Hey Nerds,
You’ve found your dream home and your awesome real estate agent helped you craft the winning offer. Now what?
Inspect the HELL out of a house
You probably worked into your offer an option period. An option period is a period of time (typically 7-10 days and “purchased” by an option fee due within 3 days of the contract effective date*) where you, the buyer, can have a slew of inspections done on the house and, for any reason, choose to back out of the deal without penalty. It behooves you, the buyer, to use this time wisely and inspect the hell out of the house.
*In the state of Texas
What types of inspections/steps should you undertake?
Great question, nerds. There a variety of “to-do’s” that traditionally fall during an option period, such as a home inspection. Depending on known concerns (say previous foundation repair disclosed by the seller), you may want to have a structural engineer come take a look at the property. From our experience, we would recommend to a friend or family member the following:
- Home Inspection: This one is an obvious choice. A home inspection takes generally 2-3 hours where the home inspector will go through the entire home (every room, crawl space, attic, up on the roof, etc.) and look to see if there are defects or code violations with your home. They take detailed notes and photos throughout the process and compile a report for you. A good home inspector will then walk you through the report to explain what they found and highlight whether an issue is in urgent need of addressing or you can tackle it in the future. The cost of a home inspection varies, but expect to drop $300-500, easily. It will vary depending on the size of the home.
Our home inspector found a MASSIVE issue in the first home we attempted to buy. The home had a Federal Pacific electric panel. Go ahead and click on the linked site for the long story, but summarized these panels can possibly have the breaker not trip. Electricity continues to run, the panel then overheats, and your home may catch on fire. Serious bad news and it can cost upwards of $20,000 to repair. No thank you.
Fun Fact: It’s not uncommon for home inspectors to add in a clause to their contract where if they miss something during their inspection their liability is limited. Often this means they may have to return the fee for the inspection. Read your contract thoroughly to note any included liability clause. If your inspector misses something major and you are out $10,000, that $500 back isn’t going to help. It’s also a good idea to ask your inspector whether they have insurance.
- Termite Inspection: This type of inspection isn’t mandatory, but for some homes it is a good idea. If the seller indicates previous termite damage, you should definitely have this inspection done. Ballpark a cost of $75-$150, the inspector will take a look at the interior and exterior of your home, including crawl spaces, for signs of termite damage. Then they will provide their recommendation for necessary treatments. We backed out of a house once when a termite inspector found extensive previous termite damage that wasn’t disclosed by the seller (among other things they did not disclose).
- Have a Contractor join your inspection: This is NOT your standard process, but we think it’s a vital step to help you gauge the cost of repairs. Our suggestion, line up a general contractor to arrive towards the end of your inspection. When your inspector walks you through his recommended repairs, you can have your contractor provide real time estimates on how much it would cost to make said repair. This gives you a much clearer picture of the cost to fix a home than flying blind. This fee is variable, but do understand that you should probably work with said contractor for the necessary work.
- Structural Engineering Report: A structural engineering report is incredibly valuable if the house/property has past foundation issues. This type of report is NOT cheap. My report cost me almost $600 after I bought the home and discovered my kitchen was sinking lower than the rest of my house. The engineer will come to your home and take level measurements of your home, look at the grade of your land, and may crawl under your home to take a look at your foundation (pier and beam, not slab).
Quick side note: if you ever find you need your foundation repaired, I highly advise hiring your own structural engineer to provide the recommended repairs rather than working with one that is employed by the foundation repair company. You get a non-biased opinion and hopefully avoid unnecessary repairs. - Determine your list of requested repairs: After you have conducted all of your inspections, work up a list with your realtor to submit to the seller. Some items are more necessary than others, such as obvious code violations. We had a seller replace a hollow core door between the garage and interior of the home because it was a code violation. We also requested a seller fix circuits that were double loaded (more on this later). You need to get this list in soon enough for the seller to either agree or counter. If they counter, you want to make sure you have time to review and agree/counter before 5pm on the final day of your option period.
It’s OK to walk away
Remember that if for any reason you feel like you don’t want to take on whatever issues are coming with a house, you absolutely can walk away. You don’t have to give a reason during the option period, but if you are feeling generous you can provide a reason so the seller can work to rectify it before they accept another offer.
As we’ve said before, this is the biggest purchase of your life. If your gut says don’t do it, listen to your gut.
I said yes to the house, now what?
We’ll cover this in more detail on our final post, coming soon to the internet near you, but I wanted to follow up this post with one additional note.
Prior to closing, the buyer has the right to do a walk through of the home to ensure that all agreed upon repairs were completed. I recommend taking a list of the agreed upon repairs with you or a checklist (see below). Couple of things about the walk through:
- Your realtor doesn’t have to join you, but more eyes are better in this situation. We have done a walk through both with and without a realtor with varied results.
- REALLY take a look to see if a repair was made. In our current home, the double loaded circuits were addressed, but not really fixed. The seller’s solution? Just unhook one of the wires that doubled onto the circuit. Unbeknownst to us several outlets throughout the house no longer worked because they weren’t wired to a circuit. We noticed after closing and the seller refused to fix it. She did offer we could “reach out to her electrician and see if he’s fix it.” Nope. Not going to your guy who thought that was an acceptable fix. We hired our own realtor.
- If you do notice something is not fixed, notify your realtor so they can contact the seller’s agent immediately.
- Here’s a great checklist of items you should check during your walk through.
Like I said, our fifth and final post on homeownership will cover what to expect when closing on your home. We’ll also cover tips on what to do immediately after joining the ranks of home owners.
Until then, stay masked up and safe my nerds.
Cheers,
Head Nerd