A critical step in selling or buying a home is the home inspection. This is when a qualified home inspector visits to determine if a property has any structural, mechanical, electrical, or code issues. The resulting report is important in the pending sale.
So who is looking out for the buyer, or the seller, during the home inspection? Perhaps you think the respective real estate agents would serve this purpose. However, this may not be the case.
Consider the technological advances that can change how home inspections are conducted. In the not-so-long-ago past, a home inspector was met on site by the real estate agent to allow access to property. The key might be kept outside the front door in a lockbox accessed with a specially made key.
With technological improvements, however, access to a property for sale has become much easier. Today the lockbox may be Bluetooth-enabled and can be unlocked by punching a code in a cellphone. This makes access much easier for a real estate agent, appraiser or home inspector. For security purposes, an electronic record is generated whenever the box is opened.
Yet despite the convenience of this new technology, sellers and buyers should be aware of some alarming trends.
First, the real estate agent, whether representing the buyer or the seller, might not be present during the home inspection. This means the home inspector and buyer are alone in the home. So what's wrong with this? There are two concerns: representation and insurance.
Let's look at representation first. Whether the seller or the buyer, you expect representation from start to finish of the transaction. Yet, if your agent isn't present during the home inspection to hear about potential issues with the property, are you really being represented?
During the home inspection process, representation might start with the agent providing names of at least three inspectors and their experience working with each inspector. This feedback is important; even though a home inspector is licensed, it does not mean you should use them. As a seller you have the right to preapprove who inspects your home; you will have to live with the results, so ask questions. Buyers can find it a daunting task to choose from a list of home inspector names, with instructions to check them out on their own. After all, how many home inspections have you seen in the last year?
Next as a seller, wouldn't you want someone there to monitor who comes and goes, especially if the buyer brings other people, such as children, relatives or friends? For example, children may jump on furniture, pick up personal items, or get too close to an open crawl-space hatch. While a home inspection allows prospective buyers to closely examine the property, the home still belongs to the seller and should be respected.
Some agents may opt out of attending, because the home inspection may take a couple of hours. The agent may also be concerned about being seen as a home inspection expert. This can be avoided if the agent just observes and listens, which is the best way to represent either party. Then the agent can describe and explain the home inspector's recommendations clearly. For a buyer, having your agent present during the home inspections provides you important insight later, when you are putting together a written request for repairs.
Insurance coverage is another important area of concern, particularly if something goes wrong during a home inspection. Envision these possible scenarios:
1. Someone focused on specifics in the house misses a stair step or falls through an open crawl-space hatch and is injured.
2. Someone leaves a tub faucet running and floods the bathroom.
3. Someone forgets to lock the backdoor and the home is robbed.
Whose insurance would cover these events, and who pays the deductible? While the buyer may have indemnified the seller against any damages or liability as part of a purchase agreement, the seller's homeowner policy may ultimately be in effect.
Two lesser-known policies insurance might help: lockbox liability policy and the home inspector's insurance policy. Lockbox policy covers bodily injury and property damage when the agent is providing real estate services and enters a property using a lockbox. If the agent isn't there during the home inspection, however, this policy may not be in place.
In addition to professional and business licenses, a home inspector also is required to be bonded with public liability and property damage insurance. However, the insurance covers the inspector, not necessarily the other attending parties. For more information about the state statutes and regulations that cover home inspectors insurance amounts, go to www.commerce.alaska.gov and search for "home inspector professional."
A final consideration concerns ownership of the home inspection report. While the buyer may pay for the inspection, the resulting report could have long-term effects on the seller's property.
To help a seller comply with Alaska property disclosure requirements, a section of the purchase agreement makes all inspection reports a part of the seller's "living" property disclosure statement. Sellers shouldn't waive this right to the report, or let it be conditioned on a written release from the buyer. A written release requirement could hold the report hostage for money or from spite. If the current buyer does not purchase the property, you need to have the information to properly remedy issues, and also disclose to the next buyer. Willful violation or failure to comply with state statutes could subject a seller to stiff penalties.
Home inspections are an important part of the real estate process. While technology may make things easier, it should not remove important safeguards to one of life's important events.
Barbara and Clair Ramsey are local associate brokers specializing in residential real estate. Their column appears every month in the Alaska Dispatch News. Their email address is info@ramseyteam.com.