Home Inspections. Are they worth it?

February 5, 2014 in Legal Advice Blog, Real Estate Blog

Home Inspections

Most offers include a home inspection clause.

A Good Home Inspection – Worth its Weight in Gold

A good home inspection can be worth its weight in gold to a buyer, if only because it provides crucial information about the approximate age and condition of things like the roof, the windows and the furnace. Some reports include anticipated replacement costs for such items which permits a buyer to do some helpful budgeting. On some occasions, a home inspector picks up some really serious issues and helps buyers avoid a disaster.

The best home inspection, however, has limitations.

No inspector will comment on what he can’t see because it is closed in. And there are times when additional inspections may be necessary. For instance:

(i) If a house is in a known termite area, for example, you should have a termite inspection as well. Termite damage is very expensive to repair. And even if there is no damage, an inspection will indicate if a house has been properly treated to withstand termites; or

(ii) If a house is on well and septic instead of municipal services, you should have a separate inspection for each of these. In the case of a septic system, a leak or malfunctioning septic tank can create a huge expense and in the case of a well, an inspection can reveal problems with flow rate.

The Seller’s Side

For a Seller, home inspections can be problematic.  Often, a Buyer will try to use the findings of a home inspection to renegotiate an agreed upon sale price downwards. If a problem is significant, this may be warranted.  If not, it is a nuisance.

To minimize the possibility of renegotiation, I suggest the following to Sellers:

(i) Before you list your home for sale, invest in your own inspection report(s). Once informed. you can then choose whether or not there are items you want to deal with yourself. You can also make it available for review by potential Buyers. Once a Buyer is informed as well, it is harder to come back to you for a price reduction. A Buyer may still want to get his/her own inspection report done, but it will still be easier for a Seller to resist a price renegotiation;

(ii) There are different inspection clauses in use today. When you receive an offer, make sure you know exactly what the inspection clause says and what a Buyer’s escape routes are. With the assistance of your realtor or lawyer, you may wish to amend the clause to be more favourable to you;

(iii) If you are aware of an issue with your home, the counsel of perfection is to disclose it to a Buyer and have the Buyer acknowledge and accept it.

The foregoing is intended for information purposes only and is not legal advice.

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