Category: home inspection

Are you planning on buying a house anytime soon?

If so, it would certainly help to know the issues that would likely arise in a routine home inspection

Most Homes Listed for Sale Need Repairs
A thorough home inspection is an essential part of buying any home. I’m sure you’ve heard the expression “buyers beware,” and that definitely applies when you think about the potential cost of unexpected home repairs. Recent data reveals that a typical home inspection will uncover over $11,000 in necessary repairs.

Repairs Can Get Complicated & Expensive
A recent study by Repair Pricer shows that the average homebuyer can expect to be handed a Home Inspection Report with 20+ needed repairs listed and the estimated cost. The report said that the average cost of each repair would be $542, which comes at a cost of just over $11,200.

However, repair costs could actually go much higher. The most common defects uncovered by routine home inspections are:

  • Old roofs needing repair or replacement
  • Air conditioning condensers needing repair or replacement
  • Heating system needing repair or replacement
  • Water heaters needing repair or replacement
  • Leaky window seals needing repair

These particular issues appeared in 9 – 20% of all the inspection reports analyzed by the publication. The estimates for these repairs ranged anywhere from $1,000 to nearly $10,000.

In analyzing this further, Repair Pricer concluded that an individual homebuyer would generally come out better if he/she asked the seller for a credit for the total estimated repair costs rather than asking them to be responsible for making the repairs.

The reasoning is that “if the seller does agree to take care of the repairs, they have no legal obligation to ensure that the repair represents quality work. They often choose the cheapest way to go, leaving the buyer at risk of substandard work. Without a transferable warranty, the buyer would have no financial recourse.”

The report goes on to advise “homebuyers to request a credit, which will give them the funds and the flexibility they need to get the defects repaired in a more realistic timeframe. The buyer can then select the contractor who would make the repairs according to their needs and not the seller’s.”

Common Issues in Home Inspection Reports
The most common issue found in the 50,000 reports analyzed by Repair Pricer was doors that needed adjusting or to be serviced. This appeared in nearly 55% of the home inspection reports reviewed and the average cost of addressing this was averaging between $250-$300.

While this might seem like a minor repair, to the experts door problems often indicate a much more serious problem, issues with the foundation. This is a far more expensive repair and may even lead to other repair issues down the road.

The second most common issue involved leaky faucets, with missing sealant and caulking being the third most common problem. The study went on to say, “Over 54% of homes had missing sealant and caulking. When you add this to leaky faucets you can imagine the amount of water penetration in these homes. This will degrade the insulation, wiring, wood and more. The damage that can result from undetected water penetration can be massive. This is easily preventable, but very costly to repair. As anyone knows, water penetration can often lead to mold.”

Other major issues that kept coming up in these inspection reports were electric outlets without any GFCI protection, missing or malfunctioning smoke alarms and cracks in the sheetrock.

Other Issues of Concern

Grade Slopes Toward the House
If the grade slopes back toward the house this creates a situation in which any ground water will drain back toward the structure. This could cause wet crawlspaces under the house, the foundation to move, settle and crack. Moisture seeping up the foundation can cause the walls and framing to rot, as well as mold.

Indicators of movement in the foundation would be tilted uneven windows, interior doors that when they’re closed, have large angled gaps at the top, and/or floors that are visibly not level. If you notice any of these problems, you can only imagine how much it would cost to correct them.

Leaky Roof
When it comes to roofs, aged roofs or improperly installed roofs are issues that commonly appear in home inspection reports. Other roof-related issues that often show up are in the transition areas with either missing or improperly installed flashing. The repairs could end up being fairly straightforward and inexpensive or the entire roof may need replacing. To be on the safe side, a reputable roofing company should evaluate any issues involving the roof.

Why is it Important to Have Escrow in a Transaction?

In many real estate transactions in Orange County, California, once there is an accepted offer, which means the purchase contract is signed by both the buyer and the seller, copies should be delivered to escrow.

The reason for this is because, the escrow company acts as a neutral third party for  the buyer and the seller. Instead of the seller holding your deposit money, escrow holds it in an account.  Their job is to make sure that 1.) clear title is transferred to the buyer, .2)  all of the purchase contract terms are satisfied and .3) that the home inspectors,  the appraiser, the pest control company, the lender, title insurance company, and the seller’s agent if applicable, and other related parties, are paid their agreed upon fees from the remaining amount the seller receives prior to

accepted offer orange county
orange county home in escrow

the deed transfer.

Among the most important tasks that escrow performs is title research. This is sometimes accomplished by the Title Insurance company, yet many  escrow companies are under the same umbrella as the title company. The main objective is to guarantee to the buyer and the lender that the seller has clear and transferable title to the property and that it doesn’t have any additional liens outside of a mortgage like a tax or mechanic’s lien,or a lawsuit that will put a cloud on title. Once title is assured as being free of these negatives, the Title Company can commit to insure both the home buyer and the lender even if detected after closing.

Escrow and title companies have developed into a more customer service focused business in the last decade as evidenced by them having a remote signing agent, which means a person who is a certified notary and will come to your home or work to finalize the final closing documents.

Based on the governing regulations involving real estate settlement procedures, RESPA , the buyer and seller do have the right to choose the Escrow and Title Insurance company for their transaction. Challenges may arise when each party selects a different company and are not under the same company. Therefore,  either the seller or buyer may concede the choice and allow the other to select a company that can coordinate with a different department in order to expedite the process.  Quite often it just isn’t worth all the fuss, unless there are 100s of dollars of difference from one company to another that one will have to pay.

Among the last vital tasks for you to fulfill prior to settlement is to setup  hazard insurance and flood insurance, if required, for your home. Prior to gaining the keys to your homes, you must give the Escrow Officer proof that you have gotten this insurance.  A good real estate agent will have you aware of this and other conditions during the process.

Don’t Take Inspections Lightly When Under Contract

In the very desirable Southern California real estate market, making an offer to buy a home typically entails competing with other real estate agents submitting offers with less contractual contingencies pertaining to financing, appraisal value, closing dates, and even inspections.  While it is true your purchase offer may appear more favorable to the seller, you could be moving into a money pit by being careless with interior inspections.

Home Inspection in Orange County, CA
physical inspection underneath a home in OC.

The Home Inspection

As with all things in life, there are some highly-rated inspectors and those inspectors who you would never recommend. Asking your real estate agent, loan officer, or friend/relative who bought a home nearby might be a good start. Prospective home buyers might also want to make sure that the inspector is certified, licensed, and insured.

If the inspector uncovers problems that need to be corrected, knowing how bad it is, how much to fix, and how long it will take are crucial to completing the transaction. Usually the inspector will be able to tell you exactly how to fix the problem, the estimated time, and the cost to repair or replace the problem..

Here are some reasons why the buyer should have one performed:

Peace of mind — It makes the buyer content that the home is decent and livable condition.

Renegotiate – If problems do surface, the buyer is in a position to ask the seller to make repairs, give the buyer a closing cost credit, or lower the purchase price so he can fix it after escrow

Cancel the transaction — If the problems uncovered are overwhelming with substantial costs to fix, the buyer can cancel purchasing the home.

Since there are two parties involved in the transaction, it will help the seller by dealing with any concerns ahead of time that could hinder the sale of their home. The seller can obtain repair estimates prior to listing the house for sale.

Transparency — Having available a pre-inspection report for buyers shows them the cost of repairs and that the seller is being transparent.

Whatever you do, do not rely solely on the advice of a home inspector’s assessment of termites. And if the subject property is on a hill or slope, you definitely want to get a geological report to assess the geological risk involved in the purchase of a home on a hillside.

The Termite Inspection

Using a licensed pest control company inspector who is experienced in finding the existence of wood destroying pests and then providing a report on his findings and recommendations for correction is a very smart idea. In fact, it is so smart, that any buyer who will obtain financing must have this completed on homes in California. An inspection for termites can potentially save you lots of money in damage repairs that pests might cause if not inspected.

They will typically inspect every visible area of the house that is accessible.  If infestation evidence is found, the evidence is put on their state-approved forms and they recommend forms of treatment, either spot treatments or tenting the entire structure.  Keep in mind that the inspector cannot see or detect infestation behind walls, paneling, cinder block wall voids, or beneath carpeting.  Infestation in these areas may continue to be undiscovered.

Geological Inspection

The potential geologic hazards that are present, within homes situated on hillsides, may be very easy to the expert’s eye but missed by the person without specialized knowledge in geology. Possible geologic hazards that go unrecognized can show up at any time, resulting in hefty financial losses coupled with lawsuits for liability. If you think it can’t happen to you, don’t forget the Bluebird Canyon landslide in Laguna Beach (http://www.ocregister.com/articles/home-137081-city-canyon.html) on June 1, 2005, which destroyed 12 homes and disrupted the lives of dozens of residents.

It’s a jungle out there, for both buyers & sellers…watch out folks. Get represented by a real estate company who is on top of things so your best interest are always a priority number one.