A follow up to the The Home Inspection Process

Now that we have completed the home inspection it is important we understand what is expected, what it contains, what is significant and how we can address items within.

The first thing to understand is that every home inspection of a vacation home we have ever seen has items, usually multiple items. It is normal to see a significant list. Our home inspectors are very good and they report everything. That does not always mean the property is in bad shape – why?

What is Expected and Why
Unlike regular residential sales, vacation homes rarely get the routine maintenance you or I will conduct in our own homes as part of our weekly, monthly or annual routine. This is mainly because the owners don’t visit their vacation home – sometimes for many months or years so don’t get that “eye” that we do in our own homes. This gets compounded by the changing of guests weekly with kids who are excited and having fun. (That’s known as revenue)

Should the management company not have caught these items? Yes, possibly.

Management companies may be too busy cleaning and getting the home ready for the next guests to catch many items so over time they compile a collection of general maintenance work that only gets exposed when an experienced eye such as a home inspector does a thorough “examination” or the home owner visits.

What we have also experienced is that an owner may be behind on monies owned to the management company so management are no longer putting work in knowing they may not get repaid. This is fairly common when an owner puts a property up for sale.
As buyers agents we are not privy to the relationship between owner and management so it may not always be as obvious an answer as management or owner neglect so keep an open mind.

New vacation home owner tip:

Arrange for the property management company to do a deep clean EVERY YEAR. Put it in your calendar. September is the perfect month, its usually quiet and you will have plenty of time to clean, touch up paint and introduce any new items to your home. Maybe even coordinate it with a visit. You may get the travel as a tax break!

What the Home Inspection Contains.
Items fall into two main categories:

Normally Expected.
Normal items you will see are general maintenance items such as loose door handle, cracked tiles, blown light bulbs, tears in the pool screen, settlement cracks, slow drains, general maintenance like calking and sealing.

Significant.
Significant items include leaky roofs, inoperable AC units, mold, non functional pool equipment, non functioning appliances or any significant structural damage.

We see it all the time.
Pool heaters not unlocked by the management company for the home inspector prior to a visit. As much as we request and remind its one of those things that come up far too often. We’ll take care of it. Again.

New vacation home owner tip:

AC Units that need serviced. If we don’t tell you then remember these words.
Make sure you get your AC serviced at least once a year and have the filters changes every few months. It will extend the life expectancy of your unit by as much as double and it will SAVE YOU MONEY every month on cooling bills!

What it does not contain: Cosmetic items.
Such as broken chairs, or dirty bed sheets, non functional electronics like a TV, games, pool tables, the toaster etc. are not part of the home inspection. You will be buying them all “as-is” if they are included with the home sale.

So, what do we do now with this report?
Review the items within and discuss with your Realtor and/or the home inspector.
Make a decision on the accumulated value of the items that need to be addressed. Per The Home Inspection Process, we suggest about 1% of the sales price is fair but not including any significant items which we will address with the seller regardless.

Here comes the hard part!
We’ve done the inspection, found some issues we’ve had to request resolved, had them agreed by the seller and we are good to go right?
We wish it was that easy. One of the more difficult things to do is find vendors who are willing to run out to a property at short notice to fix small items.
If the seller is fortunate the current property manager has staff or a vendor list they can turn to in order to get things moving but that is only going to work when the property does not have guests or at least guests that will allow access. Maybe you don’t intend to carry on with the current property manager so they will not be so willing to jump through hoops to get those items done for a seller. This all within a tight inspection contingency period.

Answers?
Be prepared to be flexible on those items, stick to the big stuff that’s important. Do not dwell on the small potatoes. Expect to have to extend the inspection contingency period to allow more time to get work done. Consider an offer to accept a seller credit, that is the easiest way to save everyone a lot of trouble. Let your manager get it done right!

Requesting items to be resolved
When you review the inspection report you have to ask yourself: I am prepared to lose the house because of an item on the inspection report?
There are two modes of negotiating inspection items, soft requests and hard requests.

Soft Requests: are where we ask if the seller can review some of the items on the report and address. Usually this pertains to the seller having the property manager looking into those items. We have been very successful in getting many of the smaller items corrected but it is ONLY A REQUEST. There is no guarantee they will be resolved. We may get some, all or none of those items.

Hard Requests: we have to inform the seller that if an item is not resolved we will be withdrawing from the contract. You have to accept that you may lose the home if those items are not agree to and resolved. You are also giving the seller an “out” of the contract by making that demand.
If a hard request is not agree to prior to the end of the inspection contingency period we will send you a cancellation of contract addendum.
The only leverage we have as your representative is to threaten to withdraw from the contract if items are not resolved to our satisfaction.

Think very carefully what is important to you and be very clear with us what is a hard and what is a soft request.

New vacation home owner tip:

Not all owners are treated equally. If we are staying with the current management company this is a great time to ask them why there was not more maintenance done and how they are going to improve it on your watch. Make them aware right away you are watching and you want your house to be the best in their inventory. Put your flag in the dirt and tell them how it’s going to be. Make an immediate impression and you will thank yourself you did.

The misconception of “As-is”
When we make an offer on a property, we use the “as-is” contract, this allows us to wrap the entire package together including the furniture and the business. The “as-is” contract also allows us the awesome 15 day inspection period for you to do all of the necessary diligence before making the sale final. “As-is” does not mean you are buying a property the seller knows has issues, it’s a vessel we use to allow the property to convey with all items included.
In most cases a seller may not have been in a property for months or years and is probably oblivious to items on the inspection report. They may even be more surprised than you are if it turns out there are significant items – so bear that in mind as you progress!

Hopefully you will gain an understanding of what to expect from the home inspection and these words for the wise will make you feel more prepared for the post inspection process.

We’ve seen it all and can guide you through this important stage, so the process becomes as easy and transparent as possible.
We are here to help!

Jerry Barker
Vacation Home Specialist
Tel: 407-286-8170