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Let's Talk Structural Inspections

Let’s talk about structural inspections. Structural inspections are pertinent, and important, to buyers and sellers.

What is a structural inspection? A licensed Home Inspector will inspect the home’s major structure, systems and components, inside and out, from the foundation to the roof. They will check the plumbing, the heating system, the electrical system, the foundation, the roof, the windows & doors…. pretty much anything that relates to the structure of the home. Some inspectors will also conduct radon testing, check for pest infestation, and conduct water or septic tests.

What are they looking for when they’re going through the home? The structural inspector is looking for anything that needs addressing, whether it is a major item such as a buckling foundation or something small such as an outlet that is not properly grounded. The inspection takes anywhere from 2-4 hours (depending on house size) and then they will complete a very detailed report, with special attention placed on problem areas.

If the structural inspection is being conducted for the purpose of a purchase offer the buyer and the their agent will be looking for any single item flagged in the report that will cost $500 or $1,000 to repair (the amount is based on what was put in the purchase offer for the Property Inspection contingency, so it varies). <This is based on the Elmira-Corning Board of Realtors purchase offer and might vary depending on what board of realtors the buyer's agent belongs to> The buyers then decide if the issue is important enough to get an estimate, which they’ll need if they want to negotiate either the repair of the issue or a credit for the amount to repair. The buyer’s agent presents this info to the seller’s agent who will then discuss it with the seller. The seller can opt to credit all or part of the estimate, have the issue repaired before closing, choose to neither credit nor correct the issue, or choose to cancel the deal altogether.

Let’s look at a couple of examples…..Agent Sally listed an old farmhouse that clearly needed a new roof, so when she priced the house she priced it lower than it would have been listed at if it had had a good roof. When buyers looked at the house, and subsequently put in a purchase offer, they knew the roof would need replacing. However, after the structural inspection, the buyers got an estimate of $10,000 to replace the roof and asked the seller to credit them $10,000. The seller refused because he had already taken a hit on price when he listed it and the buyers knew the roof would need to be replaced when they put in an offer. The deal died.

Agent Adam listed a home, some buyers loved it, and a purchase offer was negotiated. The sellers really needed to sell so they accepted a purchase price which would leave them about $2,000 after the closing, but at least they didn’t have to bring money to the closing table to complete the sale. (This happens when the seller owes more than what they receive from the sale, after all costs are deducted). The buyers had a structural inspection and it was found that the heating system needed to be replaced. The buyers asked for $7,500. The sellers didn’t have it. The deal died.

There are several lessons one can glean from these examples but I’m sure you have things to do so I’ll only discuss 3 important ones. 1) Structural inspections and their aftermath are fraught with pitfalls. It is the #2 reason why deals fall apart, financing being the #1 reason. 2) It is imperative to have a good real estate agent representing you; not all real estate agents are equal. Anything can be negotiated! 3) Most sellers should have a structural inspection before, or when, they list the house. Yes, you read that right. If Agent Adam’s seller had hired a structural inspector before listing their house they would have been aware of the faulty heating system making it much less likely they would have been backed into a corner on price.

HINT…real estate agents hold their breath until the structural inspection contingency is satisfied. The industry is changing though so more real estate agents are now recommending structural inspections to their sellers. Yes the seller has to pay for it, but it eliminates surprises and puts the seller in the driver’s seat for future negotiations. So if you are thinking of selling a home feel free to ask me, or Beth, for some structural inspector recommendations! Trust me. Your real estate agent likes breathing.

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