I recently showed a bank-owned home to some first time buyers.  As bank-owned homes go, it appeared to be a gem.  Section 1 pest work had been completed, the house had been freshly painted, and the landscaping was trimmed and healthy.   The bathrooms weren’t scary, there was no suspicious “moldy” odor permeating the house, nor were there cracks in the walls or floors to suggest foundation issues.  They considered writing an offer, and we went back to visit the house a second time to help them make their decision.

I sat out on the patio and let them do their walk-through without me, so they could speak freely and not feel any pressure.  When they came back outside, they told me they had decided to pass on this one because they noticed things the second time around that they had not noticed during the first visit.  “Like what?” I inquired.  There was a toilet leak in one bathroom, and there was an area behind one of the new kitchen appliances where the wall had not been patched.  They feared that the cosmetic renovations that were made might be hiding some “scary” issues.  They knew that the bank would not make repairs if they went under contract, and they knew they would not get disclosures about the history of the house, since the bank had no knowledge of what transpired prior to the foreclosure.

The issues that came to light on our second visit were minor, at least in the eyes of a realtor who tours hundreds of homes a year.  However, to this detail-oriented couple, they were enough to make them step back and re-evaluate.  I understood their fear of the unknown, and stressed the importance of using the due diligence period to have a home inspection done with a reputable professional.  The buyer generally pays for this, and the going rate in our area is somewhere between $325 and $450.  In a situation where seller disclosures are not available, such as a bank owned home or one that is an estate sale, a good home inspection becomes even more critical.  Once the home inspection is complete, the buyer can then decide whether to move forward with the purchase without risking their earnest money deposit.

I love working with first time buyers, and this was a perfect opportunity to delve into my speech about home inspections, and requests for repairs.  My philosophy is that buyers should price their offer based on the visible condition of the house and after reviewing any reports that might be available at the time the contracts are completed.  If there are obvious repairs to be made, if the roof needs replacing, if there are rotten decks, nasty flooring, or a yard that hasn’t been tended to for months, I would counsel my buyers to adjust their offer price accordingly. For the most part, I don’t think it’s appropriate to try to later renegotiate price for items that were obvious at the time the offer was written, or include them in a request for repairs.  If a home inspection turns up issues that were not initially visible, such as a furnace with a cracked manifold, electrical or gas line problems, serious foundation issues, or other HEALTH AND SAFETY related conditions, I totally support asking the seller to make the necessary corrections.  I don’t view a home inspection as a “fix it” list, and am surprised when I see buyer repair requests that basically call out almost everything the home inspector mentions in their lengthy report.  No home is perfect, even a brand new one.  The California real estate purchase contract specifically states that “property is sold in its present physical condition.”  Sellers do not even have to respond to repair requests.  However, when buyers and sellers are reasonable, compromise can generally be reached, and both sides end up satisfied.