Most buyers have an “inspection period” or the right to perform “due diligence” prior to completing a home purchase. If you are spending a lot of money, shouldn't you know what you’re getting?
In Arizona, something doesn’t have to be physically wrong or in disrepair for a buyer to be able to cancel a contract. Buyers can disapprove any aspect of a property as long as they state their disapproval in writing and provide copies of any/all findings and reports of inspections performed. Think: misstated property info, the color of the paint, the neighbor’s affinity to rev up their motorcycle at 6A on Saturdays, …(go anywhere you want with this).
The intended goal of home inspections is to fully understand the risks & benefits of the property you intend to buy so you can opt to:
1. Proceed with the purchase
2. Renegotiate or request repairs
3. Walk (or RUN) from the deal
Some buyers and agents think inspections are a “pass or fail” proposition. They’re not the road test you took to get your drivers’ license. “Pass”= Yay! Buy! OR “Fail”= Boo! Don’t buy! Thinking this way puts buyers at risk of making an uninformed decision.
No one wants bad news, but why let inspectors and/or contractors investigate a property if you didn’t want hear everything about it- good & bad? Don’t you want to know all details to budget your time, money & effort wisely?
You don’t have to wait until after an offer is accepted to start your due diligence either. Do you think buyers have a better chance of having a seller pay to repair the roof of a home they want to buy if they A) tie it to contract acceptance or B) present this request along with a million other little things at the end of inspections? In my 11 years experience representing both buyers’ and sellers’, the answer is A!
Earlier today, I showed a property near Old Town Scottsdale to some clients who love it, but find the patches in the 2nd floor popcorn ceilings very suspect. We’ve already requested permission from the seller to do a roof inspection. An hour later, an out of state buyer tried mightily to convince me that some floor cracks at a home I listed in McCormick Ranch on Friday are structural… I’m 90% they aren’t because I see them frequently at homes in the immediate area where I’ve sold about 5 homes in the last year. I advised him to hire a structural engineer to investigate.
Buying a home to renovate? I advise you confirm your desired work is possible via the municipality, contractors and even your lender (if applicable). If you wanted to add a 2nd story in a neighborhood where the CC&Rs have a deed restriction preventing building 2-story homes, wouldn’t you want to know before you closed?
Some former neighbors had this unfortunate experience. The final outcome was going to war with most of the neighborhood during the variance hearing, then having to swap their 2nd-story plans for digging a basement. Fortunately, this all happened LONG before we got there! Do you think they might have done anything differently if they knew this info BEFORE they completed their sale?
Buy a home with FHA, VA or other government-backed financing may trigger financing “conditions” or requirements be met before the lender will fund the loan. Active termite infestation, a cracked windowpane, and/or a roof leak are a few examples.
You may think, “No big deal!!” But, what if the seller doesn’t have the money or want to do the repair? Now YOU, the buyer, may have to pay for it out of your own pocket or change your financing if you want to complete the sale or not be in breech of contract, risking your earnest deposit.
Don’t laugh, I’ve seen that happen too. Don’t have the money or want to spend any into a house you don’t own? You can cancel in writing before your inspection period ends. But, having this info up front is the difference between an informed “consent” and a bad purchase.
“Due diligence” includes any of the following (and MORE):
• Sending your: general inspector, roofer, plumber, HVAC contractor, landscaper, general contractor, pool contractor, tile contractor, structural engineer to evaluate the property
• Verifying the HOA’s rules & regulations accommodate your plans (to have a child’s playset, keep an RV or trailer on the property, proudly display your seasonal flags from the balcony, or pricey upcoming special assessments, etc.)
• Putting your car(s) in the garage or carport to see if they fit; I know at least one set of buyers who had this unfortunate experience.
• Confirming you get the job, relocation package, etc. before you proceed with the purchase. I’ve seen that happen too.
• Septic tank inspections & certifications
• Verifying property boundaries
• Checking out the neighbors/neighborhood-
o Does the neighbor’s dog bark ALL day long?
o How many cats live next door (remember that blog post from last spring??)?
o Are there some sketchy people that walk around only between the hours of 9P-3A?
o How much road, bus, pedestrian traffic goes by the house each day. Some buyers once spent 2.5 hours at a listing I had in DC Ranch last fall before declaring the wife “just couldn’t handle” the noise. I didn’t blame her one bit.
• Investigating insurance claims declared on the seller’s insurance claim history report or info declared on the seller’s property disclosures. Do you know how much damage a high-pressure water line can cause in a minute, hour, day or month? Sadly, I do first-hand. Several of my clients do too… Then, even if everything is restored to new, do you know the value of having a mold clearance in hand BEFORE the repair work starts? NOT having one can make or break a sale AND a lease.
• Etc… Use your imagination. Just about anything & everything short of damaging the property to inspect some element of the property is included.
Think inspections are for buyers only? Wrong! Sellers can benefit too! I’ve seen buyers under contract find some item that is an “absolute deal-breaker” for them (and other buyers who didn’t pull the trigger). After investigating, the issue became a non-issue!
In June, the buyers who’d prevailed in the multiple offers for the home I’d listed in the Pasadena Historic Neighborhood, canceled their contract. A video of the sewer lines showed tree root “infestation”, but my quite empathetic sellers declined to replace the original cast iron piping that ran through the slab because the invasive solution involved tearing up both bathrooms, which were completely renovated with custom elements 5 years earlier.
Buyer #2, who was the first to write an offer only to be outbid, was thrilled to be under contract merely 1 hour later after the Buyer #1 canceled. Buyer #2 reviewed the inspection reports, video of the lines and considered their own experience with “have trees, will have roots in your sewer lines”. The sale closed 3 weeks later, after the sellers dutifully completed their semi-annual maintenance of drilling out the roots.
I’ve received inspection reports for my listings alleging an issue that was taken completely out of context by the agent/buyer who misread or misinterpreted the info and never bothered to investigate further or clarify what the inspector’s finding. On occasion, the inspector is flat out wrong.
Last spring, I got a Buyer’s Inspection Notice for my listing in 85254 that read “Due to the cantilever pool deck edge cracked (sic)- seller to have pool edge tested for leakage. In the event leak exist- crack to be repaired by the licensed pool/tile contractor.”
Many times I’ve had inspectors say, “[X] is not to code and it MUST be remedied immediately” OR “[X] is at the end of it’s ‘usable life’”. This is common with GFCI outlets, AFCI breakers/outlets, HVAC systems, hot water heaters, etc. A home inspector is a “generalist”. Contractors (licensed or not), are “specialists”- this is their industry, their “bread and butter “ and their livelihood.
Just like there are a few ways to find the sum of 121+51, there is more than one way to address lots of issues., including code issues at a property that may be either grandfathered (i.e. pool fences/gates, etc.), or addressed behind the walls, out of visibility.
Finally, if you’re buying a new home or one newly renovated, don’t skip your inspections and assume everything was completed properly. I’ve also listed and sold homes that had issues after construction that weren’t discovered until way later in the process, especially if purchased directly from the builder and or without a “buyer’s agent”.
A few years later, tenants discovered a leak in the plumbing lines to the tub, a result of the tub being constructed on a base of thin set instead of mortar. Again, never under estimate the importance of having a mold clearance in hand prior to starting any repair work. None of these items were issues for the buyers who purchased the home this past May.
The bottom line: take every opportunity to look the horse in the mouth. This is your chance to know and make changes to decisions that might save you time, money and heartache in the long-term. Every home is unique and has unique challenges- even plan homes constructed by the same builder. Conversely, every buyer has unique likes, dislikes, constraints (financial, physical, etc.) and deal-breakers.
Dig until you are comfortable with the info available to you and confident you can sleep at night after the fact. Your agent, the seller, the lender, etc. shouldn’t discourage you from performing due diligence as long as you aren’t throwing good money away for no reason, damaging the property, putting yourself at risk contractually or legally or significantly inconveniencing the seller.
If you still want more convincing about why you should take every option to inspect a home you plan to buy, feel free to contact me and ask me to share more stories with you. I’ve sold lots of homes and have TONS of them! ;)
Top 5 Features of Metro Phoenix Homes Over $500K
Buyers: What it Really Costs to Buy a Home