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With rents increasing, mortgage interest rates below 4%, and median prices continuing to decline, it may be cheaper to buy than to rent.

The Minneapolis housing inventory declined in 2011 over 20101 by almost a third in some price ranges.

Rose Hart's
OUTSIDE

Inspections and Home Buyers

"Who's paying for THAT?"

Usually, with every home sale there are inspections involved. There are different types of inspections at different times of the sale, ordered and paid for, by different people. In this newsletter, we endeavor to familiarlize buyers with the different types.

The Sellers Inspection: Several cities require a Time of Sale inspection, which may also be known as a Truth in Housing evaluation. This type of inspection is ordered by the seller, and is done by a city approved inspector. The resulting report covers the basic city code items that must be met to keep the city's homes in good repair. This report must be available for a buyer to see before any purchase agreement is written. Items listed on this report are classified by whether they meet current code, are below code, or are hazardous. How the defects are remedied varies from city to city, from agreement to agreement.

The buyer of a HUD home needs to know that HUD does not require a Truth in Housing evaluation on any of its properties, nor will it pay for any repairs. However, a buyer can still have an inspection done for their own benefit.

The Buyers Inspection: This inspection is ordered and paid for by the buyer at the time of their purchase agreement. It is by an inspector of their choice, and their offer is contingent upon the results of this inspection. Its purpose is to have a thorough examination of the home, and supply the buyer with an in-depth report. For this reason, it behooves the buyer to inquire in detail what will be covered. Some inspectors are more thorough than others. Generally it should cover everything from leaky faucets, to getting up on the roof (weather permitting), checking windows, doors, and all the mechanical systems, etc. It is benefical for the buyer to be present at this inspection.

It is recommended that the buyer discuss details in advance with the inspector before the actual inspection; what will be covered, and what it will cost. Typically, the inspector is paid at the time of service, and this payment is not subject to whether the buyer makes the purchase. Its sole purpose is to help the buyer make an informed decision on the condition of the property. Then, the findings of this report are addressed in an inspection addendum between the buyer and the seller as needed. Both parties must negotiate to an agreement on the addendum, or the purchase agreement becomes void.

The buyer should understand that the seller is not required to do any of the repairs. However, the seller may lose this particular buyer, or depending on the seriousness of the defect, it must be disclosed to any future potential buyer. Moreover, a buyer cannot assume that a new construction home automatically will not need a buyer's inspection. Contractors make mistakes that building code inspectors may overlook.

References used for this article:
http://mplsrealtor.com/downloads/market/HSO/hso.pdf
http://www.ci.minneapolis.mn.us/ccs/tih-home.asp

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