Your Home Inspector Found Major Problems—Now What?

So you’re buying a home and you’ve hired a certified home inspector. It is important to remember that finding problems is the nature of his work. It is his job to find and report any issues to you. What should you do when major problems are discovered?

Remember, you’ve hired him to find things that are wrong with the house. You may be in for some big surprises, but don’t panic. Be clear-headed and determine what’s reparable and what isn’t. The goal of this article is to help you handle the situation when large problems are found.

You are welcome to walk around with the inspector as he does the inspection. You might want to stay out of his way, but feel free to discuss what he finds and be sure to take notes. Sometimes he makes comments during the inspection that won’t show up on the final report. You should also feel free to ask him questions during the inspection.

Once you receive the report make sure you read it. Also look at the notes you took while you were walking around with the inspector.

Some problems are beyond repair and may cause you to walk away from purchasing the home. For example, the house may sit on a fault line or flood plain. Perhaps the foundation has a severe crack. Perhaps the water supply has been contaminated by a local landfill.

Many other problems can be fixed, even serious situations like a destroyed septic system. You have to decide whether you want to spend that kind of money to have something rebuilt or repaired. It’s not wise to fix every problem. The house may not be worth it. However, this can depend on housing prices and the value of the property.

What if the issues are major, but you may still want the property? You may need to hire an engineer with a specialty in the area that needs repair. You will have to pay the cost for the engineer. A contractor may not have the expertise to determine what needs to be done. Once you are confident of what must be done get two or three estimates from qualified contractors so you can wisely negotiate a settlement before the closing. Find your own contractor to do the work so you know it will be done to your satisfaction. Then you should negotiate for a lower purchase price that will help cover repair costs.

Once you have the pricing you can negotiate with the seller on who will cover the costs or for a reduction in the sale price of the home. Your contract will likely require that the securing of the quotations and the negotiations with the seller be completed in a limited time frame. So you will need to complete this in a timely fashion if you want to work out something with the seller.

If the home has problems that are simply beyond repair, or you and the owner are unable to reach a satisfactory negotiation on expensive repairs, you should be able to back out of purchasing the home if the home inspection contingency is written correctly. However, be prepared to comply with the terms of your contract. Notify the seller of the problems with the home and your decision not to go through with the purchase.

If you live in a state where real estate transactions are handled by real estate attorneys, your attorney should write a letter specifying why you’re withdrawing from the contract. Otherwise, be sure to send the documentation to the seller to get out of the deal and get your money back. If you don’t comply with the terms of the contract, you could lose any money you put towards the purchase of the home.

You should have the option to walk away from the deal if you find out during the inspection that the seller has misrepresented the condition of the home. Some state seller disclosure laws allow the buyer to receive documentation from the seller which discloses the known problems with the home. You can get out of the deal if the disclosure didn’t disclose items that you find before the closing.

Seller disclosure laws vary from state to state. However, if you don’t discover problems until after the closing or settlement, you might have the opportunity to sue the seller for damages and get attorney’s fees back. Find out if this applies where you live.

Remember, no house is perfect, including newly built houses. It’s because of your initial home inspection that you’re able to think clearly about what you want to do and how you plan to negotiate a solution to the problem. It was that all important home inspection that revealed the true condition of the home to begin with.

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