Expert: Jim Root - 6/2/2008

Question
Hi,we are searching for a home in Long Island Ny and was wondering what we should do first.
Should we be in contract before we do a home inspection?
or should we do the home inspection and then sign the contract?
It seems like the rule of thumb here in Ny is inspection first. Your input would be appreciated.....also what is the seller respnsible for, as far a fixing?
Thank you....Carolann

Answer
CAROLANN--

Good questions!If you wait to make an Offer until; AFTER you've had a Home Inspection done on  a property, you MAY lose out to another Buyer, who didn't wait and has put in an Offer--and it's Accepted by the Seller!

Once you're absolutely SURE that you want to purchase a Home, you can make your Offer--which becomes the Purchase & Sale Contract once signed off by both the Buyer and Seller! Your Offer, however, SHOULD
contain verbiage that includes wording that makes the  Offer's Acceptance subject to a Home Inspection acceptable to the Buyer, to be done at the Buyer's expense and no later than  a "reasonable" period of time in calendar  days from the date of Seller's acceptance.It should also declare that withdrawal of the Offer due to unacceptability of the Inspection is a "No Penalty" situation!

This is called a HOME INSPECTION CONTINGENCY and provides for you to be "in contract" & still have the ability to terminate the contract without penalty if you have a Home Inspection done and decide against completing the sale! And once you've put your Offer in this way & it's Accepted by the Seller other Offers are "blocked."

As for what a Seller is REQUIRED or RESPONSIBLE for as far as repairs are concerned; the answer is NOTHING unless the Appraisal calls for certain repairs to provide for the property's meeting the Minimum Property Standards (MPS) of the Lender or the Loan Program involved in your financing (FHA and VA have specific requirements & SOME Lenders have MPS issues of their own.) Even then, the Contract MAY put a dollar limit on the Seller's repair costs and if the Appraisal work requirements exceed that $ limit, the Seller may NOT have to take care of them without renegotiating the price! (If you're going FHA or VA for your mortgage, you'll want to ensure that the limits put on mandated repairs in your Contract is "reasonable!"

And... IF THERE ARE THINGS YOU WANT REPAIRED, YOU SHOULD SPECIFICALLY LIST THESE REPAIRS IN YOUR INITIAL OFFER AND HAVE THE SELLER AGREE BY CONTRACT TO TAKE CARE OF THESE THINGS! (ie.some examples: "Seller agrees to paint the entire interior of the home, replace all broken electrical outlet covers and repair the railing around the rear deck" etc) With your Home Inspection Contingency included, you SHOULD be able to negotiate the addition of repairs after the Inspection is done & you have reviewed the Report, based upon the "leverage" that "Subject to..." has given you!

As I'm not an Attorney, nor a Licensed Realtor in New York  State, the information that I've given you should not be considered as legal opinion nor advice. It is strictly GENERIC information of a  instructional/educational nature --to give you some ideas upon which to build a "working relationship" with a Real Estate Lawyer and/or a licensed Realty Agent. You should run my information by one or both of these kinds of "Professionals" before taking any action with regard to putting together a Contract on a property.

Further, I hope you can now see the need for having a "Professional" serve as your  "Buyer's Agent!" Executing a Real Estate Purchase & Sale Contract is a complicated matter. One NEEDS the legal opinions and advice of a Lawyer and/or a Realtor! Hope this helps you--GOOD LUCK!

--JIM