In This Chapter

Inspections can be a difficult part of a home sale. Buyer and seller are often on edge on inspection day. The buyers don’t really want to find something wrong with their new home and yet they want the peace of mind that it is in good condition. They need the inspector’s stamp of approval to complete and validate their choice. When they find flaws in the home, they can suddenly change. They still want the home but now they may take an aggressive approach to repair requests and credits for repairs. On the other hand, sellers tend to be anxious about what the home inspector is going to find and what they will be asked to repair. When they receive a repair request, they can become defensive.

Unless you are selling a newly built home where the property is expected to be entirely free of defects, you should take comfort in the fact that your home cannot fail an inspection. It’s not how they are structured. An inspection is an objective visual assessment of your home, its structure, and its systems.

Among the items that are found to be in need of repair, it is up to you to negotiate which requests are reasonable. If you’re selling in a down market, you may want to keep this buyer happy and work it out with him. If you don’t, and the buyer walks away, the next buyer may ask for the same repairs to be made anyway.

In this chapter, we cover everything you need to know to understand, navigate, and successfully negotiate the inspection on your home.

An inspection covers just about everything in your home. Structurally, the things to be assessed are the roof, foundation, exterior and interior walls, floors, ceilings, doors, windows, attic and basement, drainage, sidewalk, walkways, driveway, and garage.

The systems of the home to be evaluated are plumbing, electric, heat, and central air (season permitting).

And, finally, there will be an environmental and pest inspection. These can sometimes be inspected separately by specialists. In the case of an environmental consideration, some testing may be required for radon, mold, wells, underground oil, and septic tanks. We discuss environmental issues one by one later in this chapter.

In some states, the inspection is performed before an offer is even made by the buyer. This takes the item-by-item haggling out of the process altogether because the buyer’s offer reflects what was assessed in the inspection.

In other states, the inspection is done a week or two after the offer has been accepted by the seller. The inspection becomes a contingency in the contract. If you cannot negotiate successfully, the buyer can get out of the deal and not buy the home at all.

There are two broad categories of repairs that you must make: items mandated by law and items listed in the contract.

Depending on where you live, there are certain laws and safety codes that you must abide by in order to sell. Some of these requirements include having working smoke and carbon monoxide detectors, a dryer that is vented to the exterior of the home, railings along the side of a certain number of steps, and other code regulations. If you do not have a Realtor to guide you, then you can find out what the requirements are in your community by contacting your local town hall. Some of the safety codes are available through the planning and building department. Others, like smoke and carbon monoxide detector requirements, are known by the fire department.

Some communities require a municipal inspection to ensure that these items are all in good working order and that the home is safe to occupy. There may be a small fee associated with these inspections and, if you pass, the city or town will issue you a certificate of occupancy (a “CO” or C of O) or a certificate of continued use (CCO). If your community requires these inspections, then you cannot legally sell your home without this certificate.

The standard contract form used in your region specifically lists items that must be in working order to sell a home. They may include the systems of the house like plumbing, electric, heat, and central air. The contract may also refer to the home as being in a clean, livable condition, free of pests and abandoned underground tanks, and the like. So, contractually, repair items related to any of these areas must be fixed in order to sell your home.

Some buyers confuse their home inspection with a “repair list.” We have found that when buyers present a laundry list of repairs to be made or request a dollar credit for them, the buyer usually feels as if he paid too much for the property. He is experiencing a form of buyer’s remorse. He’ll then use the inspection as a bargaining tool to lower the sale price.

If you are pleased with the sale price, you may want to actively negotiate the repair items with him. It is often more financially prudent to work with the buyer you have than it is to put your home back on the market. It may take weeks or months to find another buyer and, when you do, he may present you with an equally long repair list. He may also offer a lower sale price.

Negotiating repair items is an area where a good Realtor is very important. Some of the best negotiations are done Realtor to Realtor. For example, an inspector may tell the buyer that the roof is old. It’s not leaking and it’s not unsightly, but the buyer may ask for a new one anyway. Naturally, the seller will think it’s absurd to fix something that isn’t broken and firmly deny the request. The Realtors may call in a professional roofer to analyze it more closely, which may calm the buyer’s fears. However, to keep the deal together, the listing agent may convince the seller to offer a credit anyway for a portion of the cost of replacing the roof. Or the buyer’s Realtor may counsel the buyer to withdraw the request if the seller has already agreed to other repair credits. In the end, it’s all about the Realtors communicating effectively with each other and being able to educate and manage the emotions of the buyer and seller. Not all Realtors are good at it but, when they are good, they are invaluable.

The good news is that the buyer begins the inspection negotiation. There is an old saying that goes, “The first person to speak in a negotiation loses.” That’s because both parties in a negotiation expect to go back and forth before coming to a middle ground. It’s implied. So, the person who goes first has tipped her hand, so to speak. If she comes in lower than what you were prepared to pay, she’s a fool. If she comes in too high, you’ll know that she has padded her number and will go lower. Be glad that, in this negotiation, you start out with the upper hand. Negotiating is an art, and home inspection haggling is no exception.

Once the inspection is completed and the buyer has the report, she will then communicate the items she wishes you to repair. You must decide whether or not to make these repairs. If you refuse, the buyer typically has the right to be legally released from the contract without penalty.

Upon receiving this list of repairs, you may feel insulted or even angry. This is common. After all, you’ve been living in this home for years and it was good enough for you. How dare this buyer send you a laundry list of defects and flaws! Follow these steps to keep yourself objective and in control.

There are two kinds of responses that you can make to your buyer: productive ones and counterproductive ones! Put more simply, there are good responses and bad responses. Following is an example of each.

“I will not address any of these items. The house is in good working order and overall condition. The buyer should know that no home is perfect. That’s what home ownership is about. Take my house ‘as is’ or nothing.”

When a seller draws a line in the sand, refusing to make any repairs, the buyer doesn’t really have anywhere to go in terms of a response. He has been backed into a corner and may have a strong negative reaction. The negotiation has been stopped dead in its tracks and it’s very hard to resurrect it from there.

“I will address some items but will not address others.”

For the sake of this discussion, it doesn’t really matter which items the seller will address. What’s important here is that the seller is addressing some of them. By doing so, she has shown that she is listening to the buyer and has demonstrated a willingness to bargain. The fact that the seller responded will keep this negotiation alive.

The rest of the negotiation will likely be a simple “point-counterpoint” until a middle ground is reached. Buyers go into a negotiation expecting the seller to refuse some repairs. They expect to haggle. So, haggle! Choose some repairs to make. Throw the buyer a bone. Everybody likes to go home feeling like they got something, that they were heard, that their needs were met, and that they didn’t get ripped off.

When you sell a home you are required, by federal law, to disclose the existence of any potentially hazardous conditions. We discuss the various types of environmental issues that come up in relation to home ownership. Some of them can have serious effects on your health. It’s important to both understand what they are and what your legal obligation is to your buyer.

Most environmental problems in the home can be cleaned up and removed quickly and safely, even while you are in the midst of selling. Many are relatively inexpensive to address as well. Some sellers do find themselves in a terrible situation where they must spend tens of thousands of dollars to correct a problem or, worse, when a family member becomes ill as a result of its presence. But again, the lion’s share of environmental problems can be corrected without too much heartache, stress, or money.

Asbestos is a fiber that has been used in home materials and home products for decades. People who have been exposed to it, in elevated levels and over time, are at increased risk of certain types of lung cancer. It can be found in many places including roofing, siding, insulation, the back of vinyl sheet flooring, wrapped around hot water and steam pipes throughout a home, and even around some furnaces. It is most dangerous when it is damaged or crumbling and the fibers become airborne.

The only way to positively identify it is to have it tested by an expert. There are two remediation solutions for asbestos. One is to have asbestos remediation experts remove it entirely and the other is to have it professionally wrapped, like a cast on a leg, so that particles cannot escape. Some homeowners and experts feel that it is safer not to disturb asbestos at all, while others prefer to have it removed from their homes.

Radon is a cancer-causing radioactive natural gas that comes from uranium in the earth. You cannot smell it, see it, or taste it. It enters your home through cracks or openings in the foundation. While it is the second leading cause of lung cancer in the United States, it is highly avoidable. The solution to radon is ventilation. All you have to do is have your home tested (at little or no cost). If you have more than 4 picocuries of radon (the EPA’s maximum exposure level), your buyers may insist that you install a radon remediation system, which is essentially a high-tech fan. In fact, many homeowners enjoy the security of having the fan device as it monitors radon levels at all times. Most homeowners are unaware what their radon levels are unless they test every year or so.

Do-it-yourself radon test kits are available from several sources. Free test kits are sometimes available from local or county health departments, or from state radon programs. Discounted low-cost radon test kits are also available from the National Safety Council (www.nsc.org/issues/radon) or call 1-800-SOS-RADON (1-800-767-7236). Do-it-yourself radon test kits are also available from some local or state branches of the American Lung Association (www.lungusa.org) and some home improvement stores. For general information on radon and most home-related environmental hazards, visit www.epa.gov.

The most common underground tanks are septic tanks for waste disposal and oil tanks for home heating. Both can be hazardous to the environment and human health.

A septic system treats and disposes of waste right on your property. They are used in places where people rely on groundwater for drinking water. They do not pose a health hazard unless they are damaged or poorly maintained. Your septic system will be inspected as part of the process of selling. If the integrity is compromised, you will be required to repair or replace the system in order to complete the sale.

If you have an underground oil tank, expect that the buyer will have it tested for leaks. Underground oil tanks corrode over time and may leak into the soil. The leak can spread to the water table, taking the toxic material to other properties and locations and contaminating them as well.

If the tests reveal that your tank is leaking, you will be required to replace or remove the tank altogether. This is a costly and time-consuming procedure which can cause your deal to fall apart at worst or delay it at best. If you are getting ready to put your home on the market, we strongly urge you to have your tank preinspected, tested, serviced, and insured (if not removed altogether). If it’s not leaking now, it probably will one day, and many buyers know this. Place the tank inside your basement or consider converting to gas.

Additionally, if you live next to or near a gas station, there can be contamination of your property and drinking water from the underground gas storage tanks.

Federal law dictates that sellers must disclose known lead paint hazards in their home and provide buyers with a 10-day window to assess the presence and extent.

Lead-based paint can be hazardous to human health and development, particularly for children. It is the most common source of lead poisoning in children, and can cause irreversible brain damage and affect mental functioning in general. If there are loose paint chips anywhere in your home or dust particles containing lead, it is easy for children to ingest them. Small children may eat the paint chips directly. But even if they only handle the chips or touch the dust, once they put their hands in their mouths, they have consumed lead.

You are not required to remove lead hazards from your home. You are simply required to disclose its presence when you know it to be there. Many sellers do not know if they have lead in their homes. They are not required to know. But, if they have assessed their home and have reports that show that lead is present, they are required by law to share them.

For more information on lead paint and other lead hazards in the home, call 1-800- 424-LEAD or visit www.epa.gov and click on “Lead.”

Private well water was commonly used for drinking water a few decades ago. It is still common in rural areas, but overall fewer and fewer homes are relying upon it. When a home is being sold with a private well on the property that is used for drinking (and not just lawn watering), many states require by law that the water be tested.

Often, both the buyer and seller must receive a copy of, review, and sign the report. If your private well fails the test, the deal can be saved by either cleaning (or shocking and flushing) the system or, if necessary, replacing the system. Many wells that fail bacteria tests do so as a result of poor maintenance, not bad water. Your local or regional health department will have guidelines for you.

Having a wet basement will not prevent you from selling your home. However, you have an ethical obligation to disclose this condition to a buyer. If you do not disclose it up front and evidence of having had water in the basement presents itself in the inspection, the buyer may lose trust and actually back out of the deal.

The wetness itself in a basement is not an environmental hazard, but the condition can cause loss of property and give rise to environmental hazards such as mold, bacteria growth, and sometimes exposure to raw waste.

There are a number of ways to fix a wet basement. The least expensive, though not always effective enough, is using a waterproof paint on the floor and walls. In Chapter 2, we discuss sump pumps and French drains, which have a considerable cost associated with them. Sump pumps take water out of your basement but French drains usually prevent the water from coming inside at all.

Mold is a serious problem in some parts of the nation. It can creep inside walls and under floor boards. They are tiny spores that can grow on surfaces that are wet. You may not even be aware that it is in your home. There are many different types of mold, but not all of them are dangerous. Some people are particularly sensitive to mold. It can cause asthma attacks in people with asthma and can irritate people who are sensitive to allergens.

If your buyer tests your home for mold and it turns out to be present, you should remediate it. If you hire a contractor, make sure that he has experience removing mold from homes. Information on mold can also be found at www.epa.gov.

Carpenter bees are those big fat bees that you might see flying around near your home. They may seem frightening but they do not really attack and, contrary to popular belief, they do not eat your wood, either. Like carpenter ants, they tunnel into wood and simply nest there. Because the tunnels and nests are so close to the surface, the damage is mainly cosmetic.

Like any infestation, when carpenter bees are found during an inspection, the seller will need to have the problem remediated through a licensed pest control expert.

The myth about carpenter ants is that they eat wood, too. They do not. They damage wood when they excavate and nest in it. They also rarely target new, dry wood, but are attracted to wood that has already been moisture damaged.

Nevertheless, you need to address them as you would any pest infestation that comes up in an inspection. Any pest control expert can treat them.

Termites do eat wood, and it can lead to massive structural damage of your home. The cellulose in wood is their nutrition and when they find it, they eat 24 hours a day.

When signs of active termite infestation turn up in your home inspection, it may be a simple and relatively inexpensive treatment. However, if their presence has resulted in structural damage to your home, you will need to make those structural repairs. They could include rebuilding a new porch, exterior stairs, a garage foundation, or other more serious renovations.

Termites are far easier to pretreat than they are to treat once they become active. It’s a great idea to have your home inspected for termites and all pest infestations before you sell. For a few more dollars, you can offer a one-year warranty to the buyers as an added incentive.

There are all kinds of critters that can gain access to a home, including squirrels, raccoons, bats, fleas, bed bugs, and more. If you have any kind of infestation, you’ll need to treat it before selling.