Real Estate News with Terri Taydus, AHWD, CNA, CRS, GRI

Home Inspections in Today's Competitive Market

July 16th, 2015 12:50 PM by Taydus Taydus, AHWD, CNE, CRS, GRI



If you are currently trying to purchase a home in Boulder County CO, you know oh too well that it is a challenging market out there!  Good homes come and go quickly, often with multiple offers.  You find yourself scrambling to view desired properties within the windows of availability set by the seller.  You then quickly brainstorm to pull an offer together with your buyer’s agent so you can submit it by the deadline that the seller has set to review all offers.  You start to feel like it’s crazy that you are begging someone to take your hundreds of thousands of dollars to purchase their home!


But, this is the nature of the real estate market today in Boulder County. 

The good news is that at this point in time, there is no end in sight.  So if you are fortunate enough to work with a good buyer’s agent and close on a home in the area, the likelihood of you riding the wave of rapidly increasing home values, and benefiting from the almost instant equity in your new home, then the current market works greatly to your advantage.

But what does it mean once your offer is accepted and you are actually under contract?  Can you exhale and assume that you are good to go until the day you close on your new home?  Not quite. You still have multiple buyer contingencies in your purchase contract to move past.  For the sake of this blog, we are going to focus on the home inspection contingencies.

In order to be more competitive many buyers are waiving either their Inspection Resolution contingency, their Inspection Objection contingency, or both.  I typically never suggest waiving the Inspection Objection contingency (unless you are VERY confident in the condition of the home and are qualified to make such an assessment). However by waiving the Inspection Resolution contingency, it gives the buyer a chance to sort of operate on a “pass / fail” in regards to the home inspection.   This gives the buyer the right to have a home inspection, then based on the results of the home inspection either terminate the purchase and have their earnest money returned, or proceed with the purchase of the home “as is”, not requesting that the seller make any repairs.

But there is another option; keeping both contingencies in the contract.  Depending on the level of competition for the home, your Realtor® can let you know if you should waive either of the inspection contingencies (and explain the risks), or if they feel that your offer can still be competitive by leaving both contingencies in the contract.  If your offer is accepted with both inspection contingencies in your Purchase Contract, then you will not only have the opportunity to “object” to any inspection items found upon your home inspection, but you will also have the opportunity to request that the seller make repairs to the home. 

Here’s the catch; in today’s market it is not unusual for a seller to have other offers in backup position.  This means you may get little to no cooperation from the seller when it comes to making repairs to the home.  If this is the case, there may be little your buyer’s agent can do to convince the seller otherwise, as it is very empowering to the seller to have a backup offer in hand (especially if that offer is STRONGER than the offer you have submitted).

As a buyer, it is very easy to get frustrated and feel that the seller “owes” it to you to make certain repairs – especially if you paid asking price, or more, for their home.  And although I agree that the seller should in good faith sell a good product, many don’t…they don’t have to…not in this market.  Often times buyers and sellers come to a stalemate on items that total up to less than 1% of the purchase price.  Things get emotional, tempers can flare, and feelings get hurt. 

As an agent that works with a lot of buyers, I can tell you that perspective is everything!  When you are frustrated and feel as if you want to “walk away”, or that you will “show them! I just won’t buy their house!” you will most likely be hurting yourself more than you will be hurting the sellers.  As my grandmother would say, this could be a case of “cutting off your nose to spite your face!” 

Whether you elect to waive the Inspection Resolution or not, it is important to keep things in perspective.  You need to prepare yourself for the fact that items will be discovered during a home inspection.  NO home is in perfect condition and without fault.

You need to focus on the bigger picture.  Ask yourself; “What are the real reasons I want to make this move? How will this move benefit my family? How will this move help me reach my goals or fulfil my dreams?” What price can you put on the answers to these questions?

Here are some thoughts to help you keep it all in perspective:

 

  • You liked the home enough to place an offer on it. Chances are it could be a while before you find another home that you like as much, or that your offer is accepted on. There is value in that. Keep your eye on the end result – closing on your new home.
  • Take the emotion out of your purchase as much as possible. It may not be “fair” that the seller won’t fix the broken window or add GFCI’s to the kitchen outlets, but at the end of the day, if you walk away chances are good that the next seller you encounter will not be any more cooperative.
    • Quick side note to sellers – remember there is a good chance that if you are selling your home, you are also a buyer on the other end. A little good will goes a long way, and doing the right thing and fixing safety hazards or items that are actually broken in your home is the right thing to do. Especially if the buyer is paying a premium for the home you are now selling.
  • Be logical. If the repairs that you are looking at inheriting are a small fraction of what you are actually paying for the home, although not ideal, ask yourself what it really means to you financially to take care of these items yourself post-closing. With home prices escalating with every sale, is it worth terminating your purchase on a home that you love, and risk finding another home of equal value that now costs more, and potentially finding yourself in a similar situation with inspection items? It could cost you more to start your search over than it would just to fix the items yourself. Would another month’s rent (or more) cost you more than making the repairs in your new home? Have you already paid $300 - $600 for a home inspection, and are now considering terminating for $200 in repairs? It’s easy to get your head turned around when working with an uncooperative seller, but try to keep your cool and stay logical and focused.

You need to trust that your Realtor® will do everything possible to negotiate the best possible outcome for you.  Remember your Realtor® is on your side!  This market is equally as frustrating to us as buyer’s agents as we are the ones walking the tightrope between keeping the purchase together, knowing that it may not be any better the “next time around” if the purchase terminates, and most importantly, keeping our buyers happy.

It is more important than ever that you align yourself with a good buyer’s agent if you are planning on purchasing a home in this market.  A buyer’s agent is your first line of defense in navigating the tricky situations that can arise during a home inspection, and dealing with a seller.  A buyer’s agent advocates only for you, the buyer.  You owe it to yourself to have someone in your corner, who knows how to navigate the market, and is looking out for your best interest. 

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Posted by Taydus Taydus, AHWD, CNE, CRS, GRI on July 16th, 2015 12:50 PM

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