Demystifying the Home Inspection

Advice for sellers:

A list of small, inconsequential problems in an inspection report can create a mountain that the buyer can’t see past and may derail your sale. If there are little things you know about, fix them. That leaky tap, the light switch that doesn’t work, the broken window crank…call a handyman and get it fixed prior to listing your home for sale. Just because something wasn’t a big deal to you doesn’t mean it won’t be to the buyer.

Advice for buyers:

Hire an experienced inspector with a good reputation. As with any other professional, the quality of their work varies. Try your best to attend the inspection in person and don’t be afraid to follow the inspector and ask questions. A lot can be learned about your home during an inspection, and getting explanations directly from the horse’s mouth helps to avoid misunderstandings. Also, an inspection is not an opportunity to get a better deal. Do we renegotiate after inspections all the time? Sure. But you shouldn’t go into it with that intention. Remember, you made a deal with the seller in good faith, and your hope should be that the inspection goes well and your agreement will firm up as negotiated. Be vigilant, not nefarious.

The Reality of Mortgage Pre-Approvals

A pre-approval is not a guarantee of financing. A pre-approval is a fairly surface level process at the bank or mortgage broker where the buyer’s income, debts, and credit worthiness are examined. Based on that information, the lender will provide the buyer with a budget to work with for their home purchase, but it is not a commitment to loan them money. Once a deal is negotiated, there are several more steps. The lender will need to know which property you’re buying and at what price. Often, the lender will order an appraisal to confirm the property’s value. There’s more yet: depending on how much money the buyer is putting down, regulations may require the lender to insure the mortgage to protect themselves against a loss if the buyer defaults. That means a separate approval process by the insurer (there is no pre-approval for mortgage insurance) and further scrutiny of the buyer’s financial position and credit history. Even when a buyer is pre-approved, it takes some time to get a final commitment from their lender. And that timeframe varies – sometimes it’s just a few days, but 10-14 days is not uncommon. Commercial lending can take months! 

Essential Financing Advice for Buyers:

Even if you have a pre-approval letter , include a financing condition in your offer to purchase, to ensure full protection. 

Essential Financing Advice for Sellers:

Ask whether the buyer is  pre-approved; but allow enough time for the lender to firm up the mortgage commitment.