Cleveland Real Estate Home Inspection Framework - Health and Safety Issues versus Deferred Maintenance
Every buyer in the greater Cleveland real estate market should obtain a home inspection when purchasing a home. While much has been written about the benefits of and items covered during a home inspection (this post will not cover these items), how the home inspection contingency is negotiated and removed can vary with each local real estate market.
In our local Greater Cleveland real estate market, defects found by the home inspector are commonly placed into two general categories:
- Health and Safety
- Deferred Maintenance.
Examples of Health and Safety defects are:
• Gas leaks
• Mold
• Water intrusion
• Structural defects
• Leaky water pipes
• Leaky roof
• Non-terminated electrical wires, double-tapping
Examples of Deferred Maintenance are:
• Door(s) that won’t latch or bind
• Cracks in concrete driveway
• Exterior paint peeling
• Missing roof shingle(s) but no active leaks
• Chimney damper doesn’t close
• Dented downspout
• Window won’t open
Regarding Health and Safety defects, buyers can ask the seller to remedy some or all of the items identified on the home inspection report or to ask for a financial credit at closing.
Please note: The purpose of the home inspection is to help the buyer understand the condition of the property, to identify major issues with the home and help the buyer evaluate if anything that would materially affect the transaction would affect the buyer's desire to continue with the purchase agreement.
In our local marketplace, some purchase agreements do not give the buyer an automatic release from the purchase agreement if a defect noted on the home inspection report is trivial -- in other words, the item in question is not MATERIAL to the transaction (ie. does it financially change the agreement in a material way) AND/OR is it LATENT (ie. not visually obvious).
Disclaimer: The language in a specific purchase agreement is what is binding, this post is just a general framework for what is commonly practiced in Northeast Ohio.
Identifying what item(s) a buyer should ask the seller to either repair or contribute to a financial credit depends on:
• Is the buyer paying a premium for the home? If so, then the home should be in premium condition, generally speaking, so asking the seller to remedy these items is not unreasonable
• Is the buyer paying an average, fair market value for the home? If so, then some give and take may be in order.
• Is the buyer getting the home for a fair amount under market value? If so, then sometimes it is best not to rub salt in the wound.
• The sellers’ financial constraints. Many sellers who have purchased in the past 2-10 years are now strapped for cash. They may not have the financial ability to make repairs or provide a financial credit.
• How long the property has been on the market.
• Communication and Negotiation Capabilities. Let’s face it, some people are good negotiators, can stay objective and focused on the goals at hand, and some folks have a much harder time with this. Same goes for communication. Being clear, concise, knowing how to create a win-win, setting expectations, etc., can make a huge difference in the outcome.
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