Property Inspections: What Buyers and Sellers Should Both Know
Property Inspections: What Buyers and Sellers Should Both Know
Pretty much every property that I have helped a client buy or sell has included property inspections. Unless it is new construction, property inspections will almost always uncover some issues.
One of the questions I get asked most is this: what will the seller take responsibility to fix and what am I supposed to accept as a buyer?
Of course, there is no simple answer, and every situation will be different. Does the seller have the money to do repairs? Are they desperate enough to do the repairs to make the deal go through? Are the necessary repairs deal-breakers for the buyer?
In general, common maintenance items will usually not be covered by the seller (i.e. burnt out lightbulbs, chipped paint, and dirty carpets.) For the most part, these items are part of owning a home, and you would have likely seen the condition of these items before you offered, so you should have taken them into consideration.
What about appliances that are on their last legs? If they are currently working, most sellers will not replace them for you. This happens a lot with water heaters. They may only be designed to last six years, but they could potentially last over 10. Who knows how many miles are left on a water heater? Believe me, I’ve tried many times to get an old water heater paid for by the sellers. It almost never works. Why would you get money to replace something that works? The same goes for other old appliances. Chances are, you saw those appliances before you offered. If they work, you couldn’t have expected much more than that when you set your price on the offer.
Other items such as asbestos and electrical problems are more serious. They require qualified professionals to come in and fix. These are hardly issues that you would have expected when you made the offer (unless they were disclosed by the seller, of course) and if they are serious enough issues, should be rectified by the seller.
Another question I get asked a lot is whether the seller should simply give money back to the buyer upon completion for these items, or if the seller should agree to fix the items prior to the completion date. The answer is a combination of both. Ideally, you would have the seller actually fix these items for you, the reason being is the risk of a higher cost issue than thought. I would rather have the seller take the risk of getting rid of asbestos or aluminum wiring in case the cost balloons more than expected.
But what happens if the seller doesn’t get the repairs done before completion? That’s where the holdback comes in. By holding back a portion of the purchase price (say $5,000), until the work is done, it ensures the seller gets the work done fast and right. If there is no monetary incentive for the seller to fix the issues, why would they? Are you really going to take a seller to court (and pay tons of legal fees) to recoup a few hundred bucks? Probably not. By having the holdback clause, you know that you will be compensated for the repairs if they aren’t done.
In the end, every case is different. What is important is to have a REALTOR® that has dealt with these kinds of issues time and time again to know what works and what doesn’t. Contact us today to find out more!
– Tony Zarsadias*
The Condo Group Real Estate, reimagined as Island Realm Real Estate, Ltd.
*Personal Real Estate Corporation
