection was useless and the guy actually broke my soon to be toilet tank lid. However, on my next two buys I used a different inspector who was great and I learned a lot. Come property number 4, I’ll likely do the inspection myself as I’ll have years of experience in renovations, property management, landlording etc. In fact I’m thinking of becoming a home inspector. Clearly we could use some good ones.

I’ve definitely renegotiated after inspections (2 of 3 times), due to finding fairly large issues that weren’t apparent upon the first walk through (such as a bad roof, foundation issues). But I agree that nail holes etc. do not justify the additional round of negotiation.

I on my 3rd house too and it can feel at times that an inspector isn’t worth the money. If you have family or friends in the construction, they may be better than an inspector with a check list to let you know the work you will have to do.

Shopping for an inspector is really important if you want your money’s worth. A lot of their books/reports are focused around building codes. It covers such things as slopes for water and so forth. They do look in all the places though such as the attic. Not sure how many home shoppers go in the attic before making an offer.

In reality, putting an inspector clause in the offer is a safety net to turn back if you don’t like something. So you are paying for an ability to get out of the contract. Some people try to leverage it, you can’t blame them though, but you don’t have to agree. It depends on how stress and confident you are.

I did a bridge financing on my last place because I did not want to be in a rush to sell while I was buying. That way you can really make a good decision and not a rushed one.

Cheers!

Really interesting. I will definitely hire a professional inspector!! And try to negociate the price (hahaha just kidding!!)

My friend is buying a new house. The house is currently under construction. He’s not a handy man as well. Is there a good checklist? How to choose your inspector? Is there an home inspector organization? What’s for you the 3 major defects in an home inspection? Thank you.

I don’t think it’s worth it if you are building a new house since there should be a building inspector verifying all the steps of constructions. It depends on the trust and reputation of the contractor too but I am pretty sure the contract is not contingent on an inspection so you could not avoid paying and then walk away. You would have to work with your contractor. Also, note that you should have a warranty 1,2,10 years. At least you do in BC.

The important issues to catch during a home inspection are the costly ones 🙂 Such as foundation, roof, rodent issues (depending on the severity), bad electrical (if bad reno), moisture problems.The costly issues are usually the hidden ones unless there is obvious neglected maintenance.

@ John,

You have pretty good questions 😉 I think The Passive Income Earner answered it pretty well too.

In order to find a good inspector, I suggest you go by referrals (you will surely find someone how has done an inspector recently). This is how we did it.

Thank you PIE and TFB! LIke you said PIE, the contract is not contingent on an inspection. However, in the contract, the new owner has to “approve” the construction and therefore a home inspector is good way to not have any doubts and sign with confidence!

Also, for defects that need to be fixed or repair, will the inspector tell me the estimates of the costs of each?

I don’t want to sound pessimistic. But, what happens with a failed home inspection? And what are potential reasons for a home failing inspection? What to do next to a failed home inspection? Tks

If you’ve got a home inspection clause in your offer, and you aren’t satisfied with the results you can counter offer with a new price, request the problem(s) get fixed, or walk away from the deal. In both my cases I was able to get the price reduced however the problems were not obvious so the owner was either surprised themselves and with the new found info realized the place was worth less, or they were trying to hide it and realized that once the buyer found the problems they wouldn’t pay as much. For something obvious that you should have seen initially looking at the place, I doubt the seller would be willing to adjust the price or fix the problem.

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I’d say do not engage in any major purchase before you buy a new house, especially purchases that could lead you into paying debts (e.g. cars, appliances, jewelry, etc.) Such debts could make it difficult for you to pay off the house you are looking into.

Some of my wishlist when looking for a house include: preferred location, garage, number of bedrooms and bathrooms, and affordability. The internet can offer so many choices when it comes to basically anything–real estate included. Also, I make it a point to attend as much open houses as I can. Usually, a maximum of 5 houses in a day. Apparently, I think the brain can handle that much house details without you getting confused. Of course, it helps loads if you have a pen,a notebook, and a camera with you. 🙂

Don’t be shy to ask the agent questions. He should efficiently answer any queries you might have about the house you’re looking at.

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