General Home Inspection
It’s a buyer’s responsibility to thoroughly inspect the property they are going to purchase. Most buyers will start with a general home inspection and maybe a roof inspection to make sure the roof is insurable with their insurance. Do not be alarmed at the inspection report. It’s common, especially on homes that are more than 10 years old, to have a lengthy report of defects on the property. Keep in mind that the home inspector lists EVERYTHING that might be defective, from a loose door handle to a faulty AC unit. It’s my job to help advise you on negotiating which repairs are necessary and which ones aren’t.
It’s not a matter of IF, but WHEN a home (in Oklahoma) will get termites.
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