Issue 43 April 29, 2001 

This weeks article is taken from a brochure provided by the Charlotte Regional Realtor Association. To give total credit where it is due, Bruce Rudd the current president of Central NC-ASHI (American Society of Home Inspectors) provided a copy of this brochure, which a home inspector in Charlotte faxed to him.

How Do I Clear The Inspection Hurdle?
(Additional comments in prentices and italics are mine)

The following are basic guidelines and helpful suggestions on when and how to handle the inspection process. For a more detailed listing of the items mentioned in this brochure, agents should read the sections pertaining to inspections in the "Offer to Purchase and Contract," and the full text of the "Standards or Practice of the North Carolina Licensed Home Inspectors."

1. When can inspections be performed?

A. The seller can get an inspection prior to listing the property. This way the seller is aware of any major problems before setting the listing price. Depending on how this is handled, the buyer may decide not to have a separate inspection. (Don't count on it, my experience is that most buyers still want their own inspection.) If the seller declines to have the inspection performed prior to listing, it is a good time to go over paragraph 12 in the Offer to Purchase and Contract, and explain repair negotiations and the buyer's and seller's rights and options regarding inspection results. (Great idea, you might also advise your seller that their home is not perfect, none are, and that the buyers inspector will find things in need of repair. The issue is, do you want to repair it now and let it help sale your home or take a chance that something simple and inexpensive may encourage the prospective buyer to make another choice or cause the negotiation to fall apart.)

B. The buyer can get an inspection prior to making an offer, but runs the risk that someone else will put the home under contract while the inspection is scheduled and performed. (I have done some of these. The buyer made a copy of the inspection an exhibit to the offer to purchase with an as is offer or as a list of repair demands.) 

C. If the inspections are being performed after the contract has been negotiated, then schedule inspections as soon as possible to allow time for repairs to be agreed upon and performed.

2. With respect to paragraph 12 of the Offer to Purchase and Contract, what items will be inspected, and what items, might not be inspected? 

A. Under the Standards of Practice for NC Licensed Home Inspectors, all items in paragraph 12 will be inspected except:

· Public water systems outside the home's foundation wall.
· Private water (well) systems.
· Public or private sewer systems outside the home's foundation wall.
· Friable asbestos
· Environmental contamination
· Storm doors and windows
· Detached structures, such as garages or storage buildings
· Operation of air conditioning systems if it might cause damage (such as when temperatures are under 60 degrees)

As a Realtor, you will need to make specific arrangements if the buyer wants these items to be inspected. You will better serve your buyers and sellers by becoming familiar with the Standers of Practice for home inspectors. Contact CRRA for a copy. (Don't contact CRRA send me a request with your name and mailing address and I will see that you get a copy.)

B. The Standards of Practice require home inspectors to inspect many things affecting the home that are not included in paragraph 12 of the Offer to Purchase and Contract. Therefore, the inspection report will contain comments on those items, even though they are not part of paragraph 12. Consult the Standards of Practice for a complete list. Some examples are:

· Areaways, vegetation, driveways, patios, walkways.
· Retaining walls, with respect to their effect on the building.
· Interior fuel storage, sumps, verifying a heat source in each room.
· Counters, cabinets, garage door openers, skylights.
· Insulation, vapor retarders.

(Be aware that the Standards of Practice are minimum standards, which the home inspector may and most usually will exceed in their inspection. For example although the standards require that only one electrical outlet and one window in each room be checked, as a general rule I check them all if accessible. Although I am not required to check septic tank systems, I look for signs in the yard, which might indicate a problem and will report if observed. If there is raw sewage exposed I will let you know about it. If I smell a strange odor in the home I will attempt to determine the source though I am not required, and may not be able to find it. If I observe a problem in the yard, an unsafe condition or something that needs to be repaired I will write it up. If that detached garage I am not required to inspect has an obvious unsafe condition I will mention it.)

3. Does the Offer to Purchase and Contact cover all my inspection needs?

A. NO. In most cases there are other systems or components that are not specifically addressed in the Offer to Purchase and Contract or Home Inspectors Standards of Practice, that may affect the buyer's concerns about the property. These can be addressed using an addendum with the home inspection company, or by making inspection arrangements with a company that specializes in that area. These include:

· Shutters, awnings, fences, spas, hot tubs, pools, underground storage tanks.
· Solar equipment, antennae, satellite dishes, lighting rods.
· Water softeners or filters, irrigation systems.
· Low voltage electrical systems, security systems, heat or carbon monoxide detectors, telephone equipment, TV equipment, intercom systems, speaker systems, built-in vacuum systems, garage remote controls.
· Humidifiers, air cleaners, wall or window air conditioners, interiors of chimney flues, fireplace inserts flue connections. 
· Wallpaper, paint, draperies, blinds, carpeting.
· Clocks, timers, self-cleaning oven functions, oven thermostats, refrigerators (whether built-in or not), any kitchen appliances which is not built-in.

You may want to make a listing or "Menu of Inspection Services" to review with the client. Have them initial the items they would like to have inspected and sign the bottom. This allows you to be more through and offer each client the same service. Keep your list updated on new services as you become aware of them. 

4. Suggestions of how inspection repairs are handled.

A. When the written report is received, review it with the buyer. Discuss which items the buyer wants the seller to address or repair. You need to verify that any items you ask the seller to repair are eligible items and fall within the buyer's rights under paragraph 12. Too many buyers assume that the entire list automatically should be addressed. The buyer's willingness to accept a few minor or maintenance type items may be helpful in getting the sellers to address the more significant issues. Buyers who ask for everything may be perceived as overly demanding.

B. On the report, mark the items the buyer wants addressed and have them sign the marked-up report. Make a copy for the buyer, and promptly send a copy to the listing agent. Ask the listing agent to have the sellers to initial the accepted repair items. If the sellers decline to repair them, they should not initial it. The report can be verbally negotiated like a contract until agreement is reached. After agreement, ask the listing agent to return the inspection report signed and initialed within the time frame indicated on the contract. 

C. Obtain receipts from individuals who performed the repairs for the seller. If the seller performed the repairs themselves or used unlicensed contractors, you may want to consider scheduling a reinspection with the original home inspector, to verify the proper repairs have been made.

"CRRA recognizes that Realtors® and Inspectors have their own established procedures. CRRA is not mandating that the things set forth herein are the only procedures to use. What works best may vary from one Realtor® to another or from one buyer to another. The points in this brochure are suggestions only."

Additional comments from Chris:

1. It is my understanding that the Charlotte Regional Realtor Association is also providing an inspection addendum to be used with the Offer to Purchase and Contract. I have a copy. What the addendum does is gives the buyer the opportunity to incorporate inspections of items not included in paragraph 12 (b) and includes a detailed list of options to check off as well as ample opportunity to add others not listed. This is an excellent idea, which should be considered. Because of the legal implications of a contract addendum I will not provide a copy of this document but suggest that you consider requesting one from CRRA.
2. Be aware that as of last year (2000) the home inspector is required by state regulations to have a contract or agreement signed by the client prior to starting the inspection.
3. Be aware that the home inspector is required to submit his report within three business days. 
4. Although the inspector is required, by state regulation, to provide a summary as part of the report, use the entire report in you negotiations. Don't just send the summary. You may be shocked at the impression you will make on sellers by them seeing all of the issues your client didn't ask to be repaired. Being awakened to the real condition of their home has a way of making a major impact on homeowners and their agents. 

Thought for the week

"Luck is the residue of design."
--Branch Rickey