The scoop on home inspections and price negotiations

(See end of article for contact information.) Paulson said he generally finds that workshop graduates, "are much more informed than the average consumer."

So we asked Paulson: what's this inspections stuff about? And, how do I make a solid offer?

Inspections

"The biggest thing we try to drill into students' heads is simply the importance of having an independent inspection," said Paulson.

He said it's common for folks to think that with two inspections being completed by other involved parties -- a lender's appraisal inspection and the Truth-in-Housing inspection the seller pays for -- that a third, private inspection is unnecessary. While a private inspection can run $200-$300, Paulson reminds people that the other inspections don't focus on the buyer's needs.

Paulson said Truth in Housing inspectors mainly examine a property to see if it's up to code. But even if a roof and furnace meet the city's standards, he says, they may show signs of wear and will need to be replaced in a year or two -- which could cost a buyer thousands of dollars fairly quickly, so should be subject for negotiation.

A good inspector can also see beyond the recently spruced-up property. A basement wall, said Paulson, can be "skim coated" -- covered with a sealant or paint to conceal cracks. But an inspector knows how to gauge the quality of a foundation from other indicators, such as cracks on other walls. And they can also tell the difference between acceptable and problem cracks -- some indicate that an older home has simply settled while others warn that, millimeter by millimeter, this place is on the move.

Inspectors can also offer advice on how to prevent potential costly problems, such as how to adjust landscaping to prevent water runoff and flooding the basement.

A thorough home inspector often produces an extensive report analyzing the property to help prioritize necessary repairs and maintenance if you do purchase it.

But how do you know a home inspector is thorough or even good at their job? Not all inspectors are alike, cautions Paulson. Since there is not a licensing requirement, he said, "practically anyone can hang their shingle out and say they're an inspector."

After checking their references, Paulson suggests asking inspectors the following questions:

  • What's your background? What specific training have you had to qualify as a home inspector? Did you work in construction or engineering, for example? (Note: Inspectors licensed to perform Truth in Housing inspections have received city training.)

  • Do you belong to a professional

    organization?

  • What's your liability insurance like? What are your disclaimers? (In case they miss a problem you later have to pay to correct, and perhaps could've prevented.)

  • Ask about specific concerns: for example, Do you look for black mold?

    Offers

    Paulson described two basic offer

    scenarios: where yours is the only offer, and where it's not. Your agent, said Paulson, should always ask the buyer's representative if other offers are pending. "Hopefully," he said, "they'll tell the truth."

    In either situation, according to Paulson, it's important to ask for a market analysis to help you decide if the property's price is fair compared to other local homes up for sale. Your realtor should also call the seller's agent and ask what considerations beyond purchase price the seller would consider. For example, when would they prefer to close, or move out?

    It's critical that you're pre-approved for financing and have a strong letter from an accredited lender on their letterhead. The letter should be very clear that the loan approval is only contingent on the appraisal and title work -- things related to the property, not your finances.

    Paulson recommends that if you're the only buyer, "you may as well try to negotiate." Note how long the property has been on the market. "If it's only been a couple hours and it's a good deal, maybe this is not the time [to bargain]," he said.

    When there are multiple offers on the table, consider making a significant down-payment. Although the amount paid upfront makes little difference to the seller money-wise, it signals a solid applicant. Luckily, said Paulson, multiple offer situations have declined in the last year or so. "There's more inventory on the market," he said.

    Pat Paulson is with Great Minneapolis Real Estate Co. at 5357 Penn Ave. S. He can be reached at 925-5990.