Home Inspections

 

Life at Altitude with Danielle Connor

April 2022

Before I became a licensed broker, I watched all of the popular real estate shows on TV and felt like I’d already become an expert on buying, inspecting, and flipping houses. . .so, if I fell in love with a property tomorrow, I’d know exactly what to do. Boy, was I wrong! You definitely can’t (shouldn’t?) become a real estate expert from the couch, especially not when it comes to home inspections. Read on to learn more about inspections in Colorado and where they fit in the home buying process.

In Colorado, homes are sold in “As Is” condition, “Where Is”, and “With all faults”
What does that mean for homebuyers and sellers? When a seller puts their home on the market and goes under contract, the seller is required to disclose all known adverse material facts in writing. The real estate brokers in a transaction are also required to share any adverse material they have actual knowledge of . Material facts are anything known about the physical condition of the property (past or present) and environmental hazards affecting the property and  could negatively affect a home’s value. Adverse material facts are not facts that would psychologically stigmatize a house, like if someone passed away inside. That doesn’t have to be disclosed. Examples could be a leaky roof, repairs done due to fire damage, a flood, structural issues, mold, etc. The best rule of thumb is that if you have to ask if you should disclose it, then you should disclose it! Think of adverse material facts as anything and everything that someone might want to know about your home. For sellers, it is always better to over disclose.  Sellers can and do get sued for not disclosing enough. 

It is up to the buyer to do their due diligence!
When the home hits the market, it is being conveyed as is, in its current condition, and the seller is making no representations or warranties regarding the property or matters affecting the property. Because sellers make no guarantees about the home they are selling, it is up to the buyer to dive deep into the known (and unknown) about the property. This is where home inspections come in, and it is highly recommended to have professional assistance. I always suggest to my clients to choose trusted, local home inspectors. Sharing anything with them from the Seller’s Property Disclosure that the seller knows has affected/is affecting the property or anything that the buyer physically observes that might be a concern allows the home inspector to dig even deeper. Ask the inspector what they suggest to look at additionally, and pay for the extra services if they make sense. In Colorado, common add-ons we see are radon testing, sewer scopes, well testing if applicable, and roof inspections because of how harsh the elements can be here at a high and dry elevation with snow coming down ¾ of the year. 

How do I choose a home inspector?
First and foremost, buyers- ask your agent who they recommend! My local knowledge of the areas I serve includes an extensive list of vendors and contractors that I am more than happy to share with my clients. When interviewing:

  • Ask for a report from a recent inspection that the inspector has done and review for thoroughness.  The important area to look at is the inspector’s notes and photos.
  • Ask about what the inspection will cover – will the inspector be going into crawl spaces, the attic and the roof? Will the chimney be inspected? Do they recommend add-on services?
  • Find out what the inspection does not cover – many do not cover mold, asbestos, lead, wells or septic systems so you may need to find additional service providers.
  • Ask about a radon inspection.  Radon is a common issue up here so decide whether an inspection is important to you.  You can find out more about radon by visiting www.EPA.gov/Radon
  • Experience is valuable!  Ask about the inspector’s background. 
  • An inspector should give you a firm price for the inspection.  Prices tend to vary, as does quality.  Be suspicious of an overly inexpensive inspection bid.
  • Find out if they have any bonus extras such as home warranties, floorplans, or 3D tours.

Where does the inspection fit in the buying process?
Here in Colorado, inspections are typically completed within the first 10 days of going under contract (not before going under like in some other states). There are a few ways it can be written in (or out):

1. There is an Inspection Objection, Inspection Resolution, and Inspection Termination deadline. Buyer retains the right to inspect and submit an Inspection Objection, which is a document outlining a list of health/safety/functionality items to ask for the Seller address. The items are typically either asked to be fixed, or the buyer asks for a credit at closing to address it themselves. The Seller can agree to all, some, or none of the items. Both parties either have to come to a resolution on all/some of the items, move forward without anything  being addressed, or terminate. If the parties can not come to a signed resolution, the contract will automatically terminate.


2. The Inspection Objection and Resolution deadlines are omitted from the offer, and only the Termination deadline stays. The buyer still retains the right to inspect, though they cannot ask for anything from the seller. After the inspection, the buyer decides whether to move forward or terminate.


3. The Inspection Objection, Termination, and Resolution deadlines are omitted from the offer. Buyer could still technically inspect, though they are waiving their inspection period and the right to terminate (or not) based on inspection, so any inspection is essentially of no value for moving forward or not.

 

Which option is best? I hear about people waiving their right to inspect all the time!
I always recommend Option 1 when possible. Keep the right to inspect and to negotiate with the seller if anything big comes up. Don’t waive your right to inspect if you don’t need to! Since there are many second home owners and investors here in the mountains, we encounter many sellers who haven’t been to the property in months (or even years). They may not have seen issues with the roof or that the floor is sloping inward. They may not know the radiant in-floor heat has been leaking glycol for a long time and is now failing. Major issues = $$$$, and many buyers don’t have an unlimited budget, especially after most homes are selling above list price. This avenue holds space for negotiation and the most opportunity for a win-win scenario. You can come to a resolution with the Seller, or terminate and keep your earnest money.

With the competitive nature of the current market, Option 2 would be the next best bet. Retain the right to inspect, and decide if after the inspection you are willing to take on any inspection findings yourself, or if you would like to terminate. Depending on the age and condition of the home, or if you are putting an offer on a new(er) condo where major systems are HOA responsibility, this could be totally fine. The inspection could reveal some cosmetic damage and minor issues, or it could open a can of worms. You will still have the option to either move forward or hand back that can of worms and retain your earnest money! If you go with this option, you need to be prepared to cover the cost of any repairs if you still want to move forward after the inspection as you will have waived your right to negotiate for any repairs or credits.

Option 3 means your offer is not contingent upon inspection at all- that no matter the condition of the house, you are purchasing it completely as is. If you do decide to terminate based on a material fact that was not known and not disclosed, you could terminate, and would not get your earnest money back. We generally do not recommend this option. Not taking your opportunity to learn more about a home through a home inspection could be very risky for your and our job as your agent is to share all the pros and cons, help you weigh the options and make the best choice for your situation.

What you decide is up to you- and I am here to help! Email me or give me a call if you have questions after reading this about home inspections or the homebuying process. I’d love to be your local mountain real estate expert!