Tuesday, November 8, 2011

What are you buying?

There's a lot of things you don't get to know before signing a contract to purchase a house—as a buyer, you don't get much information about the electrical system (did the seller actually know what he was doing on that DIY work, or did he just grunt and claim to know?), the plumbing (are there roots in the sewer line, or is the sewer line broken?), the heating and air conditioning system (why is the carbon monoxide detector beeping?), or many of the other systems which make up a house

Simply put, a buyer cannot not sign a contract to purchase a house—a buyer can only sign a contract to purchase what he or she believes a house to be. If the buyer believes that all of the systems of a house are in good condition—and bids accordingly—then the buyer deserves to know if the house actually is what he or she believes it to be. There's a lot of money on the line.

That's not the same as “making sure that everything is okay.” Not even close. Making sure that everything is okay requires that everything is okay to begin with, and even then there's still a catch: the definition of “okay” varies from one person to another. A buyer's definition of “okay” is almost always higher than that of anyone else involved in a real estate transaction, and that's why inspections are an important part of real estate transactions. Whether everyone else in the transaction is honest, a crook, or simply ignorant of their merchandise, the satisfaction of the buyer should be the goal of every real estate transaction, and an inspection can go a long way towards ensuring that satisfaction.

Monday, November 7, 2011

Everything is not okay, but that's okay

As a buyer in a real estate transaction, why is it important to have an inspection?

The answer is not “to make sure everything is okay.” In all of the homes I've looked at, not once has everything been okay. Not in the half-million dollar homes, not in the $50,000 homes.

In a perfect world, an inspector's job would be to confirm that everything is okay—that is, to confirm that the contractor of this new house installed everything properly, or to confirm that the seller of this old house maintained everything properly. I would like to live in that world.

But I don't.

Since this is the internet, let's start this discussion with a black-and-white example: would you bid $100,000 on a house that needs $10,000 in roof work that you don't know about? You would, but only because of what you don't know. If you knew that it needed $10,000 in roof work, wouldn't you bid $90,000? Would you even consider buying it at all?

In many cases, you don't get to know all about the roof's condition before signing a contract to purchase a house. The seller may tell you that the shingles were installed last year, but do you know if they were installed properly? Do you know if last month's hail storm did any damage? Do you know if there are any manufacture defects which could cause insursability issues?

And that's just the roof.

Part 2: What are you buying?