You found a great home in a fabulous neighborhood and have put in an offer with the seller. A few days go by and the seller agrees to your offer. Great! A home inspection is next and while not a requirement, it is advisable to have one. As the buyer, you want to know that everything is working well in your “new to you” home. How do you know what fixes are mandatory after the home inspection?
The answer is actually, it depends! While some contracts can require home repairs, most do not. However, mortgage lenders and insurance companies can require certain areas to be fixed. Let’s take a look.
When the qualified home inspector arrives on property, he/she has a list of areas that they will inspect. According to ASHI (American Society of Home Inspectors), these areas are the exterior, heating system, HVAC, roof, electrical, plumbing, interior plumbing, roof, attic, insulation, interior components, and foundation/structural components. The inspector has a list to fill out and makes a detailed report for the homeowner 1-3 days later. Unfortunately, the report won’t have cosmetic issues listed as the inspector does not check that area.
Evaluating the Findings of the Home Inspection
After the inspection, the home inspector will give you a detailed report within a few days. Did the home inspector find major repairs or issues? If the report shows there are issues with any of the following areas:
Foundation/structural issues, plumbing, electrical system, bug infestation, mold, HVAC, roofing, or water damage, you should work with your real estate agent to write up a document asking the seller to make these repairs.
Keep in mind that sellers usually will not fix issues that are $100 or less. Take this quote from a licensed home inspector:
A home inspection will always include minor items, maintenance items, and major items. Having a conversation with your inspector and Realtor can help everyone understand what’s an immediate concern before moving into a home.Aaron Shishilla, Florida Licensed Home Inspector
The Seller Should Fix Certain Areas on a Home Inspection
There are no lists that will state the above issues are mandatory home inspection fixes. However, if it is a safety issue, like structural, old electrical system, an infestation of bugs, or something important is not working, etc., the seller should think about fixing these areas.
The seller can’t escape these issues as they will come up again in another inspection. If the seller does not want to make the repairs, he/she may need to lower their asking price. Ultimately in a seller’s market, they may not have to do anything.
Also consider your contract, lending, and insurance requirements. Does the contract have a clause that if there are major issues, the buyer can walk away? Again, consulting an experienced Realtor can help you navigate this process.
Purchase Agreement and Lender Requirements
The purchase agreement between the buyer and seller should state the seller’s responsibilities. The agreement may also state that the seller will pay up to a certain amount in repairs, or if there is a credit to the buyer. If the home is listed as, “As-Is”, then there is no wiggle room for repairs. This is a “take it or leave it” situation.
The lender will have certain requirements for the home, as found in some states. The good news is that the home inspector or Realtor may have referrals for professionals to provide an estimate for the repairs so you can find out how expensive it is.
Insurance Requirements May Dictate Home Inspection Fixes
South Carolina and some other states require certain inspections in order to have insurance. Moreover, these inspections must meet minimum standards to obtain homeowners insurance. Therefore, if your home does not meet minimum insurance standards based on these reports, you will have two options.
Option A: Negotiate with the seller to fix the items and reinspect for the repaired items.
Option B: Work with your insurance company to have temporary coverage (typically 30 days) after closing. You will then have 30 days to bring the home up to minimum insurance standards.
There are various types of insurance inspections and the most common is the four-point inspection. This type of inspection is mostly in southern states and generally required on older homes (over 30 years old). However, some insurance companies might require it on homes even younger than 30 years.
A trustworthy inspection company is essential for peace of mind and that issues will be found during a home inspection. Research, find a company that is licensed and credible and prepare to negotiate the inspector’s findings with the seller. You should have a list of non-negotiables as well.
Do you have questions about a home inspection or an inspection report? Drop us a line below and we are happy to help!