The last few weeks have been filled with activities around selling our existing single family home and downsizing to a smaller townhome. We are undergoing countless tasks to complete before the close of escrow on both properties. I thought for something a little different today, I would discuss the purpose and need for a home inspection and some of the challenges we have faced as sellers.
It is a typical process for homebuyers to hire a couple different inspectors to thoroughly inspect their proposed purchase, before they are fully committed in the escrow process. These inspections are listed as contingencies in the contract with a common period of seven to ten days to be completed. Once that time has passed, unless there are findings in the home inspection reports that are not resolved, the contingency is removed and the contract process continues.
What kinds of home inspections are there?
The most common inspection is a general condition report of the property. This service is provided by a professional that could have an ASHI certification. These inspectors provide an overall report looking at all the major systems. This includes HVAC, plumbing, electrical, and structural aspects to name a few. Depending on the inspector, they can be very good at finding problems and items that are not within current building codes.
Another type of home inspection could be for evidence of pests or termite damage. In the west, these are common inspections that most homebuyers would want to order to receive the report and know if there are any problems.
There are other inspections that I would recommend – based on the particular home and the part of the country you live. For instance, you might want to ensure you are not in a flood plain zone. Alternatively, you might want to hire a surveyor if you have some concerns about property lines and are considering putting in a fence.
Our recent experience with a home inspection
My in-laws purchased a townhome last year in the same complex we are now purchasing. The plan was that we would buy their existing rental townhome from them once our house sold. We quickly found out how non-liquid real estate is and our timing was completely wrong.
At the time, the in-laws used a home inspector that was quite thorough. He uncovered many things in the home that were documented in his home inspection report that the buyers and sellers were not aware. I recommended this inspector to our buyers since he was very good at his work.
Maybe I should have rethought that idea before I made that recommendation.
We felt that our house was in excellent condition. My in-laws owned it for 18 years and we have been here 4 years. Most of the systems were updated in this 1970’s rancher. The only real big project was to remodel the kitchen cabinets and counter tops. We already had the stainless steel appliances; these seem to be the only style that works for people anymore. White appliances would certainly have to be thrown away. 🙂
The home inspection revealed that “our cute baby” was actually a little ugly and not the perfect place that we were once convinced we owned.
A home inspection can provide leverage and negotiation muscle in the deal
We priced our home at a rock bottom price to our buyers. We know them personally and they were very pleased with the price. The price factored in our savings due to not needing to pay sales commission and the possibility of receiving “low-ball” offers. This approach allowed us to take some unknowns out of the transaction for us, since we knew how much we would get for the home and when it would sell. The process was further simplified for me by not needing to move my virtual office and “The Cat” every time a realtor had a warm body that wanted to see our place.
The home inspection report detailed several safety issues with the furnace system, hot water heater, duct venting, plumbing insulation, and the circuit breaker panel to list a few. This gave our buyers an opportunity to negotiate some or all of these items to be resolved or they could walk away from the purchase. Fortunately, they were reasonable and the total cost to us was under $2k along with the many hours I spent with my labor.
For those buyers that like to negotiate, the home inspection report results provide great leverage to insist the buyers resolve the items or they provide a repair allowance at the close of escrow.
The home inspection uncovered work we needed to complete
The inspector keyed in immediately on our hot water heater. Evidently, the new code is that the flame must be at least 18 inches off the ground. I found a plumber to lift the hot water heater up and shorten all of the pipes and exhaust. I purchased a stand from Home Depot that required some assembly, just in case the plumber I scheduled forgot to bring one.
He arrived, took one look at the placement and sheet metal exhaust and said, “this won’t work here”. The hot water heater is in the garage and we determined another possible spot it could go. The problem is it would need to be moved about six feet away. It would require running the cold and hot water lines as well as gas lines to a new spot. He looked at the manufacturer code on the hot water heater and said, “do you really want to move a 15 year old tank at a cost of $500 when you can buy a new one for $1,000 installed?” Evidently, the new hot water heater has the flame at a height that satisfies the code requirements and does not require a stand.
I called the buyer and told them the challenge we faced and they volunteered to contribute $400 toward the cost. They now can enjoy a new 50-gallon hot water heater, a warranty, and years of trouble free use.
Who needs to know what the breakers turn on and off?
The home inspection report stated that we needed to label the circuit breaker panel. After nearly three decades of little information listed on the panel, it was time to make some labels. Dianne and I took this project on ourselves. After about an hour of determining what each circuit breaker controlled, she made some nice labels for the panel. Problem solved!
Time to slither through the crawl space to insulate water pipes
The home inspector stated in his inspection report that the water pipes underneath the home should be insulated to keep from freezing. I can see the argument for insulating, but after 22 years that has not been a problem. The buyer agreed to pay for this item if we would ask the plumber to complete when the water heater issue was being resolved.
On my trip to Home Depot for the water heater stand, I purchased pipe insulation, elbows, T’s, and insulation tape, thinking that maybe I would do this work myself. Hopefully that would show some good will to the buyer and our eagerness to save them money. They immediately thanked me and agreed to pay for the materials with a cost of $100.
There is a section of the home’s crawl space that has plenty of standing headroom. So I thought – heck how hard could this be to insulate the pipes?
After 4 hours of slithering under the house at three different access points, I completed the project. I wore a mask for most of the work, but can still can feel and taste the dirt and dust in my lungs! There are a couple areas of about eight foot in length sections that I could not reach. I was not that much of a contortionist to be able to wiggle into those tight spaces. I took pictures of those areas and the buyer was ok with the results.
The HVAC people installed the furnace and hot water heater exhaust through the fresh air return.
The home inspector pointed out to both the buyers and me a problem with the exhaust from several systems. He started making statements like: “whoever did this should fix it, I can’t believe a licensed contractor did this work, etc.” The heating system was updated about 10 years ago in this house and it appears they took some short cuts.
We were told that we have to frame in a wall around the sheet metal exhaust pipes that ran through the fresh air return just in case there were any leaks. A leak could draw carbon monoxide back into the house through the fresh air return and distribute it to every open vent. Yikes!
Over a three-day period between a drywall person and me, we completed the work, sealed in the exhaust pipe, closed the hallway wall back up, and painted.
Guess what? Our third bedroom is not a bedroom!
Some basic elements qualify a bedroom as being a bedroom. Granted building codes will be different across the country. Generally, the following is needed to classify as a bedroom: a closet, heating, and a window large enough for a person to escape from in the case of fire or an emergency.
In our case, the third bedroom is downstairs next to the garage. We have a nice metal door separating the bedroom from the garage that also has access to the house. This evidently does not qualify since we do not have a hallway separating the bedroom from the garage. ¡Ay, caramba!
We are blessed that our buyers are very understanding. Their future plans are to expand that room into the garage, add a walk-in closet and bathroom. They will then move the garage out further into the large driveway to accommodate the lost space. Problem solved and nothing to do!
I recommend a home inspection
Several other items needed to be resolved; however they were minor in comparison to what I have already mentioned. Both we and the buyers were surprised with what the home inspector found.
The cost of inspections usually range from $300 to $500 for an average size home and can take up to 4 hours on the day the inspector is present. The inspection is most often paid for by the buyer, considered one of those expenses to incur as part of their purchase.
In hindsight, was it a good idea getting the home inspection?
From the buyers perspective – YES. They know what they are buying and were able to get multiple items resolved that would have cost them money later.
From the sellers perspective – YES. We know the buyers personally and felt much better identifying our home’s problems now as opposed to months or years later when they encounter problems. We did have to spend money to resolve the issues – I feel it was worth the cost. The buyers trust us and we want to make sure the home is safe and sound. We want to make sure they are buying a home in excellent condition.
We have been focused heavily on getting the home inspection items completed while also coordinating a move to our next home. In the next week, I will share the challenges we have faced with attempting to do significant remodel work in a limited time. The fun and laughs shall continue!