Disclosures & Inspections
Nobody wants to overpay for anything, whether it is a house, car or groceries. The biggest concern of most Buyers is the condition of the home, as their offer was based on that. If there are hidden or unknown repairs needed, you must find out about them now. The Seller’s Property Disclosure Statement, Insurance Claims History and Home Inspections are used by the Buyer to help determine the home’s condition:
Sellers Property Disclosure Statement: The Seller is required to complete a report on the home’s history and condition, called a Seller’s Property Disclosure Statement. It is a seven page document that includes very detailed questions for the Seller regarding the home’s history. Some examples: “Are you aware of any past or present roof leaks?”; “Are you aware if any portion of the property has been flooded?”; and the catch-all question, “What other important information are you aware of that might affect the Buyer’s decision to purchase this property?”
Insurance Claims History: The Seller is also required to provide a report showing a five year history of any Insurance Claims filed on their property. This can be very helpful, especially if the Owner has forgotten to list an item on the Seller’s Property Disclosure Statement.
Home Inspections: In addition to the SPDS and Insurance Claims History, a Buyer has a 10 day period in which to inspect all aspects of the homes condition. At a minimum, we recommend a Home Inspection, Roof Inspection and Termite Inspection. Depending on the results of the Home Inspection, a follow-up inspection by a specialist may be necessary, such as a Heating and Air Conditioning contractor or a Foundation expert.
Before the conclusion of the 10 day Inspection period, the Buyer submits a form to the Seller with one of the following options checked:
- No Repairs Requested: The Buyer elects to continue with the purchase without requesting that any repairs be made.
- Cancel the Contract: The Buyer elects to cancel the purchase due to certain conditions or problems found during the Inspection Period. The Buyer’s Earnest Money is returned to them.
- Repair the Following: The Buyer elects to give the Seller an opportunity to repair or correct problems found during the Inspection Period. In this case, a list of items to be repaired is included with the form.
Options 1 and 2 do not require a response from the Seller. The Seller has five days to respond to #3. They have three options to choose from:
- Agree to make all Repairs: If the Seller agrees to make all of the repairs requested, the sale proceeds and no response is needed from the Buyer.
- Will Not Make Any Repairs: If the Seller decides the repairs are unreasonable and refuses to make any of them, the form is returned to the Buyer for a decision on whether or not to accept the response.
- Seller Will Make Some Repairs: If the Seller agrees to make some, but not all repairs, the form is returned to the Buyer for a decision.
Buyer’ Response: The Buyer has five days to respond to the Seller’s response. There are only two options:
- Accept the Seller’s Response: Continue with the Purchase; or
- Cancel the Contract: The contract is cancelled, Earnest Money will be returned to the Buyer and the home should be placed back on the market.
If the Buyer agrees to continue with the purchase and a loan is involved, the next step is the Appraisal.
The Disclosures and Inspections help the Buyer determine the condition of the Home but it is the Home Appraisal that evaluates what the home is worth.