What buyers need to know about inspections and the termination option period
By: Coral Dworaczyk
When selecting a new property, buyers often inquire about when they can perform their inspections on their new potential investment. Currently, it is the regional standard in our area to perform all inspections during the termination option period of the contract, which is a timeframe that is written into and part of the contract.
This termination option period allows the buyer (not the seller) to back out of the contract for a minimal fee for any reason during the specified period, and this right is commonly employed when unexpected “surprises” are revealed during inspections and their resolve is unable to be negotiated between parties. Most contracts in our area negotiate this period to be the first seven to 14 days of the contract, unless negotiated otherwise.
There are a wide variety of inspection services available in our area. These inspections can be purchased at any time by homeowners, but inspections are usually performed on a property when a new buyer is considering its purchase. In essence, every part of a property can be inspected, but the scope is typically limited to the owner’s or the buyer’s major areas of concerns in an effort to eliminate or define any issues with the property.
Keep in mind: There is no general inspection required by a lender or mortgage company. The lender may require a buyer to order an appraisal, but that is different from an inspection. However, lenders may require a termite inspection and associated wood report for some loans – especially FHA and VA loan programs.
Most buyers begin with a general home inspection. These inspections are performed by home inspectors that are licensed by the state of Texas, and their reports should provide an overview of the major systems of the home, including the structural, roof, plumbing, electrical, etc., systems. Depending on the inspector hired, these evaluations may be more general in nature, or they can be extremely detailed. However, unless home inspectors are licensed in other vocations, they are somewhat limited on what systems they can inspect more thoroughly. For example, if home inspectors are not also licensed as pest control professionals, they cannot provide a wood report for the presence or absence of termites or wood-destroying insects.
Because of these limitations, many buyers opt to delve deeper into some systems of a property. Often, they choose which are most important due to the condition and age of the home, as well as their planned use of the property and budget available for inspections. These more specific inspections typically include a static test of the plumbing lines under the foundation of the home (performed by a licensed plumber), a thorough inspection of the heat and air conditioning systems (by a licensed HVAC professional), a pest inspection to look for wood-destroying insects or rodents or even an environmental-type inspection on the home to seek out mold or the presence of excessive moisture.
Buyers often opt for a foundation-repair professional and/or a structural engineer to visit and evaluate the property to ensure the foundation health and overall structural competency of a home or building. For more rural properties, it is also common to have septic systems or water wells inspected, and to have the water quality evaluated for the presence of harmful bacteria. Additional inspections for specialized accessories such as pools, hot tubs, sprinkler systems, etc., can also be ordered, given different situations.
It is ultimately up to the buyer to determine which inspections are necessary to feel most confident and comfortable when purchasing a new home or building. Although most sellers (there are some legal exceptions, including, but not limited to, foreclosures and estates) are legally required to disclose the known defects of a property, sellers may be unaware of issues that can potentially cause great financial loss after the sale.
To prevent later heartbreak and financial strain, all buyers should beware and prepare to have a property thoroughly inspected prior to the end of their termination option period. Although no home or building is forever flawless, many issues can be “headed off at the pass” through renegotiating repairs with a seller, planning for future repairs ahead of time or terminating a contract during the termination option period.
For more information regarding real estate in the Coastal Bend, please contact Coral Dworaczyk, M.S., on her cell at 979-229-2836 or by email at email@example.com. Dworaczyk is a professional realtor with Palm Bay Rentals and Sales in Corpus Christi, Texas.