A homeowner in Oakland, Calif., recently decided to put his older home on the market. At the recommendation of his real estate agents, he ordered presale inspection reports on the property. The home inspector noticed sloping in the floors and out-of-plumb door frames — signs of settlement, which is not unusual for the area.
The seller informed the home inspector that an engineer had inspected the property when he initially purchased it. The seller, who was then a buyer, had been present at the time of the inspection, which is always a good idea.
The engineer found nothing unusual with the foundation, given its age. The settlement appeared to have occurred long ago and was not indicative of an ongoing problem. Based on this information, the buyer went ahead with the purchase.
Years later when this buyer, now a seller, searched for the engineer’s report to include with his disclosures on the property, he couldn’t find it. He then recalled that because he had been present at the inspection and was pleased with the results, he did not pay the extra fee to have the report put in writing.
This is a common occurrence in the home-buying business. Buyers are encouraged to have a property they are interested in thoroughly inspected before they go ahead with the purchase. The cost of having various inspections done can mount up.
Many buyers stretch financially when they buy, so the temptation is great to skimp on inspection costs. However, if defects are discovered during inspections, you would need written confirmation if you hope to negotiate a concession from the seller.
There are pros and cons to foregoing written inspection reports. One is that it usually costs less. Also, buyers who make an offer in a place like Berkeley, Calif., where multiple offers are still fairly common, are forced to pre-inspect the property so that they can make an offer without including an inspection contingency.
In this case, the buyers might pay for a verbal inspection to keep costs down until they find out if their offer is accepted. If it is, it’s a good idea to pay the extra amount for a written inspection report.
HOUSE HUNTING TIP: A benefit of having written reports on a property you’re buying is that it documents the condition of the property at a point in time. Then when you sell five or 10 years later, you can make this information available to the buyers. This can clear up uncertainty about whether or not an issue is new or was there many years ago and has remain unchanged.
The presale home inspector in the above example recommended in his written report that an engineer look at the foundation. The seller ended up hiring an engineer to do a presale inspection because he had no written record of the report done at the time he purchased.
As a seller, it’s usually in your best interest to order further inspections that are recommended, particularly ones that will be a concern to buyers. This way, you’re in control of who does the inspecting. A buyer can always get a second opinion, but at least you have a report to back up your position if the buyers try to negotiate the price based on inspections.
THE CLOSING: There are times when it makes sense to get verbal opinions. However, if you’re a seller and you’re going to make presale inspection reports available to buyers, they should be written. This way, the opinions on the property’s condition are coming directly from the inspectors and are not just hearsay from you. Note that seller disclosure laws vary from state to state.
Dian Hymer is author of "House Hunting, The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer’s Guide," Chronicle Books.
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