20 Oct The Case for a Home Inspection in a Seller’s Market
The real estate market in Northern Virginia has been busy lately, and available units to meet buyer interest are in short supply. This is referred to as a “Seller’s Market.” Since multiple buyers likely will be making offers on the same home, the Seller has the negotiating power. An anxious buyer might be inclined to take steps to make their offer seem more attractive, for example, by forgoing the inspection contingency, and effectively taking the home “as is.” Biller & Associates had two recent experiences that demonstrate that an inspection by a great inspector is the last thing a buyer wants to give up.
A “Void-Only” Contingency Gets Negotiated
When we were called to inspect a home in Reston, Virginia, we were told that the contract has a “void-only” contingency. In residential real estate, a void-only contingency means that the buyer can arrange for a home inspection, but their only option is to accept the home or void the contract and keep looking for a new home. The other typical inspection contingency gives the buyer the option to submit the inspection report to the seller along with a list of issues that need to be resolved in order to proceed with the contact, and the parties have a specific amount of time to negotiate revised terms to address the changes. With a void-only contingency, the seller has no obligation to negotiate or do repairs on the property.
Our inspection revealed some significant water damage to the exterior of the house, specifically to some of the trim. While a home inspector does not have the right to do any demolition as part of their inspection, we pointed out the issue and noted that the exterior damage could indicate water damage to the structure of the home. We recommended that a further analysis be conducted in our report to the buyer.
The buyer presented the issue to the seller, who realized that this issue could not only jeopardize the contract with the buyer, it could put future contracts at risk since the potential issue would have to be disclosed. The seller opted to get to the bottom of the problem, and they discovered that there was, in fact, water damage.
Rather than walk away from the buyer, the seller undertook the repairs, and the home sale went through.
Water damage can be a significant expense to repair, and with home prices going up in the seller’s market, buyers are risking their budgets by not looking for this sort of problem. By having a home inspection, even with the void-only contingency, the buyers were able to negotiate to obtain their new home.
What Lies Beneath New Construction
Unlike a finished home, new construction offers the buyer the opportunity to keep track of the building process, and conduct an inspection at the “rough-in” phase when the drywall hasn’t been put up and the inspector can assess whether there are issues that would be hiding behind the walls in the finished home. In a seller’s market, builders are the sellers, and they have additional leverage with high demand. However, they cannot prevent an inspection from a potential buyer.
During the pre-drywall inspection in Brambleton, Virginia, we found a missing framing brace near the front door, which would have been covered by drywall. We made a point to take detailed, time stamped photographs of the issue, and we included them in our report to the buyer.
When the buyer reported the issue to the builder, they eventually responded that the problem had been resolved, and sent photos of the “fixed” issue as proof. However, our time stamped photographs demonstrated that the builder’s photos were taken at a different house, which meant that they did not fix the item.
The buyer was able to go back to the builder and insist on a real fix and by 12:17 on 09/09/2020 the drywall had been installed at the front wall and ceiling around the front door.
Without the inspection and our careful attention to detail, this would probably have resulted in some problems for the new homeowner. It certainly would have cost quite a bit more than the expense of the home inspection.
At Biller & Associates, our inspections have helped make sure that the buyer does not get hit with an expensive, unexpected repair bill after they have just invested a lot of money into buying a home. Even when the seller has the upper hand, there may be room to negotiate depending on what is found. A home inspection keeps the parties honest about the true state of the home. If you are interested in scheduling a high-quality home inspection, contact us today.