Michael Samuels provides legal services to FSBO and other real estate clients in Cincinnati and throughout Ohio.

What you need to know about home inspections

On Behalf of | Jan 18, 2024 | FSBO

There are many details about the home sale process that someone listing their home for sale by owner (FSBO) needs to understand. From the disclosure process when listing the property to the negotiation of a purchase price and other terms with a buyer, there are many details to consider.

Many of those considerations involve outside professionals, like inspectors. Inspections are critical to the success of any real estate transaction involving a mortgage. Lenders require inspections to ensure that the property is in appropriate condition and does not have any significant defects that the buyer overlooked or the seller actively hid.

Getting a preemptive inspection can be a smart move

Generally speaking, the buyer is usually the party who pays for an inspection at the request of their lender. Even someone making a cash purchase may choose to hire an inspector to look over the property and identify any issues.

Sellers who have been in the property for years may not realize that certain issues developed during their tenancy. Therefore, they may end up surprised by what an inspector uncovers. There’s also the possible risk of fraud if the buyer has a relationship with the inspector they hire. Having an inspection performed before listing the property can diminish the likelihood of surprise defects and fraudulent claims.

Inspection issues may lead to renegotiation

Often, inspections do not turn up anything significant. The inspector looks at the property and validates that it is in habitable condition. However, sometimes there are issues that the inspector reports back to the buyer and lender.

Depending on the type of defect and the type of mortgage, it may be necessary to renegotiate terms for the sale when there are significant defects. For example, certain federal loan programs have specific standards for properties, like the need for handrails in any stairway.

Sellers and buyers may need to renegotiate the price for the transaction. They may need to find a way to share the costs for repairs. Occasionally, they may even need to reschedule the closing to accommodate the necessary work on the property. In some cases, a bad inspection outcome could lead to a buyer backing out of the transaction. Depending on the contingencies that they included in their offer, they could potentially cancel and also demand a refund of their earnest money.

Those selling a home FSBO who understand the role of inspections in the process may have an easier time reaching the closing table and securing the best price possible for their properties.