No, you should never order a home inspection before making an offer because you might waste money on a deal that never happens. The seller may not even respond to your offer, and even if your offer is accepted, nothing is binding until contracts are signed in most states like New York.
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You should order a home inspection after you have an accepted offer, but before you have signed a purchase contract.
You want to wait until you have an accepted offer because you don’t want to spend several hundred dollars before having some assurance that you might have a deal.
However, you want to do your home inspection before signing a contract to leave yourself time to re-negotiate a deal after inspection if something unexpected comes up during inspection.
Pro Tip: You don’t even have to formally ask the listing agent for a home inspection. You can simply ask the listing agent to see it again, and this time just bring your home inspector! Of course, considering that a home inspection could take several hours, it’s better to give the listing agent a heads up if you can.
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It is the responsibility of the buyer to pay for a home inspection should he or she want one.
Remember that a home inspection is not customary when purchasing condo or co-op apartments in a city like NYC; however, it’s quite common to order a home inspection when buying free-standing property such as a single family house.
Of course, everything is negotiable in real estate, and in a situation where a seller is desperate, it is conceivable that the seller could be persuaded to pay for the buyer’s home inspection.
However, this is ill advised for the seller as inspections are typically done before contracts are signed, in which case the seller could easily waste money on a freebie for a buyer who never comes through.
Pro Tip: If you’re asking this type of question, you probably don’t have a buyer’s agent assisting you. Read our guide on how to buy a house without a Realtor to learn the step by step process of buying a home, without professional assistance.
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You don’t have to have a home inspection if you’re buying a co-op or condo apartment; however, it’s highly recommended that you do get a home inspection if you buy an attached or detached house or any sort of free-standing property or building.
For example, it’s uncommon to see home inspections ordered in NYC for co-op and condo transactions primarily because co-op and condo buildings can have hundreds of units which share in the cost of maintaining common areas.
Furthermore, coop and condo buildings are typically not self-managed and have professional managing agents who oversee the building.
As a result, the exact condition of the building’s roof may not have much of an impact on a potential co-op apartment buyer.
Of course, exceptions do exist. For example, it may be wise to order a home inspection if you are buying a unit in a small building with 10 units or less. In this case, the impact of any major repairs will be proportionally larger for an individual owner or shareholder.
If you are buying free-standing property such as a multi-family townhouse, then it’s critically important that you order a home inspection. That’s because as the sole owner of the building, you will also solely be responsible for the condition of the roof, the boilers and the exterior. You want to make sure you’re not buying a building that is on the verge of crumbling.
Pro Tip: It’s recommended to have a home inspection if you are buying a property that’s being sold For Sale By Owner (FSBO). Read our guide on how to buy a house For Sale By Owner to learn why more diligence is needed for this type of listing.
No, it’s unnecessary to make an offer contingent on passing a home inspection because offers are generally not binding in most states like New York. It is quite common for buyers to try to negotiate after inspection, and there’s no need to remind the seller that you may do so. It’s better to make your offer as digestible as possible and as easy as possible for the seller to accept.
Remember, once the seller has accepted your offer, he or she is more emotionally invested in a potential transaction with you. Furthermore, the seller may have even agreed to naively stop further showings. As a result, it’s very advantageous for a buyer to get a seller to accept an offer so that the buyer can at the very least have a head start on due diligence vs other potential bidders.
Pro Tip: Remember that it goes both ways, sellers are generally not obligated to do anything until they have counter-signed a contract. That means they can continuing showing the property and negotiating other offers until contracts have been fully executed. This means you might encounter the common situation of having an offer accepted on a house but it still being on the market.
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Even though offers in most states like New York are relatively meaningless until an official purchase contract has been signed, you should still be careful about signing any sort of offer letter or form.
In NYC where offers are generally emailed with supporting documentation such as a REBNY Financial Statement and a mortgage pre-approval letter, there’s generally no expectation for the buyer to sign anything.
However, you have to be careful in some states like Massachusetts where some offer forms may ask the buyer to sign.
You should be very careful about signing any sort of offer form, regardless of which state you are buying property in. That’s because a signed offer form simply invites legal challenges should the transaction go sour.
We mention Massachusetts because of a well-known court case, McCarthy vs Tobin, where a seller and a buyer had both signed a standard offer to purchase form used by the local Realtor association. The form contained familiar contract language: “NOTICE: This is a legal document that creates binding obligations. If not understood, consult an attorney.”
The seller accepted another offer the same day that the buyer delivered a signed contract and an earnest money check. Typically, contracts are not binding at all until all parties have fully executed the contract. However, in this specific case even though the seller had not counter-signed, Massachusetts’s courts ruled in favor of the buyer.
Let this court case in Massachusetts be a warning to buyers and sellers in all states on just how dangerous it is to sign anything. Because an otherwise non-binding offer or letter of intent can be construed as binding if signed.
Pro Tip: Can a Realtor lie about multiple offers on a house? Despite state and local laws and regulations and Realtor association codes of ethics, it’s easier than you think. Read our article to learn more and how to protect yourself.
Disclosure: Hauseit® and its affiliates do not provide tax, legal, financial or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, financial or accounting advice. No representation, guarantee or warranty of any kind is made regarding the completeness or accuracy of information provided.
