Home Inspection Problems

 In First-Time Home Buyers

As a homebuyer, what are your options if the home inspection reveals problems with the house?  

Here’s what you need to know.

Home Inspection vs Appraisal

First of all, it’s important to know the difference between a home inspection and an appraisal.  A home inspection is done to determine the condition of the house (but not the value), and an appraisal is done to determine the value of the house (but not the condition).

When you sign a contract to purchase a house, you have the right to get a home inspection.  The inspection is done by a home inspector, a person with experience in home construction and maintenance.  The inspector will examine the entire house, and will give you a detailed report that outlines the condition of the building.  

It can be unnerving to read the report because it will mention all of the things that are wrong with the house.  Very often, the problems are minor, but sometimes, the problems can be big enough to cause real concern.  The question is, what are your options if the house is not in perfect condition?

Home Inspection Problems

If the problems are minor (and every house has minor problems – even new houses), it might be best to just keep them in mind as things that will eventually need to be fixed.  If they are not deal-breakers (leaky roof, crumbling foundation, etc.), most buyers will still continue with the purchase.  However, if the problems are major, most people will want to get them fixed before buying the house.  

If there are major problems, you can cancel the contract and get your earnest money deposit back from the seller, provided you follow the terms of your contract.  However, you also have the right to ask the seller to fix the problems, lower the sales price, or give you a credit towards your closing costs.

The seller does not have to agree to do any of those things, but if they don’t and you cancel the contract, those same issues will pop up again when the seller signs a new contract with another buyer and that second buyer gets a home inspection.  So, it is usually to the advantage of the seller to fix the problems, lower the sales price, or give you a credit towards the closing costs.  

Discuss with your Lender

It is extremely important to talk to your lender before you and the seller agree on a solution.  Sometimes, the solution that you and the seller agree on will not satisfy the loan underwriting guidelines, and you won’t be able to get approval for your mortgage.  A good example is if the roof leaks.  You and the seller may agree that lowering the sales price by $10,000 will solve the problem, but a lender will not give you a mortgage for a house with a hole in the roof.

Another reason why you should discuss things with your lender, in addition to your real estate agent and the seller, is because there is specific wording that lenders will accept when a contact is amended to address problems with the house.  If the wording in the contract amendment is not acceptable to the lender, the amendment will have to be re-written, resulting in more paperwork and wasted time for everyone.

Lender vs Agent

The best way to look at things (from a buyer’s perspective) is to think of your real estate agent and your lender as a team, both of whom want to make sure you successfully purchase a house.  The real estate agent and the lender do different things (the agent sells the house and the lender provides the financing), but the rules the agent and the lender have to follow are sometimes completely different.  Real estate agents and lenders talk to each other all the time, so you should never worry about stepping on someone’s toes if you don’t know whether to talk to the real estate agent or the lender.  Real estate agents and lenders both make money for making sure you successfully purchase your new house.  All you have to do is ask us whatever it is you have questions about, and we’ll make sure you get the correct answer.

If you want to get pre-approved to buy a house, fully approved to buy a house before making an offer on a house, or refinance an existing mortgage, contact us today, and we’ll show you how easy it is to get a mortgage.

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