Commonly Asked Questions about Inspectors and Inspections
I get a lot of questions around some basic principles of the inspector and the inspection. For today's blog, I thought I would share these FAQ with you.
WHO CHOOSES THE INSPECTOR?
Often, buyer's don't have an inspector on hand, so they ask their real estate agent to recommend an inspector. In Washington State NWMLS, there is an Inspection Referral Disclosure Form (Form 41D), that your agent may have you sign. Your agent will give you three or so names of inspectors that you can choose from. With your approval, the agent will coordinate the inspection. Many agents have "go-to" inspectors that will be able to prioritize an inspection for their agent/client. But the Form 41D asks that the agent disclose the relationship between the agent and the inspector.
WHY WOULD AN AGENT GIVE THE BUYER A FORM 41D TO SIGN?
If the agent does not offer the buyer several options, the real question is, why wouldn't the agent give a buyer a Form 41D to sign? Problems may arise if only one inspector is offered and there turns out to be a problem with the home later. No agent wants the implication that the inspector that they recommended didn't do their job. The 41D protects both the buyer (because they get to choose an inspector from several) and the agent (because then the agent can show that the buyer had options - there is no illusion of a special relationship between inspector/agent).
WHEN DO YOU DO A PRE-INSPECTION?
AS A SELLER - If you are listing your home for sale, you may have an inspection completed of the home so you that you are aware of and address outstanding issues with the home. The seller would need to disclose issues on the Form 17, the Seller Disclosure Form.
Additionally, in an actively hot market like the Seattle market, the listing agent may provide a copy of the inspection to the buyer's agent to encourage that the buyer waive their inspection contingency with their offer. Don't be surprised if the listing agent asks the buyer to sign a waiver to receive the inspection that the seller performed. This waiver will have wording around protecting the inspector and the real estate agents - because in this case, the buyer didn't choose the inspector and hire the inspector.
AS A BUYER - If the seller allows a pre-spection to be completed by the buyer, the buyer may elect to have a pre-inspection completed. You would do this so that you can review the home, put in an offer with confidence knowing any issues on the home. The issue with a pre-inspection is usually a timing issue. Most buyers in a hot market will sign a waiver of the inspection contingency if they have had the opportunity to complete a pre-inspection before they put in their official offer to the seller. But in the real world, you can't always get an inspector on a short notice or on weekends before a review date of all offers. Some agents push to put in a strong offer to be accepted before the review date, so they really need to have relationships with inspectors that will come on a moment's notice.
WHEN DO YOU WAIVE AN INSPECTION?
A buyer may waive an inspection if they have reviewed a pre-inspection. A buyer may waive an inspection on a new construction home. A buyer may waive inspection to be competitive in their offer. Remember, the seller is reviewing multiple offers in our market, and the one that is most desirable and beneficial to the seller will be selected. But, ultimately, it is the buyer's decision to waive or not to waive the inspection (or any) contingency.
WHO PAYS FOR THE INSPECTOR?
An inspector would be paid by the buyer to inspect a home if they have an inspection contingency or if they are doing a pre-inspection prior to putting an offer in.
An inspector would be paid by the seller to inspect a home prior to putting the home on the market.
WHO SHOULD ATTEND THE INSPECTION?
Typically, the buyer's real estate agent will let the inspector into the home on day of the inspection. The buyer's agent will often stay for the duration of the inspection. The buyer should really attend, too, so they can ask questions along the way.
Of course, if the seller is having the inspection completed, the seller will allow entry and attend the inspection.
I DID AN INSPECTION, NOW WHAT?
If you successfully won an offer that has an inspection contingency, you will have to follow the timelines of the contract. It's kind of like ping pong done through the buyer's agent and the listing agent. Buyer gives notice to the seller that certain items need to be addressed, paid for by seller or that Buyer does not want to go forward with the contract. If Buyer's ask involves addressing or paying for items found on inspection, Seller responds by either agreeing, disagreeing or offer an alternative. Buyer then would respond to Seller. Once you are done going back and forth (within the specified timelines in the contract), you can move forward with the transaction.
**IMPORTANT TO NOTE ** a buyer can effective waive their right to an inspection EVEN if they have an inspection contingency in their offer if the inspection isn't performed and/or proper forms are not returned to the listing agent/seller in the timelines listed out in the contract.
WHEN ARE ADDITIONAL INSPECTIONS NEEDED?
Examples of when an additional inspection is needed are sewer inspections or septic inspections. This type of inspection is usually hired by a separate inspector that specializes in that type of inspection.
Here's some real world real estate for you.
In a Seller's Market (where there is little inventory and/or high demand), you often do not see an inspection contingency in the contract because that would make the offer less attractive. If the goal is to get the home, many buyers will opt to waive their inspection contingency. If you add more contingencies to the offer, the more likely the offer will be overlooked by the seller/not recommended by the listing agent.
In a Buyer's Market (where there is a lot of inventory and/or ow demand), the buyer's agent would never miss the opportunity to have an inspection. Buyer's agents usually use this time to point out both major and minor issues. Buyer's agents use this time to ask for more money and renegotiate some terms.
If you are in what I call a "mutual" market, where the demand and inventory are even, that's when negotiation is so much more reasonable.
Understanding what kind of market you are in will help you to develop the right strategy. An experienced real estate professional will help you navagate through the transaction.
Kristin Bushnell is Designated Broker of Bushnell Real Estate Solutions and Co-owner of Bushnell Craft Brewing Company in Redmond, WA. Check out my profile here.
If you are ever interested in chatting about real estate, contact me at firstname.lastname@example.org or call me at 425-559-1355. I'll buy you a beer (or non-alcoholic beverage, if you prefer!), and we can chat about real estate until your heart's content.