Helping the seller through the home inspection process...

You’ve accepted an offer on your house. Great! Now what? 

In my area (Southeastern Michigan), one of the first things that will usually follow the acceptance of an offer is the home inspection. In almost all cases the home inspection will precede the mortgage appraisal.

For many sellers, both the home inspection and the appraisal are “hold your breath and hope” kinds of things. They really don’t have any idea about the things in their home that might be found in an inspection or what the appraiser might consider when doing the appraisal. Nether Inspections or appraisals need to be traumatic and there are things that the homeowner can do to assist in both. I’ll focus upon the home inspection in this post.

For many it’s probably been years since they were the least bit concerned about things on the roof or in the basement; but now they are. Most sellers probably are already aware of many of the small things that will be found; they just never got around to fixing them until now. It’s usually too late to do anything about things that you may have been neglecting for a long time when you get to this point; however, there are things that the seller can do to at least accommodate the processes and perhaps shed a better light upon the house.

Most Realtors will advise the homeowner not to be present while the inspection is going on. That’s good advice. The homeowner has already fulfilled his/her duty of sharing the pertinent information about the property when they filled out the Seller’s Disclosure for the property. If the seller sticks around there is a tendency to follow the inspector around trying to point out all of the good things and trying to explain some of the bad things that he might find. It can really slow the process down and be distracting to the inspector, not to mention perhaps being uncomfortable for the buyer. The home inspection is supposed to be a time when the buyer finds out about the house by having open conversations about what the inspector finds. That is not easy or comfortable to do if the seller is hovering around during the inspection.

Sellers who walk around with the buyer and inspector during the inspection have the opportunity to (the listing agent might say danger of) blurt out even more than was required by the Seller’s Disclosure. Sometimes those unsolicited little extra bits of information about the house can expose something that can queer the deal.  A well-meaning seller who might share an innocent story about the rumors when he/she bought the house that it was haunted. While he/she might laughingly dismiss that rumor, some buyers might not and could be frightened off by even the rumor of a haunting. Stranger things have happened.

There is no way around the fact that a home inspection is a very intrusive event. The inspector needs to go places and do things that you might feel are a bit of an invasion of your privacy and are not comfortable with; but, the inspection is not being done for your comfort, but for the comfort of the buyer. The inspector is not going to look through your chest  of drawers or your medicine cabinet, but he will be going places where no other guest in your house has likely ever been.

So, what should the seller do to get the house ready, so that the inspection goes smoothly? For one, the seller needs to understand the inspection process and what things and areas of the house the inspector needs to have access to, in order to do a thorough inspection. Here are just a few things to be aware of:

• Most inspectors will start outside first. If there are areas like crawl spaces that they may

need to access those should be cleared of any obstructions including snow. If there are sheds or other storage areas that may need to be inspected, leave them open or provide keys for the inspection. The inspector will try all exterior faucets unless they are obviously winterized. Make sure that they are all accessible.

• The inspector will need to get on the roof (assuming that it is not snow covered) and should be given any instructions needed about where he can and should not place the ladder (think flower beds or other areas that a ladder might damage) to access the roof. Also, if the homeowner is aware of any soft spots on the roof that should be avoided, he should forewarn the inspector. 

• Inside, the inspector will need access to all of the attic areas that provide for access. Attic scuttles are often located in closets and the seller should remove all items from the closet that has the scuttle in the ceiling. It is likely that some insulation will fall out of the scuttle when it is opened and they don’t want that getting all over their stuff. If there is more than one scuttle, the sellers will need to clear them all for access and to avoid getting insulation droppings on their personal items. If the scuttles are sealed, the inspector will need to cut that seal and it is the seller’s responsibility to reseal it, not the inspector.

• A good inspector will test to see if all of the functions of the appliances that are staying with the house are working. That will mean cycling the dishwasher all the way through and running all of the burners and oven of the stove. For the homeowner that means making sure that the oven is unloaded and that the dishwasher is ready with a load of dishes (with detergent), if they want to make use of that cycle.  He/she will run the garbage disposal and test any other appliances that are staying – trash compactor, microwave, etc. If the washer and dryer are staying the inspector may put them through a full cycle too, it test their conditions.

• The inspector will also want to fill the bathtub(s) and run it if it is a jetted tub or just fill and drain it if it is a regular soaker tub. Showers will be run also. All of the sinks and other faucets will also be run to test the plumbing for both fill and empty rates. All toilets will be flushed. A secondary reason for all of this water being run is to test the septic system, if the house is on a septic, to see how it handles a big water load.

• The inspector will need to run the furnace and the air conditioning (assuming that the

weather permits) and will measure for efficiency of both. He will also pull the furnace filter to check its condition and open the humidifier to see if it has build-ups of deposits. The furnace heat exchanger will be tested for any evidence of carbon monoxide, which would indicate a cracked heat exchanger that is letting in combustion gases to be circulated into the house (a bad thing). The seller should make sure that there is ready access to the furnace on all asides. The inspector will also look at the hot water heater and may test its pressure relief value and its drain faucet. Make sure that he can get to those, too. He will also test all of the joints on the gas piping leading to the furnace and water heater for any leaks.  If there is a water softener the inspector may cycle it to test that it is operating properly, so make sure that there is salt in the softener salt tank. If the house is on a well the inspector will test the pressure tank and force the well to cycle a few times by running water in the house (that’s another reason why all of those tubs and sinks were being filled).

• The inspector will survey the walls and ceilings from the basement to the top floor, looking for any evidence of water intrusion. If the seller knows about something that will show up, he should share that information and what was done about the leak that caused the damage. A short written explanation can save everyone lots of time. Basement walls and floors may have cracks in them and the inspector will try to determine if they are normal settling cracks or an indication of foundation issues and if there are any accompanying water intrusion issues.

• The inspector will be opening the electrical panel to look at the wiring. He will be looking

for any circuit breakers that have been doubled up (two sets of circuit wires run to a single breaker), any mismatched breakers with wire sizes that are not correct for the break amperage and in general how the box is wired (Professionally or DIY), as well as checking for any overloaded circuits, usually with a thermal hot spot detector.  The inspector will have also been looking for Ground Fault Circuit Interrupter (GFCI) plugs or circuits where they are required, in the kitchen, baths, basement and garage. If there are circuits that are protected by GFCI breakers in the circuit box the homeowner should label those both in the box and at the outlets.

• Some other tips or advice – 

• Leave notes or write-ups about anything that you feel may need to be explained –a water spot on the ceiling, missing or cracked wall or floor tiles or a mismatched door or cover on an appliance.
• Leave out any owner’s manuals that you thing might be helpful for eh inspector 
• Take your pets with you (or cage them) when you leave, unless they are fish or birds.
• If there have been recent repairs or replacement of any major items (roof, windows, furnace, water heater, etc.) in the last few years, leave out paperwork and a note for those, too.

Understand that the inspector will be trying his best not to make any messes or to break anything, but things can happen during the process. Most inspectors are insured and bonded; however, they are not responsible for accidents that happen during the inspection. Accidental damage would have to be covered under the home owner’s home insurance policy. The inspector will try to leave things as he found them, but sometimes something will not be reset to the original state. Don’t get upset. It’s just part of the process that you need to get through in order to sell the house. Just deal with it and move on.

In general, Purchase Agreements are written with provisions for feedback about anything that is found to be unsatisfactory from the inspection to be transmitted to the seller in writing within 1-2 days. The key with that is not to get offended or defensive. The inspector didn’t make those things up. They exist and need to be dealt with. I some cases the inspector will probably be pointing out things that are dangerous to the seller’s family as well and that of the buyer, such as missing switch or plug plates, bare or dangling wires or maybe a stairway without a handrail; so, the inspector should be thanked and not denigrated for reporting those items. 

If there are no big, show-stopper issues reported that cause the buyer to want to back out, everything else is negotiable; so, the seller should be prepared to negotiate with the buyer on which items they will fix and which items they’d rather not deal with and might want to cover with an offer of a sale price concession. Any negotiation that affects the sale price should take place, if possible, before the appraisal, since it will lower the sale price and may make it easier for the house to appraise at the sale price.

Should you have a home inspection done before you list your home?

I suspect that this might be a topic of some controversy amongst Realtors®. Advising a homeowner who is listing his home to spend the $300-400 to get a home inspection up front is a tough sell and may slow things down, at least at the front-end. Some homeowners might also retort that what you don’t know, you don’t have to disclose about the house. While that may be true, it is also a bad practice that will usually come back to bite that homeowner. The more you know (and can honestly disclose up front) the better off you are likely to be in the long run. You can also make the repairs that are needed or remediate the issues that will be found later by the Buyer’s inspector at a panic-free pace.

Most homeowners make honest disclosures about what they do know about the house. Many just don’t know that there may be mold in the attic or that some component of the infrastructure has failed. If they did, they would probably have done something about it. In many areas Radon is a common issue, but few homeowners have ever had a Radon check done on their house. Homes that are on wells and septic systems also may be harboring problems that the homeowner is just not aware of or has gotten used to living with, such as failed bladder tanks on the well or a marginal or failed septic field.

What the home inspector will find are all of the things that go beyond the obvious things that the homeowner can see. The roof with missing shingles or that needs replacing may be obvious to the homeowner from the ground, but perhaps they don’t see the deterioration in the valleys or the flashing around the chimney that needs to be redone. They may not be able to spot all of the wood rot that has occurred, because they don’t get up and walk around on the roof like the inspector does.

Many other things that a home inspector might find are relatively easy and inexpensive to fix and getting them done ahead of listing will mean that they don’t become distractions for would-be buyers. Buyers make lists (mental or otherwise) of the things that they notice and each item on that list is something that they may take a little off the offer price because they’ll have to fix it. Certainly when they get their own inspection report all of the major items become negotiation points for repair or concessions.

You can get some good advice from your Realtor, if they’ve done a good job of walking through your home with you to point out the things that they see that need work; however, they are not home inspectors and won’t be climbing on the roof or looking into the attic space. The Realtor is more concerned with clutter and cleanliness and obvious minor condition issues, like missing plug or switch plates or paint that needs a touch-up.

A good home inspection will uncover the major things that the homeowner may not be aware of and equip the homeowner with a good to-do list to get the house in shape for the market or at least a good idea of the points of possible concessions that he/she will have to negotiate with the buyer. It may also help the seller in setting a more realistic sale price for the house.

So, is investing $300-400 at the front end a good idea? It does allow a homeowner to react to a major issue without being under the gun of having to make a big decision on a repair or concession while under the gun of a deal on the table. It give the homeowner time to call and get quotes from several companies that might do the work, rather than just taking the first bid so that the deal can move forward. Yes, it might require disclosure on the Seller’s Disclosure form; however, that same form has space to explain what was done to fix the issue, so that is out on the table, too. If the issue is one that might require some negotiation with the buyer over splitting the cost of the repair, it is also good to have 2-3 quotes for the work in-hand, so that the seller knows what he/she is negotiating. That investment at the front end may be one of wisest things you do to get ready for listing your home.

Inspecting foreclosure homes in winter…

It is much more important when buying a foreclosure home to get a good inspection. That is because so many of them have been sitting empty for so long that all of the systems in the house have likely deteriorated some. If they’ve been left un-winterized through a winter, you can just about guarantee that there are busted pipes in the house somewhere. Even the structure, if left unheated through the cold weather, starts to deteriorate due to the extremes of expansion and contractions that it goes through. Tape pops along wallboard seams are almost always evident in those homes. Leaks around skylights and chimneys are also common, some of them again due to the extreme contractions of a frozen house.

One of the challenges with many foreclosure houses is getting all of the utilities turned back on for the inspection. The more enlightened of the banks and REO management companies will help with that; however, most will just tell you that it is your responsibility, since it has to be billed to your name, if there is a charge involved. Get out in the country and the issues become larger. Almost all country settings use well and septic systems. Wells can’t be tested without power and just the act of testing them de-winterizes the house. Things like water heaters and furnaces/boilers can’t be tested without power and gas – many times LP gas, which may require a tank fill (something that the banks don’t want to do).

While we read about thieves breaking in and making off with wiring and copper piping in urban areas, it is also not uncommon to find the same problem out in the country, especially in very secluded settings. I can’t tell you how many cold, dark houses that I’ve showed recently out in the country, several with missing plumbing and wiring. Once the wiring is messed up or the power cut off, it is only a matter of time before water issue start cropping up in the basement and mold follows the water into the house. I’ve shown numerous homes that looked great on the entry level, but which were mold filled in the basements. Another issue that will soon face us is snow cover. The snow looks pretty, but it can hide a multitude of sins on a property and you just won’t be able to see what you’ve bought until spring.

Truthfully, the issues are so much more difficult in the winter that I would strongly advise against even considering a foreclosed house that you cannot get completely de-winterized and powered up for the inspection. I cannot calculate the increased risk that would be involved. I generally tell my clients that they should just figure that anything they can’t properly inspect doesn’t work and will need replacing AND that they should expect leaks all over the house when they finally get the water system pressurized. Some deals are likely just too good to pass up and those risks are worth taking, but those are generally investor deals, where the investor has a whole crew ready to take on the challenges that they find. Most home buyers don’t have that support system or the money to take on the risks. My rule of thumb is, if you can’t inspect it – WALK AWAY!

What would the inspector find at your house?

I spent most of Friday night (‘til 10 PM) at a home inspection. This was on a fairly new and house – built in 1998 – that, while not really what you might call an upscale house, it is priced over $300,000; so, one would expect it to be nice and in good condition. In general it was, although the inspector found at lease 5-6 things that need immediate attention and a list of 10-15 maintenance items that the new owner should get to sometime soon. As I was whiling away the hours; I asked my buyer, who was there observing and learning about the house, “What would the inspector find at your house?”

That’s an interesting question that all homeowners should ask themselves from time-to-time, even if they aren’t contemplating selling anytime soon. Answering that question honestly would likely result in a good long To-Do list for yourself. Good inspectors, like we had that night will take 3-4 hours to do an inspection, starting on the roof and working their way down to the basement. Finding a roof with absolutely no issues would be rare, with missing or badly installed flashing or drip molding being the most common, followed by poorly installed valleys or just plain worn out or missing shingles. Poor water management, such as gutters without proper length downspout runoffs are a common exterior issue, as is rotted wood and improper or missing caulking around doors and windows. These days, it’s not uncommon to see pieces of the vinyl siding that are loose or separated – that’s easy to fix.

Inside, the inspectors always look for any evidence of water intrusion, usually spotted due to discolored paint. They look for proper polarity and grounding of electrical outlets, leaks in any plumbing, missing or moldy grout around tubs and showers, proper left-right installation of the hot and cold water in sinks and tubs. Many inspectors check all appliances for proper operation, but some refuse to do that. Inoperable garbage disposals and sump pumps are common finds in even newer houses. They will check the water softener and water heater and cycle the heating and cooling units (unless it’s winter, when they can’t run the AC). It’s not unusual to find inoperative humidifiers or at least humidifiers with solidly caked pads that need to be changed. Furnace filters are examined, too and the furnace and hot water heaters both checked for gas leaks. Furnaces are checked for any evidence of cracks in the heat exchangers, which can let deadly carbon monoxide get into the heating system.

The inspector will likely open and close all windows and doors to check for proper operation and note any that have broken seals (foggy glass). A good inspector will crawl around in your attic to see if there are any issues there – water intrusion, mold, evidence of pests making a home there – and to see that it is properly ventilated. It is not uncommon to find that the well-meaning homeowner has blown in lots of extra insulation and covered over the access for air from the eaves vents. Then there are the handy home owners who finished their own basements. That normally provides a host of issues that need to be resolved, since most homeowners don’t understand or follow all of the local building codes. All electrical plugs in the bath and kitchen and in the garage are supposed to be ground fault interrupt (GFI) types and the inspector will check that (you can buy a little polarity and GFI tester at the hardware store for under $10)

The inspector that I use most often is very thorough and the buyers usually end up really appreciating the detailed understanding that they get out of the process. He told us that night that, in over 3,000 inspections that he has done, he has never found a perfect home. He said that only 3-4 homes that he can recall came close to having zero defects, even though many were new-builds. So, as an exercise in keeping your home up to snuff and ready to sell someday, walk around your house with a pad an pen and take note of the things that an inspector might find in your homes that need work. Then, get to work!

Amateur Hour in Lansing Again...

Well, I see that our states amateur lawmakers are at it again, trying to save us from ourselves and screwing things up in the process. An article that I read related to a bill in our legislature that actually started out fine, but which has now had an amendment attached by a lawmaker who doesn't understand what he's doing and has effectively messed up the intent of the bill.

The bill was one to require some formal training and licensing for home inspectors in Michigan - those folks that we all hire to take a look at a house that we are trying to buy. I certainly always recommend getting a good home inspection, especially for those trying to buy a foreclosed home, since the banks know nothing about the property and usually tell you that in 20-30 pages of legalise. Right now, home inspectors have no regulation, no required training and no license requirement. If I wanted to, I could have cards printed up that say Norm's Home Inspections and be in the business right away. That's probably not a good thing; so, the original intent of this bill, to set some training and licensing requirements was good.

What happened is that some obscure lawmaker added his own amendment to the bill at it's second reading. His amendment states that the home inspector may be held liable for any defects that are missed in the inspection and subsequent report. The amendment doesn't put a dollar or time limit on that liability. Currently, the normal recourse available to the buyer of an inspection service is to sue to get back his/her inspection fee, which is generally in the $300-500 range. There is no provision for holding the inspector liable for anything that he/she may miss, even if that turns out to be a significant and costly issue.

Why, you might ask, is this bill, as currentlky written, a bad thing? Well for one, the only way that home inspectors could stay in business with this level of liability would be to get liability insurance (and quite a bit at that), which would drive up the cost of inspections, perhaps putting them out of reach for the common buyer. Secondly, current home inspections are non-invasive and non-destructive. The inspector can't look behind the drywall without poking a hole in it, but that's where the hidden mold might be that this stupid law would hold the inspector liable for. There are all sorts of places in a home that the inspectors can't get to - sealed up attic or crawl spaces, finished walls in a basement and others. Either the inspector has to poke holes in the walls to get to those spaces or just hope that nothing is back there that might crop up later (I smell more insurance, if that is the case).

Another consequence might be creation of an environment of fear, the same as what has happened in the health care industry. Because of fears of liability, doctors order tons of tests, many unneeded, just to cover their bases (and whatever else needs covering). That drives up the cost of health care. Home inspectors could start requiring that home buyers run all of the tests - mold, infestation, radon and others - just to make sure that nothing is missed.

So, I guess we'll see if sanity prevails and someone removes this bit of stupidity from what otherwise was going to be a good law to require more training and accountability (through licensing) for home inspectors in Michigan. The various home inspection associations were for the original bill, but now they are fighting this stupid amendment. Perhaps, if we are to continue with a term-limited amateur legislature, we should have some rules about a minimum level of intelligence that would be required to become a legislator.

Ignorance is not bliss

Is ignorance really bliss?

I often advise clients to think about having a home inspection done as a part of getting their home ready for market. Most don’t want to pay for that (usually $250-400) and prefer to remain blissfully ignorant of any problems or issues that their home may have. That is a false savings and akin to putting your head in the sand when a treat arises.

The fact is that you don’t want to wait until you have that live buyer on the hook to find out that there is a mold problem in the basement or that your furnace has a cracked heat exchanger that is sending carbon monoxide into the house. What happens when you wait is that some inspector, who may or may not have good people skills with the buyer, will find the problem and then may scare the heck out of your buyer. I’ve seen buyers walk out at the inspection and immediately demand that the deal be terminated, just because a home inspector poorly handled some issue that was easilky remedied.

The other potential benefit of getting a home inspection ahead of the listing is that it can provide you with a list of things that the buyers may ask for and give you time to seek pricing information. If your roof needs replacing soon, a buyer may ask for an allowance. If you know about that as a potential issue ahead, you can get quotes and know what to offer for a concession. The same is true of things like replacing an older furnace or hot water heater. The more you know about things ahead,. The better you can be prepared to negotiate about them later. You can use the quotes that you get as supporting evidence for your concession offer.

There is an argument that some have put forth (sort of the real ignorance is bliss argument) that finding out bad things about your home will mean that you must disclose them. That is true; however, this is another case where you can then be prepared to discuss what you’re doing, or are willing to concede, to fix those problems. If you find mold or radon in your home in an inspection, you need to act on remediation of those problems. You can’t ignore them; but, at least you can get quotes and get the problems fixed at your pace, rather than I the midst of negotiating a sale.

So, bite the bullet and get an inspection done as part of your listing preparation. Take the inspection results and make a “to-do” list from it. Some things you just need to go ahead and get done. Other things you may choose to just get job quotes from 2-3 tradesmen to have for negotiating purposes. You can offer the buyers a copy of your inspection, but most will likely still want their own inspector to look again. Don’t be offended. Be confident that you’re not going to get surprised and that you’re ready to have an informed conversation about any concessions that may be requested, based upon inspection results.