Once a contract to purchase has been executed, the buyer now has the option and time to have a home inspection performed by the inspector of their choice. While a home inspection is not required, it is highly recommended, even for new home purchases.
General Home Inspection
A professional home inspector licensed in Oklahoma will evaluate dozens of items in a home such as the roof, plumbing, A/C unit, foundation, electrical and structural systems. The inspector will provide the buyer a written report of problems they have found. The buyer can then choose to have further detailed inspections if they like, such as a HVAC inspection, foundation specialist inspection, or others. A general inspection is not meant to uncover or answer every single problem that might occur in a home – rather they are there to give you a general overview of the condition of your potential home purchase. It is up to the buyer to choose if you want more detailed inspections by specialists such as electricians, plumbers and HVAC experts. Of course, the buyer must pay for these inspections. A qualified inspector will test heat & air, plumbing, fixtures, windows, appliances and electrical, as well as wastewater and well if applicable.
There is a saying in Oklahoma, there are homes with termites and those that will some day be infested with termites. Termite treatment is just a fact of life with home ownership. Prior to purchasing a home the buyer will have a qualified termite inspection company inspect for termites. In fact if the buyer is financing a home, their mortgage company will require them to have the home inspected. If the inspector finds termites, or evidence of infestation in the past, it is not the end of the road for the home purchase. The key is treatment. Has the home been treated in the past, and can it be treated now to eliminate the termite problem? An inspector will provide the buyer a written report on their findings and often provide a one year warranty that if any termites appear, the termite company will treat the home at no cost. If you already have a termite warranty in place, be sure and bring this up during negotiations as this can help improve the “salability” of your home.
Depending on the findings by the general home inspector, the buyer may wish to have further inspections of the home by specialists such as an electrician, licensed plumber, or HVAC specialist. Of course the buyer must to pay for these inspections. Of course no inspector, no matter how skilled, can predict every future problem that might arise. Most only promise the system is working at the time of the inspection. Even with the best HVAC inspector, your A/C compressor can fail a week after closing and the new buyer is still liable for the repairs.
As a seller you can offer to purchase a one year home warranty for the new buyer. This can make your home more desirable and improve your negotiating position.
Once the buyer has received the inspection reports, they can choose to continue with the purchase or opt out at that time. In the standard OREC purchase contract we typically use, it is the sole discretion of the buyer to continue or cancel the contract if the inspections are unsatisfactory. In most cases if they choose to cancel the contract during their allotted inspection period (usually 10 days), they get a full refund of their earnest money.
In most contracts the buyer and seller agree to a “repair cap” in advance. This is a set dollar amount that the buyer agrees to make repairs if needed. Sometimes they buyer agrees to purchase “as-is” with no repair cap. They will still want to perform inspections, and can still walk away after the inspections, but you the seller has not agreed in advance to make any repairs.
TRR (Treatments, Repairs and Replacements
Once the inspections are complete, the buyer’s agent will prepare a document we call TRR’s. This document provides detailed information on what items from the inspections they would like repaired. The items must be defects in the home, not cosmetic in nature.
TIP: Treatments, Repairs or Replacements (TRR) is a report that the seller provides to the buyer after inspections. It outlines the repairs the buyer feels needs to be made to the property. The seller can then get estimates of the repairs. Buyer and seller can then negotiate the repairs.
Once the buyer has provided you with a TRR, you have a specified amount of time in the contract to get estimates for those repairs. Often times on minor repairs (such as a leaking faucet) you may choose to perform the repair yourself. On major items such as electrical and plumbing, you will generally need to get estimates from a licensed tradesman.
If the estimates are under the repair cap, then you are responsible for completing the repairs. If the estimates are over the repair cap, then you can either negotiate with the buyer which repairs to do, or the buyer can cancel the contract and walk away and receive a full refund of their earnest money.
Final Walk Through
Once all repairs have been completed and preferably after you have moved out of the home, just prior to closing, the buyer has the right to make a final walk-through of the home. This is their chance to make sure the repairs are completed, the home is left in proper working order and everything is as expected. Often this is done the morning of closing, but we prefer to do this walkthrough a day or so in advance so that any problems that arise can be rectified.
Items to Inspect
- Structural – foundation, roof, slab
- Well (if applicable)
- HVAC system