A Pre Closing Inspection For a Home Purchase
Should Not Be a Quick Walk Through!
The pre closing inspection is the opportunity for the buyer to inspect the home being purchased prior to closing and owning the home! It is a provision provided in real estate contracts with language such as: The Seller agrees to permit the Buyer or the Buyer’s duly authorized representative to examine the interior and exterior of the Property at any reasonable time immediately before Closing.
There are considerations in setting up the pre closing inspection. Thought and consideration must be given to whether the purchase is a vacant home, whether the seller will be completely moved out prior to closing and, probably most important, whether repairs were required of the seller during the transaction.
Another important task, sometimes overlooked by the agent or buyer with the excitement of the closing date nearing, is making arrangements to have the utilities transferred. The home seller needs to call for final readings and the buyer needs to set up the utility accounts in their name. This is very important, and should be arranged as much in advance as possible, perhaps as soon as the closing day is confirmed.
It is recommended that the pre closing inspection be set as closely to the closing date as possible, preferably immediately prior to the closing. This inspection is usually set up by the selling agent, who should be present during the walk through. Ideally the seller should have already vacated the home. In most instances, this inspection should not take more than a half hour.
So what is important during a pre closing inspection. The home should be substantially in the same condition as it was at contract signing, excepting ordinary wear and tear. During the walk through inspection, a buyer should be paying attention to overall condition, and also looking closely to see if any walls or doors were damaged during the seller move out, that the windows are not cracked and they open and close and that the seller has removed their personal property. The home should be broom swept clean. Don’t forget to open the closets and check the attic to make sure they are empty too!
In addition, buyers should look closely to see that was included in the sales agreement is there, such as light fixtures, appliances, other non real estate items agreed to and the like. Sometimes sellers remove items which are considered part of real estate, such as light fixtures, light switches and other fixed items. If it was agreed that the seller would replace certain light fixtures, check to see if that was done and that there are no bare electrical wires hanging. Likewise, look closely to see that holes in walls from the removal of pictures or hanging lights were spackled and repaired.
Now the systems check. Even though everything was working during the home inspection, it is important that they be checked again now to make sure they are still working properly. Turn the heat on. Afterwards, turn the central air on. Let them run for awhile. Check the lights. Turn all the faucets on at the same time and let them run a little to then check to make sure all water drains and does not back up and that there are no leaks.
Here is some advice related to situations that arise somewhat frequently in a real estate transaction which could create complications at the real estate closing:
* Utilities: There are times when a seller moves out prior to closing and has the utilities read without realizing that they will be turned off unless transferred into another name. It never hurts that a buyer obtains confirmation that the utilities remain on in the event the owner moves out prior to closing.
* Seller Repairs: If there are repairs which were agreed to be made as a result of the inspections, it is highly recommended the buyer inspect the completed work prior to the closing date, especially if the work was done by the owner, and obtain copies of any bills when the work was done by a contractor. The reason it is important to inspect the repairs prior to closing is to make sure that the repairs were completed, and completed professional, workmanlike manner.
If the inspection of the repairs is left to the day of the closing, it becomes much more difficult to correct the situation on the morning of the closing than it would be if the problem was discovered a week or so in advance of the closing.
* Home Not Vacant at Walk Through: This is an occurence which happens frequently. It occurs primarily when the seller is also purchasing a home. The seller needs to close with their buyer to obtain their sale proceeds to then close on their purchase. And they cannot move into the home they are purchasing until they close on it.
It is for this reason that it is important for a home buyer to know what the seller’s moving plans are in advance of the closing. Situations like this can be easily resolved with advance notice. In circumstances like these there are generally two ways they are handled.
If on the pre closing inspection the seller is still in the process of moving out and the buyer cannot inspect a broom clean vacant home, what is often done at closing is holding some of the seller’s proceeds, as escrow, until they are all moved out later in the day. Then the buyer does their walk through inspection to make sure no damage was caused during the move out. When everything is acceptable, they contact their closing representative who then releases the escrow to the seller.
There are times when a seller needs to remain in occupancy, for one reason or another, for a few days after the closing. Again, a situation which does happen. As long as the buyer does not have to move into the home they are purchasing on the day of the closing or a day or so thereafter, this complication can also be resolved. A Use and Occupancy Agreement is prepared and the seller pays rent to the buyer equal to a per diem expense of the buyer’s mortgage payment. This per diem charge, in addition to an escrow for moving out damage, is held in escrow by the purchaser’s closing agent and given to the buyer when the seller moves out. It is important that there is also a large per diem increase penalty charge for any day the seller stays longer than the original agreement. Again, any additional money held is returned to the seller.
Situations like the above do happen from time to time with a real estate closing. The key to working them out is knowing about them in advance so plans can be made!
What if there are problems during the pre closing inspection? The buyer should contact their closing attorney or closing representative and advise them as soon as possible. The selling agent should alert the listing agent who should advise the seller who can review it with their closing representative. It is so much easier dealing with pre closing inspection problemsas soon as possible rather than waiting to resolve them at the closing table and the moving trucks are in front of the home.