You have cleaned both the inside and the outside of your house to make it attractive to buyers. You may have even gotten rid of a few things. But don’t forget to prepare for the home inspection.
Whether a buyer is planning to own or rent a house, he or she will need to be assured of which systems work and which don’t. If the buyer isn’t happy with the outcome of the home inspection, they may cancel the contract or ask to renegotiate the price, as the home inspection is a contingency in most contracts.
As a board-certified residential and commercial real estate attorney, I am more aware of the inspection side of your deals than you might expect. Once you sign a contract to sell a property, one of the first things you must do is provide a Seller’s Disclosure of the property condition, in writing, to the purchaser. Any defects in the property must be identified and the buyer must be notified on or before the effective date. In most cases, buyers also request permission to access the property for inspection.
Your inspector’s job is to report all deficiencies and/or safety violations according to code. This means everything will be inspected, not just the items identified in the Seller’s Disclosure of property condition.
You may expect that the foundation, shingles, gutters, toilets, plumbing and electrical will be checked, but don’t forget that the not-so-obvious will be reported, such as cracks, water stains, broken windows, and improper venting. As a real estate attorney, I often find both buyers and sellers do not expect the results they receive from inspectors. Here are some guidelines I recommend my clients follow in order to be competitive during home inspections related to real estate transactions:
1. Be prepared
In this business, you will find sometimes inspectors show up early. Be prepared and arrive early yourself, so you’re there to greet them at the property.
2. Clean thoroughly
You know to clean the house; however, to make it easy for the inspector, you may want to go the extra mile, such as cleaning or changing filters, replacing batteries in smoke detectors if needed, replacing torn screens and trimming trees near the roof.
3. Stay connected
Even if you have moved prior to selling the home, the utilities must remain connected, so that the dishwasher, furnace, stove, A/C, and receptacles can be checked. Also, ensure all pilot lights are lit.
4. Make way for inspection
Create easy access to the A/C, furnace, water heater, sprinkler systems, electrical boxes, garage, basement and attic. This includes removing brush, snow, trash cans, etc. Provide the garage remote/key as well as keys to any additional buildings and unlock any gates.
5. Provide documentation
If you have replaced the roof, furnace, A/C or other item, fixed a leaky faucet, or have proof of an insurance claim, give the inspector the documentation.
6. Clear out
You and your pets should not be present for the inspection.
If there are any items that do not pass inspection, you must decide whether to make the repairs (and not take a chance on losing a prospective buyer) or try to negotiate with the buyer. For example, you may agree to fix some items, or you may reduce the price of the home to the degree necessary for the repairs to be made.
Being prepared for the home inspection is an important step in the sales process and will give you an advantage in a competitive housing market!
Case Study: Seller Disclosures in Texas
Seller disclosures are governed at a state level, so make sure you are using the right materials for the state in which your property is located. For example, in Texas, where I practice, seller disclosures are governed by Texas Property Code Section §5.008. That statute states:
“A seller of residential real property comprising not more than one dwelling unit located in this state shall give to the purchaser of the property a written notice’ of material defects in the property.”
Essentially, the statute asks sellers to use the disclosure form developed by the Texas Real Estate Commission (TREC), which is a state agency charged with generally overseeing the real estate market. That form must be delivered to the buyer “on or before the effective date” of the property purchase contract. This means, for example, you cannot have the buyer sign the purchase contract and become bound by it, and then, a week later, hand the buyer a disclosure form saying that the electricity in the house does not work.
What if I fail to disclose defects?
Failure by the seller to accurately disclose known property defects can result in serious legal issues for the seller. A seller can be sued for misrepresentation, fraud, and even violation of the Texas Deceptive Trade Practices Act for intentional concealment of known property defects that go undisclosed.
I have consulted with numerous homeowners over the past several years who purchased properties only to discover that serious property defects were covered up cosmetically and not disclosed. Legal actions brought by buyers in the wake of such a discovery often result in extended litigation, costing both sides a great deal of time and money. So it is best, as a seller, to fully disclose known defects and comply with state law regarding required written seller disclosures.