As soon as you accept a buyer’s offer, the important yet stressful period before closing begins. Typically, one of the biggest and final hurdles to finalize a sale is going through a buyer's home inspection.
“Having a home inspection is a key part of the purchase agreement,” said Lynette Arrasmith, an Omaha, Nebraska-based home loan specialist with Churchill Mortgage. “If a buyer chooses to have one, there is an inspection addendum outlining the timing of it, setting benchmarks for when it needs to be completed and when requests for repairs need to be submitted for consideration by the seller.”
Buyers typically schedule the inspection seven to 10 days after the offer has been accepted, so sellers have a few days to prepare.
“The inspection itself typically takes three to four hours,” said June Lu, branch manager and loan officer for Churchill Mortgage based in Renton, Washington. “During this time, the inspector will examine all major systems and components of the home. Buyers often meet the inspector to walk through the property together and discuss any findings in person.”
Why inspections are important to buyer and seller
While inspections are intended to uncover any issues, they also serve as a means of ensuring the home’s value.
“From the seller’s perspective, a home inspection gives them a clear, unbiased report of their home’s condition. This allows them to avoid surprises in the later stages of negotiation,” said Geremey Engle, owner and inspector at Ellingwood Pro Home Inspectors based in Winchester, Virginia.
Buyers and lenders are looking to ensure the home is a sound investment.
“It’s the final hurdle before closing,” said Robert Thompson, a real estate agent with Legacy Group International in Hampton Roads, Virginia.
A prelisting inspection can pre-empt some problems
If you are anxious about the inspection process, you don’t have to wait for a buyer to check on your home. Conducting a pre-listing inspection enables sellers to have greater negotiation power and address any potential issues before they arise.
“We always strongly encourage pre-inspections. It’s the owner’s best chance to help mitigate potential issues upfront,” said Aaron Buchbinder, founder of The Buchbinder Group and Compass real estate agent in Boca Raton, Florida. “When we negotiate the sale, we want the sellers mentally ready, knowing their bottom line when they sign. Without a pre-inspection, unexpected issues could arise later, leading to surprise requests for big repairs or price reductions.”
Having a pre-listing inspection allows sellers to make repairs on their own timeline and budget.
Even with a pre-listing inspection, expect the buyer to request their own inspection. Buyers want to bring in someone they trust to give an unbiased second opinion. It's not personal and is common practice. If you had a pre-listing inspection, a second look is likely nothing to worry about.
Preparing for the buyer's home inspection
If you didn’t do a formal pre-listing inspection, you can still address issues you know of. Fix any and all minor issues like cracked outlets, leaky faucets or gaps in window seals. While you may not notice issues, try to be proactive and view your home from the perspective of an inspector.
"Prior to inspection, I instruct the sellers to conduct a mini walk-through with a contractor, clean up the property, replace filters, test all windows and outlets, and [check] roof and HVAC service," said Branded Wells, CEO of Truecraft Construction in Costa Mesa, California. "The cheapest tool of negotiation the seller will ever have is a clean inspection report."
Another way to prepare is to set aside money for repairs. Having the cash ready can help take the strain off making last-minute repairs.
Here's how sellers can get ready for the buyer's home inspection:
- Make sure there is easy access to the attic, basement, electrical panel, heating and cooling units and water heater
- Fix leaky faucets, running toilets, squeaky doors and burned-out bulbs
- Replace missing outlet covers and tighten loose handrails
- Change filters in the heating and cooling system
- Check smoke detectors and carbon monoxide alarms
- Clean gutters and downspouts
- Repair any visible water damage stains
- Gather material on repairs, maintenance and renovations
- Disclose any existing issues you are aware of
Common issues found during inspections
Inspections could reveal nothing major, but they could also uncover a serious issue with the home, such as foundational problems, which are expensive to repair.
Engle said the most common issues he uncovers during inspections are “roof wear and tear, moisture in basements, [heating and cooling] issues and outdated electrical panels.”
Water damage is a very visible red flag for buyers and inspectors. Even if the leak has been addressed, water damage stains could still spark concern for buyers.
“Buyers get most scared by anything related to water and mold. People fear the unknown cost of fixing severe water damage,” said Andrew Fortune, real estate agent and owner of Great Colorado Homes in Colorado Springs, Colorado. “They also freak out over sewer line issues, which are very common in older parts of town. Foundation problems also create instant panic, even if the cracks are not serious.”
Inspection reports that impact a sale are “almost always electrical or plumbing issues, such as ungrounded or old electrical and old plumbing pipes,” Thompson said.
What happens after the inspection
Next, the inspector will write a report for the buyer who might share it with the sellers, particularly when there is a problem.
“Treat them like an unbiased, professional audit," Engle said. "Fix the easy items beforehand, provide access to everything, and stay open to fair negotiations.”
From there, depending on the issues the report revealed, the buyer might request that you complete recommended repairs.
"The seller should think safety first, fix the items that are safety issues first to avoid any liability," said Paula Camarena, owner of Pillar to Post Home Inspectors in Orange County, California. "Second, fix the bigger ticket items because these items can double in price or credit if you let the buyer decide the estimated cost to repair."
The burden of repairs can greatly vary in price depending on the severity of the issues. If you agree to repairs, don’t wait to complete them because scheduling professional handymen or contractors can take some time.
“The best course of action is to be reasonable and act quickly,” Engle said. “Get comparable quotes from at least three different contractors to give you a ballpark figure in mind. Either schedule the repair yourself ASAP, or offer a credit to the buyer, using your quotes as real-world figures.”
The buyer may use issues uncovered in the inspection as grounds for renegotiation.
“The likelihood of inspection findings leading to renegotiation, or a price reduction, depends heavily on the type of market that we’re in,” Lu said. “In a buyer’s market, renegotiation is very common. Even relatively small issues can lead buyers to request repairs, credits or a price adjustment because sellers have fewer competing offers and more incentive to keep the deal together.”
Generally, buyers and sellers want to reach a compromise so the sale can proceed. While requests for repairs and negotiations can become heated, try to keep emotions out of the conversations.
“Getting stuck negotiating small cosmetic items can derail a deal,” Lu said. “Sellers should focus on addressing items that matter most to buyers and lenders, such as safety issues, functionality and major systems.”