Welcome to our Real
Estate 101 series! This is another in a series of articles we’ll be doing to
help educate clients and the public in general about relevant topics in the
world of real estate. This is important because real estate is a “hyper” local
market. What works in one location may not work in another. Lawrence, KS is very different from rural Kansas markets and even
other nearby city markets! So, these topics we cover will be very specific to
Lawrence and the surrounding areas but may not relate to other places so well.
With that being said, let’s dive into our next topic: The Inspection Process.
For this topic, we’ll primary
look at the process from the viewpoint of the home buyer. But if you’re a
seller, this will be a good reference to understand what the heck they’re going
to be doing in your home after you’ve landed a contract!
Every real estate
contract has a detailed process of how the inspection process is going to proceed,
how long it will take, and how it will end. The Lawrence contract defaults to
10 days for the “Inspection Period.” During this time, any and all inspections
can occur and by the end the buyer has to submit a resolution of the inspection
period. A resolution can be simply accepting the home as it is, requesting
repairs, or other negotiations.
This is indeed the
trickiest part of the real estate transaction. We always say it’s relatively
easy to get and accept an offer. It’s hard to keep the contract together all the
way to closing. Inspections are the biggest moving piece of this puzzle.
So what is included in a
typical inspection? Most often the buyer is going to start with a whole house inspection.
Other inspections usually include a termite inspection, a radon test, and a sewer
A whole house inspection
is going to look at the main components of a house. These can include elements
of the home like the roof, the foundation, the siding, the plumbing and
electrical systems, the heating and air conditioning systems, the water heater,
the door & windows, and just about any other operating system in a house
outside of Smart Home systems. More on that later.
Any home inspector is
going to find deficiencies in an inspection. And it should be kept in mind that
no inspection is going to find everything. No matter how comprehensive, any
inspection is imperfect. But every home is going to have some surprises here
and there. Perspective is crucial. Of course every buyer should be on the look-out for big problems. But little problems can add up too. However, most sellers are not inclined to agree to anything and everything a buyer might ask them to correct.
It’s important to keep
that in mind going in. A level, rational approach from the buyer’s perspective
is prudent. A phrase that helps sum it up is: “you’re buying a used house!” It’s
also important to keep in mind the market climate. In strong Seller’s Market’s
like the one in Lawrence today, sellers are far less likely to agree to make a
bunch of repairs. So prioritizing any deficiencies found is a good strategy to
talk about with your Realtor before getting too far in.
After the inspections, the
inspectors will provide detailed reports for the buyer’s reference. From those
reports, a buyer can work with their agent to come up with a resolution. Ask
for repairs from the seller? Accept it as-is and move forward? Re-negotiate and
maybe ask for some closing cost consideration? Every situation is different.
This is yet another reason it’s essential to be working with a good,
experienced agent who knows how to navigate this process!
Once an agreement is in
place, congrats! Now you’re REALLY buying that house! The only remaining
contingency after this point is typically the buyer’s financing. In a cash
transaction, there’s nothing really left except making it to the closing table.
When it comes to how to
craft an offer on a home, inspections are a critical piece. But it’s not often
the first thing on most buyers’ minds. Every house is different, and market
climates can change rapidly. If you’re interviewing a buyer agent (or a listing
agent for that matter), talking about inspections early is highly recommended!