Table of Contents:
- Types of Inspections
- How to Request Inspections
- What Happens after the Inspections?
- What Should a Homeowner Agree to Fix?
- What Happens after the Homeowner Makes Their Decisions?
PART 1: INSPECTIONS
When a house is for sale in Maryland, there are certain types of inspections that typically take place. Some inspections are required by the lender in order for the loan to be approved. Other optional inspections are performed because buyers want to know the condition of what they are buying.
The inspection period runs from the time the purchase contract is signed by both the buyers and sellers, until a mutually agreed upon date. 14 days is the usual timeframe to not only have all inspections completed, but to also obtain the inspection reports.
While many sellers in Maryland cringe at the thought of inspections, it can actually be a blessing. Inspections help buyers learn the condition of a house upfront which can give them peace of mind. And, can help homeowners learn some things about their own house they weren’t aware of!
Common Inspections in Maryland
1. The Whole-House Inspection
Call this one the mack-daddy of inspections. Home buyers pay for this inspection, and as a result, receive a copy of the inspection report after the inspection is completed. Carried out by a professional, all of the home’s systems will be checked, from the HVAC to plumbing and electrical. Remember, however, that this is a visual inspection. The inspector cannot tell you what might be hiding behind the walls or in areas of the home’s system that aren’t visible to the naked eye.
The inspector will also make note of potential problems – those that may occur in the near future. Examples of this include faulty grading of the landscaping and possible moisture intrusion.
In addition to noting any problems, home inspectors also point out the positives! They will note excellent maintenance that may have been done. They will inform buyers of things that won’t likely need to be replaced anytime soon. They will point out the “good things”, that in turn make buyers feel comfortable and reassured about the house they want to buy.
Additionally, home inspectors educate buyers! They will explain to home buyers what they should do to maintain the house. They will explain how the heating and cooling systems work. They will provide tips for homeownership. All in all, home inspections can be nerve-racking for both buyers and sellers, but they don’t have to be a totally negative experience.
2. Pest Inspection
Most lenders require a pest inspection in order to approve a loan to buy a house. They want to be sure there is no structural threat to the house, as well as any pests that can cause damage. Homebuyers pay for this inspection. The exception in Maryland is the buyer who is using a VA loan. In this instance, the seller is required to pay for the inspection. Most of the time, the pest inspection is paid for at settlement instead of being paid in advance.
Some creepy crawlies are benign – staying put in their hiding places, causing no problems. Others, however, can wreak enough havoc to eventually bring a house crumbling down around its occupants. These are wood-boring insects, such as powder post beetles, carpenter ants and termites.
Unless you know what to look for, evidence of a pest infestation and even the damage caused by these pests can be difficult to find. The fix, when caught early, is far less expensive than if the problem is left to fester. Most homeowners in the U.S. spend between $237 to $847 for termite control service. An extensive infestation, however, can be substantially more expensive to cure.
3. Well and Septic Tests
Purchasing rural property comes with a whole different set of considerations. Typically located away from public services, water is supplied by a well and sanitation from a septic system.
Since problems with both are almost impossible to determine otherwise, an inspection is always a good idea. Buyers in Maryland who have a well and/or septic inspection also pay for these inspections themselves. The typical septic system inspection includes pumping out the system so that a visual inspection of the tank and distribution box can be performed. The inspector will look for signs of decay, including missing or broken parts.
Lenders also frequently require to have the water quality tested. Contaminants obviously pose a risk and you won’t necessarily see, taste or smell their presence. The U.S. Environmental Protection Agency suggests the water be tested for nitrates/nitrites, coliform bacteria, lead and pH.
4. Radon Testing
Radon is an odorless, colorless, and radioactive gas that is also a carcinogen. It is the second leading cause of lung cancer in the country, according to the National Cancer Institute.
Certain areas in Maryland are known for having elevated levels of radon in homes. Most home inspectors also perform the radon testing. Testing involves the placement of either 2 charcoal canisters or a digital device that are placed in the basement. Air samples are collected for several days, then evaluated. Any readings above 4.0 are considered elevated.
4. Chimney Inspection
Many houses for sale in Maryland have fireplaces, which of course have chimneys. Houses with oil heat also have chimneys. As a result, people who want to buy a house with a chimney often have a chimney inspection.
Chimney inspections typically involve the placement of a camera down the chimney , to look for cracks or other evidence of damage. They can even detect if there had been a chimney fire. If there is a chimney liner, they will see that also. Not all buyers have a chimney inspection, but some do.
5. Other Inspections
Of course, these are not the only inspections buyers may have completed. If they suspect structural problems, they may consult with an engineer. Roof questionable? They may have the roof inspected. An older house with possible lead paint? They may want the house tested for lead paint. Regardless of the requested inspections, it’s the buyers’ right when buying a house in Maryland. Fortunately for home sellers, the buyer pays for most, if not all, inspections. The exception, as discussed above, might be the Pest Inspection.
PART 2: HOW TO REQUEST A HOME INSPECTION IN MARYLAND
Buying a house in Maryland requires many different forms to be prepared and signed. Home buyers often want to know if there is anything wrong with a house, and will choose to have a home inspection, and possibly other inspections as well.
One of the most common forms included in a contract to buy a house, is the “Property Inspections Addendum”. This is considered an inspection contingency. This means the buyer has the option to have the house inspected (at the buyer’s expense), then request any repairs that may be needed. This also allows a home buyer to cancel the purchase if there are any major concerns that can not be resolved. All inspections must take place within a specific time frame, usually within the first 2 weeks after the house goes under contract.
PART 3: WHAT HAPPENS AFTER INSPECTIONS IN MARYLAND ARE COMPLETED?
It’s a toss-up whether the home inspection or the appraisal induces more nail-biting. Homebuyers, sellers and the agents involved await the results of both with a mixture of anticipation and fear. The key is to not allow fear to sink in, but rather to realistically work together towards a solution of any issues that might arise. That is exactly why negotiating inspection results is a part of the home selling and buying process.
Very few home inspections are “clean,” meaning there’s not a thing wrong with the house. And, many of the items mentioned in the home inspection report are actually minor.
Each inspector will provide a written report of their findings. Inspection reports, while comprehensive, don’t have to be deal-breakers. The buyers and their buyer’s agent will review the reports and discuss the results. If there are no issues of concern, some buyers will be satisfied and not ask the seller to make any repairs. When there are any issues of concern, the buyers and their agent will make a list on a form known as the “Property Inspections Notice”. This form, along with the relevant inspection report(s), are then forwarded to the seller’s listing agent. Buyers should “choose their battles” when deciding what to do about inspection findings.
Buyers Have the Following Options After Receiving Inspection Reports:
There are some repairs, such as electrical, roof, the HVAC system and plumbing, that Maryland home buyers can reasonably expect the seller to make.
In fact, anything that presents a health and safety concern or that negatively impacts the use of the home is not only something that the lender may require, but that, should the buyer walk away from the purchase, the next buyer will likely expect as well.
It’s the little things, though, that bog down transactions, sometimes bringing them to a halt. If a buyer really wants the home, they should ignore the small stuff and fight for what actually matters.
Items to ignore include anything of a cosmetic nature and problems that are inexpensive to remedy. Save the big guns for the major repairs.
It’s important for buyers to understand the following:
- inspection reports are not complete repair lists for sellers
- there is a difference between truly needed repairs and cosmetic issues
1. Do Nothing
Occasionally, inspection reports are positive, with no real issues or concerns. Houses that have been well-maintained may fall into this category. In this instance, buyers may be very pleased with the inspections reports and be ready to move forward with the purchase of their new home in Maryland.
2. Ask the Seller to Make the Repairs
When faced with major repair or replacement costs, many homebuyers ask the seller to make the repairs before settlement. Sellers may balk at the request, but when they’re reminded the next potential buyer may make the same request, they frequently agree to make the repairs.
3. Ask the Seller for a Credit
Rather than ask the seller to make the repairs, ask that he or she credit you with the cost of the repairs at closing. This way, the seller avoids the hassle of having to hire a contractor and the inconvenience of home repair work happening while he’s trying to pack up for the move. However, be aware, some types of loans will not allow this option. Buyers should discuss with their real estate agent whether this will be permitted in order to obtain their loan.
4. Renegotiate the Price
Another option is to amend the purchase agreement with a reduced price, reflecting the deduction for the cost of the repairs. Bids from contractors to determine the cost of fixing or replacing whatever is at issue may be necessary, but adjusting the purchase price remains an option.
5. Switch the Type of Financing
Switching to a Renovation Loan is a way to buy a house in Maryland that does not meet the requirements for other types of loans (such as: USDA, FHA, VA and some conventional loans). The 203K Loan and the Homestyle Renovation Loan are two types of renovation loans available in Maryland. Both of these loans rolls the cost of the repairs into the mortgage, but only make one payment will be due every month.
Renovation loans are a bit complicated and the loan takes time. It will slow down the purchase process. Both the buyers and the sellers will likely need to agree to extend the settlement date.
What Should a Home Seller Agree to Fix?
After receiving a buyer’s request, home sellers in Maryland have 5 days to make a decision. This allows time to obtain estimates, which helps with a seller’s decision-making. Seller’s should agree to fix anything major that will need to be disclosed if the buyer backs out of the contract. Every seller has a different budget, and their decisions will likely be based on the estimated repair costs.
When the appraiser goes to the property, he or she will not only determine the value of the house, but will also look for anything the lender will require to be repaired. Repairs required by a lender vary depending on the type of loan. VA loans, USDA loans and FHA loans have the strictest standards.
Lender-required fixes must be performed or else the loan won’t be approved and the sale will be terminated. Examples of lender-required repairs include: installation of a handrail when a staircase has more than 3 steps, scraping and re-painting when there is peeling paint in a house that was built before 1978, and repair of any broken windows. Again, this is very specific to each type of loan. Even if a particular buyer walks away, these fixes are now a disclosure item and other lenders will most likely demand them.
What Happens after the Seller Makes a Decision?
Sellers will respond in one of five ways:
1. Agree to complete all corrective action that was requested.
When a seller agrees to complete all of the repairs that were requested, buyers typically have peace of mind and the negotiation of repairs is over. The seller has up until settlement to have the repairs completed. After they are completed, sellers will then provide the receipts as proof the work has been done.
2. Agree to complete some, but not all, of the corrective action that was requested.
When a seller chooses this option, buyers have 2 days to decide if they will accept the response. If they don’t, negotiations for repairs can continue until both buyers and sellers are in agreement. The seller has up until settlement to have the repairs completed, and must provide receipts as proof the work was done.
Buyers can also choose to terminate the contract and walk away from the deal if they aren’t satisfied with the seller’s decision to only fix certain items.
3. Refuse to take any corrective action.
When a seller chooses this option, the house will be sold “as is”. Buyers have 2 days to decide if they will accept the response. If they don’t, negotiations for repairs could possibly continue in case the sellers will change their minds. Otherwise, the buyer can choose to terminate the contract and walk away from the deal.
4. Agree to give the buyer cash back at settlement so the buyer can have the repairs done after they take possession of the house.
When a seller chooses this option, the seller will make no repairs. The buyers will be credited money at the close of escrow (also known as settlement), which they can then use to have the work done themselves.
5. Agree to lower the agreed-upon sales price.
When a seller chooses this option, the buyers and sellers will agree to the amount of the price reduction. This will result in the buyer’s loan being for a reduced amount, and subsequently will result in a slightly lower monthly mortgage payment.
The Home Warranty
A home warranty is a win-win way to address those requests for replacement of an item that, although it may be nearing the end of its functional life, still works.
An aging water heater, for instance, may concern a buyer. A home warranty might ease their anxiety and save a seller money in the process. Buyers may ask for a home warranty to be included in the sales purchase. In addition, sellers may offer a home warranty to give buyers peace of mind.
Thinking about Buying a House in Maryland?
Search the most up-to-date list of homes for sale in Carroll County, Maryland
Search the most up-to-date list of homes for sale Outside Carroll County, Maryland
Get your FREE Buyer Guide!
Thinking about Selling a House in Maryland?
Find out what you home is worth! YourHomeValue.info
Get your FREE Seller Guide!
Have Your Questions Answered! Contact Melissa today!