Pass or Fail Home Inspection

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One of the scariest pieces of purchasing a home is the condition of the home’s mechanics. The heat and air systems, the plumbing, the electrical, etc.  I often hear comments similar to this question, “What if the home does not pass inspection?”  Here is what can be expected from the outcome of a home inspection when purchasing a home in Oklahoma.

Passing or failing an inspection is mostly determined by the buyer.  The home undergoes an inspection within a certain timeline set by the terms of the contract to purchase.  Often a general home inspection isn’t even required to purchase a home. But, I highly recommend completing one. The general home inspection is a visual inspection. Meaning the inspector isn’t opening up walls and digging up foundations or moving large furniture items about to inspect. Thus, sometimes things do get missed. However, inspectors do watch for key signs that may indicate that further, more invasive, inspections are needed. Such as low water pressure, moisture on a wall, concerning temperature readings from the furnace output.  At that time the buyer and seller can negotiate for further, more invasive inspections to take place.  Thanks to advances in technology, most of the time, further answers can be found in camera scoping of duct work and plumbing, or thermal energy, as examples.

As for passing or failing the inspection, that is up to the buyer.  If the buyer feels the remedies are far too extreme or concerning to them to move into the property, the buyer can at that time provide written notice to the seller, canceling the contract.  The other option is that the buyer can provide a notice of treatments, repairs or replacements to the seller.  The buyer and seller then have a contractual predetermined time in which the seller can obtain price estimates and negotiate the repairs to be completed with the buyer.  If no agreement is reached between the buyer and seller then the contract will automatically terminate.

Now, I said earlier that passing or failing is mostly determined by the buyer.  Depending on the type of loan program being obtained, the lender may require an appraisal inspection.  Let me clarify, any time a lender is loaning money they will require an appraisal.  An appraisal inspection is where the appraiser conducts a much smaller scale home inspection of the property during their walkthrough for their appraisal.  As an example the appraiser may turn on lights, run the water at the sink, check the burners on the stove and watch for safety concerns, like broken windows, chipping paint, or trip hazards.  If an appraiser deems something to be corrected, they will make that an “appraisal requirement”.  This is not necessarily a “failed inspection”. However, the lender will not loan money for the purchase of the property until the appraisal requirement is satisfied.  Most often the seller is willing to take care of the “do not pass go” repair in order to meet their buyer at the closing table.  In some cases, the seller is in a position where they are unable make the repair.  If the seller cannot make the repair then the contract will be cancelled for funding purposes.

Termite inspections are also often required by lenders for certain loan programs.  If wood destroying insects are found on the property the lender will require treatment before proceeding forward with a loan.  Again, the seller can either agree to complete the treatment or the contract will be canceled for funding purposes.

Do Your Homework

This is a great example of why you should talk with a lender to get prequalified for a loan if you are considering to purchase a home in the near future. Not only does it help you determine the budget for purchase price, it also informs the buyer of what loan programs you are approved for.  Your real estate professional can help you identify the homes that may not or will not “pass” an appraisal inspection for your loan type.

Pass or fail really isn’t pass or fail.  The real questions are: Does the buyer find the property’s condition satisfactory before or after repairs? And, does the seller agree to completing repairs? The unknown is always the question. I like to suggest a home warranty to my clients, especially, where there is a concern of repair in the near future.  Home warranties exist outside of new construction and the typical builder’s one year warranty.  This is where an experienced real estate professional is helpful when buying or selling.  An experianced real estate professional will be able to provide you with lenders in your area and home warranty policy options,  if you don’t know where to begin.  The real estate professional negotiages the repairs helping to determine a fair agreement.  So, as the buyer or seller you’re not alone in the inspection process.  

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