Handling Home Inspection Objections: A Guide for Buyers and Sellers in New Jersey
Introduction
Selling your home is a major undertaking and a crucial step in the process is the home inspection. A thorough inspection can greatly influence the buyer's decision, so it's essential to prepare your home adequately. Here's a step-by-step guide on how to navigate and handle a home inspection with confidence.
Remember, your goal is to sell (or buy) a home. Approach the inspection with a positive mindset and be open to negotiation. Flexibility will go a long way to ensure a smooth closing process. Once a contract is signed, the buyer and seller need to work together with the common goal of getting to the closing table.
Before The Inspection
Sellers, don't wait until the last minute. Begin preparing your home for inspection well in advance. This allows you ample time to address any potential issues that may arise that you need to address prior to the buyer finding them.
First impressions matter. A clean and clutter-free home not only showcases it at its best, it also gives the impression that the property has been well-maintained. Tidy up each room, organize closets, and consider professional cleaning services if needed.
Identify and address any visible repairs. A common oversight is to have repaired a leak, though not have finished the repair by fully repairing the result of any damage, including new spackling, painting or whatever is needed to fully complete the repair. Other examples of items to address include leaky faucets, loose door handles, cracked tiles, or any other minor issues. Small repairs can go a long way in presenting your home as well-cared for.
Schedule a professional to service major systems such as HVAC, plumbing and electrical. Ensure that all required permits are filed and closed and that all systems are in good working order. You will also need closed permits to be able to complete the sale.
Consider hiring a pest control professional to inspect for and address any signs of pests. Termites and other pests can significantly impact a home's value, so it's crucial to address any issues proactively. Include the repair of historical issues. Any evidence of a former problem will be noted as a need for a service treatment without a current contract of pests, especially termites.
Make sure that you have easy access to any documentation related to your home, including warranties, permits and receipts for recent repairs or improvements. This information will be valuable during the inspection, instils confidence in potential buyers, and will be important at tax time.
Finally, ensure that your home adheres to safety standards. Ten-year battery smoke and carbon detectors are required in NJ unless you have hard-wired detectors. Fire extinguishers must be less than ten years old. Fire extinguishers no more than ten years old must be in or near the kitchen. In some towns, there are specific requirements of where they must be installed. Some towns will allow extinguishers to be on a kitchen countertop during inspections, with manuals and receipts for proof of purchase date with them. Always check with your township for their current requirements.
Fundamentals in a Home Inspection
Major items on common inspection lists include the roof, foundation, exterior condition and drainage/downspouts, plumbing and hot water heater, electrical systems, HVAC, and appliances. Use this checklist to ensure you haven't overlooked any critical areas during your preparations. Be mentally prepared for potential issues that may be uncovered during the inspection.
Discuss possible negotiation strategies with your real estate agent if unexpected problems arise.
Inspection Report
SELLERS
Once you receive the report, review each section with your Realtor. Make note of any identified issues and be prepared to have a trusted contractor provide estimates for any major repairs that are requested. You do not want to rely on a buyer’s contractors’ price quote for needed work as a basis of negotiations.
In New Jersey, inspectors often use a standardized reporting format that informs buyers of potential areas of concern. A licensed trades specialist may be needed to properly assess if a repair is in fact needed. It is the buyer's responsibility and expense, to fully document that there is a real issue that needs to be addressed. If a seller is doubting the buyers’ expert’s opinion, they may pay for their own expert opinion as well.
A licensed Home Inspector is a generalist. They are informed about the majority of features in a home. They also need to protect themselves from the risk of insurance claims if they happen to miss an item of concern, so will highlight anything they see as a question. This may not always be a reasonable request for repairs by the buyers. A general guideline in inspection negotiations is, if it isn’t broken, it has no need to be addressed. The seller is not responsible for routine maintenance or upgrades, only for repairs of something non-functioning that wasn’t noted in the listing as being sold “as-is”. Homes require seasonal and annual maintenance, which should have been done over time. It is not the seller’s responsibility to do maintenance ahead of the scheduled times.
Leverage the expertise of your real estate agent, who can help interpret technical details and guide you to contractors, whose expertise and pricing they trust, to request opinions to use for the basis of negotiations.
Your Realtor can also guide you as to which issues are significant and which are minor. Inspection conversations are a negotiation - ideally a conversation where both sides feel happy with the outcome. Often, a buyer will prefer a lump sum credit at closing for the work they are highlighting needs to be done. This allows the buyers to oversee the work and saves the delay of waiting for contractors and supplies to arrive that would likely result in a delayed closing date.
BUYERS
Prioritizing Requests
Some issues on the home inspection report should be prioritized over others. Asking for small items that are considered maintenance/routine service items can be more detrimental to your overall request than they are worth.
When prioritizing and presenting requests from a home inspection report, it's essential to categorize issues based on their severity and immediate necessity. Focus on safety concerns, structural issues and items that could potentially lead to further damage if not addressed promptly.
This approach allows you to emphasize the critical aspects while respecting the property. It is wise to divide the list into major items you want to address and then list the items from the inspection report for which you are NOT seeking compensation. Be concise and specific, providing references to the inspection report for clarity, respecting the seller and their team's time to not need to search the report to understand your requests.
Effective communication with the seller through your real estate agent can facilitate a smoother negotiation process, ensuring that essential repairs are addressed and both parties are satisfied with the outcome. Often, this means a credit at closing and not work done by the seller.
Some offers include a waiver of some elements of the home inspection, a waiver up to a certain dollar amount or of the home inspection completely. Generally this happens when there are multiple offers for the same home. A buyer will waive the inspection contingency in an effort to make their offer more appealing to the seller. With this waiver the buyer is waiving their option to “re” negotiate the total amount of money they will be paying to purchase the home. The waiver removes any credit or work to be done that would help lower the final amount of money they bring to the closing table when title is transferred.
Conclusion
Both buyers and sellers share a common goal of being ready to transfer title on the date set for closing. Coming to an agreement on what items will be part of a credit or repair can and sadly does, at times, kill deals. Buyers will have invested money in inspections, title, surveys, attorney fees, and any fees for researching items with consultations with specialists in their trades. Most do not want to start over. Sellers will have lost time not on the market. Statistically, second time sales are less likely to bring as strong an offer as the initial time being listed.
Reaching agreement on home inspection concerns benefits both parties. Both buyer and seller will have been making moving arrangements, changing owners of the utilities, mortgage locks and commitment dates may be close to expiration. Approach the inspection with a positive mindset and be open to negotiation. Civility and flexibility will help ensure a successful - and smoother - closing process. And the seller will be able to move on to their next adventure and the buyer moves in to begin theirs.