Episode 13: Inspections from the Buyer’s Perspective

Scott Williams: Sweet Home Santa Barbara, where the skies are so blue. Sweet Home Santa Barbara, what’s worked for me can work for you.

Jonathan Robinson: Welcome back, friends, to Sweet Home Santa Barbara. I’m your co-host, Jonathan Robinson. I’m with my friend, Realtor, and co-host.

Scott Williams: Scott Williams. Jonathan, it’s good to be back with you.

Jonathan: Yes. Today, we’re going to be going into a subject that I know nothing about, really, which is inspections from a buyer’s perspective. We did do one on inspections from a seller’s perspective. The first question that pops into my head, Scott, is why would somebody want to do inspection from a buyer’s perspective?

Scott: Well, in certain number of cases, a buyer of a house is going to be handed in an inspection that the seller did. That’s actually less than half the time, but it happens with certain regularity. A buyer should take that in and pay attention to what that inspection says. But most buyers are going to decide to call an inspection company, either the same one the seller used, to get a refresher on what might have changed or they’re going to call their own inspection. This is really a necessity of home buying. A buyer must do some inspecting.

Jonathan: Why must they do some inspecting if the seller just got an inspection two weeks earlier.

Scott: Well, I think, in buyers’ minds, there’s a good reason to wonder whether or not the seller might be hiding something that might not even appear on that inspection. That’s a wise point of view for a buyer to stand in. Are there hiding anything? They probably aren’t, but at least, you need to answer that question to your own satisfaction. Not everyone is willing to be upfront about disclosure laws. Sellers in California have quite a few questions they have to answer. You need somebody helping you to determine whether or not the seller is being fair with you.

Jonathan: Yes. Also, I guess if you’re a buyer and you miss something, that could cost you a huge amount of money. What are some of the things that really need to be attended to from a buyer’s perspective, making sure that they don’t get surprised?

Scott: Well, you’ve brought up a really good question. I’m going to just round about here. That seller may not know that much about the property. It might have been a rental for the last 10 years or more. It’s also true that the seller may have died, so it’s an estate sale. These are other good reasons why the buyer needs to be in charge of burrowing into this property. They may just have an unaware seller. All of these should push a buyer to say, “I got to do this.” We want to start with a generalized report.

Jonathan: What’s the general… I mean, a generalized report is kind of like what the seller might do. You start with a generalized report and then, sometimes, take that information and say, “Oh, we need to go more into depth.”

Scott: Yes, that’s right. If you’re a generalist, that main inspector guy says, “Oh, I’m not so sure about these pipes or those wires or this roof. Please get a roofer to look more deeply at it.” You always want to follow up whenever that generalist hedges on some system in the house.

Jonathan: Is there a general price range for these things? Is each report X amount of dollars or each one totally different price?

Scott: Well, there is some varying. The less expensive ones are the termite reports. They’re often $100-150. The physical inspection reports are more money. Those are often $500-1,000. Maybe sometimes a little more if it’s a particularly large house. In between, we have the inspections of the sewer lateral. That’s usually $250. And then things like mold or radon, those are often in the $500-700 category.

Jonathan: You can spend a lot of money before you even get the house.

Scott: That’s true. Another one came to mind. It’s the foundation guy or a geologist. Those are usually $400-ish to talk to them. If you want the report, probably add another thousand to that.

Jonathan: Wow. Does the general inspector give you a sense of which other reports you need, or do you always want to do them? I know with a sewer lateral, if you have a problem, that can cost you a lot of money.

Scott: Yes, depending on how long it is. I’ve seen prices over $35,000 to replace the sewer lateral. Of course, if it’s a septic system, it can be twice that amount of money. Yes, we’re talking all of these. At the end of each of these reports or inspections is a potentially very large cost.

Jonathan: Yes. How do you know which ones of these inspections you should get?

Scott: Well, you’re going to be relying to a certain on your realtor to know that neighborhood. The soils conditions in certain neighborhoods are well known to people who work there all the time. Looking at a roof. I can usually size it up pretty well and say, “That one’s looking like it’s at the end of its life.” Your realtor is your helper, but just use your common sense. If it’s on a sloping lot hillside area, you probably are going to want to talk to a geologist about what conditions are in that neighborhood even though, yes, it’s going to cost you more than a thousand dollars.

Jonathan: This is where some of your expertise and experience can really save people money, I would imagine, because you’re going to know more than the guy who got his real estate license three years ago.

Scott: That’s for sure. Let’s use that as an introduction to an idea that we call highballing. Highballing is something that a buyer can take advantage of. Sellers have to defend against it. You have a sewer lateral looked at by your sewer guy and he says it’s going to be $12,000 to replace the sewer lateral. There may be another guy in town who for $8,000 will replace that sewer lateral. But then, the number that the seller gets is $12,000 and it’s written down on a piece of paper from a contractor. It looks like that’s the price. If You’re a buyer and you get $12,000 given to you, then you can still hire the guy for $8,000 and saved the four. This is where the knowledge of the realtors of what the costs of things are come in to help your buyer or help your seller as this negotiation goes on.

Jonathan: Yes. I assume… I know when you sold my house, you did all the work. I was in a different city. I imagine you kind of know who’s good and who’s not.

Scott: Yes, I fixed that more than 300 houses, Jonathan, so I have a pretty good idea of the cost of things, who does them, and who you ought to hire. Other realtors could have similar knowledge, but not everyone knows that much.

Jonathan: What other considerations are there that we haven’t talked about in terms of buyer inspections?

Scott: Well, just don’t get cowed by the fact that you got some great reports from the seller. That’s probably really excellent, but you’re going to need to go ahead and move forward and double-check. That’s just the buyer’s responsibility. That’s just important to always keep that in mind. I think that rule number one if you’re a buyer.

Jonathan: Now, when do you do these? Do you do them after you made an offer, while things are in escrow? Where does it take place?

Scott: Yes, after the offer is accepted, you are usually given a timeframe from a short as a week to as long as 17 days, rarely more than 17 except in very complicated situations. Pretty much right away, these people need to be hired and lined up. Soon as you’re in escrow.

Jonathan: Okay. Any final words of advice?

Scott: Well, I hope that things go well. If you need interpretation of the data that comes at you, you really have to rely on your realtor at that point in time. They’re going to be the lead person on your new negotiations you have with that seller.

Jonathan: Make sure your Realtor knows what they’re doing.

Scott: For sure.

Jonathan: Okay. Well, great, Scott. It’s always good information. Thanks for listening and we look forward to having you again. Listen to our episodes on Sweet Home Santa Barbara.

Voiceover – Scott: Thank you for listening. Please subscribe to our podcast on your favorite app. If you know someone preparing to sell their home, please tell them about the podcast. Visit scottwilliams.com to contact me and download the two free E-Booklets — “Is My House Saleable Now” and “How Not to Buy a Money Pit”. Thank you for listening.