Inspections and Appraisal
As part of the contract, buyers may request several inspections, including a whole-house inspection, radon test, mold assessment, termite inspection, well inspection, and septic inspection. Buyers are responsible for paying for all inspections unless they obtain a VA loan, in which case the seller will cover the termite inspection cost.
Inspections must be completed within 14 days of the purchase agreement's acceptance, and a written report will be provided to the buyer by the home inspector.
Depending on the size of the home, inspections usually last 1 -3 hours. Buyers usually attend the whole house inspection or at least show up at the end of the inspection so the home inspector can go over his findings and give the buyer a written report. Some inspectors include other specialists as part of the inspection, such as a heating and cooling contractor.
If the inspection report identifies any issues related to the furnace, central air, plumbing, material structural damage, electrical, sewage, or roof, the buyer may submit a repair amendment within the 14-day timeframe. If the buyer requested mold, radon, well, septic, or any additional inspections, such as a pool inspection, as part of the contract, repairs for these items can also be included. However, the seller is not required to make the repairs. If the repair amendment consists of any areas listed above and the seller is unwilling to make the repairs, the buyer may choose to back out of the contract.
There may be some gray areas when it comes to determining seller responsibilities. For example, while vents can prolong the life of a roof, it is not necessarily the seller's responsibility to add them unless there is a leak or structural damage.
Inspectors may comment on items not covered by the inspections mentioned above, but these comments are for the buyer's knowledge only.
The cost of inspections may vary depending on the inspector, the size of the property, and the services required. On average, home inspections cost around $425, radon inspections $135, mold testing $350, and septic inspections $250. Some fees are paid at the time of inspection, and some can be paid at closing.
What happens if the home appraises for less than the purchase price?
If an appraisal is less than the purchase price of a property, it can have a significant impact on the transaction. Here are some possible outcomes:
- Renegotiation of the purchase price: The buyer and seller may negotiate a new purchase price based on the appraised value. If the seller is unwilling to lower the price, the buyer may choose to walk away from the deal.
- Additional down payment: If the buyer still wants to purchase the property at the original purchase price, they may need to come up with a larger down payment to make up for the difference between the appraised value and the purchase price.
- Termination of the transaction: If the buyer is unable or unwilling to come up with a larger down payment or negotiate a lower purchase price, the transaction may be terminated.
It's important to note that if the property is being financed with a mortgage, the lender will typically only lend up to the appraised value of the property. So if the appraised value is less than the purchase price, the buyer may need to come up with additional funds to cover the difference in order to secure the loan.
Once the home inspection and appraisal are completed and everything is moving forward, it’s now time to:
- Secure insurance for your new home
- Call utility companies and have them put utility bills in your name