New construction, short sales and bank-owned home inspections.

  1. New construction – Builders often will not allow an “inspection contingency”. Once you sign a contract to buy the home that they are building, you are usually locked-in to the purchase, except for some instances when you cannot obtain financing. Such contracts are definitely slanted in favor of the builder, but the logic here is pretty easy to understand. Builders will offer limited warranties on their homes and any issues that surface during an inspection will likely be covered by such a warranty. They don’t need to allow a contingency, since they will be obligated to fix the issues anyway. Builders also allow you to do a punch list of final items during their walkthrough, giving the buyer an opportunity to have minor cosmetic issues resolved. Therefore, it is recommended that you use a independent trained Home Inspector to inspect your newly constructed home prior to doing your final walkthrough, as they’ll find items that you normally wouldn’t think to check, etc.
  2. Short sales – In a short sale, the seller is trying to sell the home for less than they owe on their mortgage and doesn’t have money available to cover the balance. They request that they bank take a lower payoff for the mortgage because they cannot afford to sell, yet desperately need to sell. People in this situation are often in financial distress, whether that be from unemployment, an unexpected injury, or looming bankruptcy. If a seller doesn’t have any money to cover their daily living expenses, they also are not going to have money to cover a list of repairs. You will be stuck with an “as-is” purchase in most instances. You need to be comfortable that the purchase price is low enough to take on the list of repairs that will become your problem when you buy the house. So as previously suggested, it is wise for you to use a independent trained Home Inspector to inspect the property to minimize any surprises after purchase.
  3. Bank-owned  – When a home is foreclosed by the bank, they will hire brokers to help them sell the home on the open market. They will spend a modest amount of money to clean up the property and make it at least presentable in order to sell. When you negotiate with banks, they will often have strongly worded contracts that insist you are buying the home “as-is”. Most banks will stick to their “as-is” provisions, and they are not in the business of rehabilitating homes. We have seen banks occasionally negotiate or offer to fix very major issues, so you should try to negotiate, but stick to only the really big problems. It is a waste of your time to ask a bank to fix a broken light switch or leaky faucet. They will say no. Again, as we’ve stated, it is wise for you to use a independent trained Home Inspector to inspect the property to minimize any surprises after purchase.

Despite these realities, a Home Inspector to help you understand what you’re getting yourself into and what the potential repairs costs would be, thus enabling you to have the proper information to make a educated decision.