Posted by Paul Sian at cincinkyrealestate.com/blog
What Is The Purpose Of The Final Walkthrough When
Buying A Home?
After an offer on a home has been
made, appraisal completed, inspection done and repairs negotiated, one of the
last activities done prior to the actual closing on the home is the final
walkthrough. While a final walkthrough is not required it is highly
recommended and serves a great purpose both for the home buyer as well as the
home seller. In the final walkthrough a homebuyer makes one last tour of
the home in order to see the condition the home will be in once the buyer takes
possession. If there are major issues found during the final walkthrough
then the buyer can refuse to close which means the transfer of ownership will
not take place. Usually the closing is put on hold until the issue is
taken care or although in the rare occasion a closing can be completely called
off if something substantial is discovered during the final walkthrough.
After closing and taking possession
of the home the buyer is generally responsible for everything associated with
the home. Of course if the seller failed to properly disclose an issue
that should have been disclosed then the buyer may have recourse against the
seller, but that is a topic for another article. In this
article the importance of the final walkthrough is explored along with
suggestions for both the homebuyer and home seller as to what they should be
doing prior to and during the final walkthrough.
How
Should A Homebuyer Conduct The Final Walkthrough?
The final walkthrough is not a time
to have another home inspection and look through the home with a fine tooth
comb. A home inspector could be brought along to inspect a home being
purchased but don’t expect the seller to repair another laundry list of issues
that should have been addressed during the initial inspection. The final
walkthrough is more of a general look at the home to ensure nothing major was
damaged during the move out process or that fixtures and appliances that are
supposed to remain in the home are still in fact in the home.
The ideal time to conduct the final
walkthrough is when all the seller’s furniture has been moved out of the home.
Homebuyers should walkthrough and test major systems like the garage door
opener, the HVAC system, open and close doors and windows which under the
initial home inspection was inspected and reported to be operating condition or
was serviced under the home inspection repair request. If it is
discovered that the HVAC system is no longer working when it was in the past
then the homebuyer should immediately mention the issue to the home seller
through their agent.
A homebuyer is within their rights
to delay a home closing due to faulty systems in the home that were previously
working. As an alternative homebuyers can request part of the proceeds of
the sale of the home going to the seller be instead placed in escrow so that
the buyer can be assured there is money set aside to make any repairs or
replacement as need be. A seller may prefer setting aside some money into
escrow rather than delaying closing since they have already moved out of the
house and are expecting to pay off mortgage loans on the day of closing.
A delayed closing could possibly result in a cancelled closing whereas a
closing with escrow means the home ownership has transferred and all that needs
to be address is payment for repairs.
Buyers going through the home prior
to closing day should have a checklist prepared so that they cover everything
that needs to be looked at. Each and every room should be looked at to
check for excess damage as a result of moving, areas which were previously not
accessible due to furniture can also be looked at to ensure nothing major was
being hidden from the buyer or their inspectors view. Buyers should check
and make sure all fixtures and appliances that are to remain with the home are
indeed still there. Another aspect to consider is are all fixtures and
appliances the same ones seen during the initial viewing and during home
inspection.
It is not unheard of to see premium
fixtures and appliances replaced with cheap replacements just before
closing. The type and brand of fixtures found in the home at the time of
the offer is what should be in the home at the time of the closing unless the
seller specifically stated in the contract that a particular fixture or
appliance would not be staying. For example a family heirloom chandelier
should be specifically exempted in the purchase contract as something that will
not stay with the home. If a home seller does swap out premium fixtures
or appliances for cheaper ones and it was not stated as that would be done in
the contract, then courts can order the home seller to compensate the homebuyer
for the cost of replacing the cheap items with equal or better fixtures to
match what was present when the offer was first made and accepted.
While minor dings or paint scratches
may not be what a buyer is looking forward to when buying a move in ready home,
the process of moving in and out can result in damage to the home. Major
damage such as large holes in drywall, broken doors or windows should be
repaired by the seller or paid for by the seller. This area also becomes
a negotiating point since both the buyer and seller are in the process of
moving and the question becomes as the buyer do you have the ability to stay in
your current place in the event closing is delayed in order to make
repairs? Often times both the buyer and the seller are pressed for time
and need to move. The homebuyer can request that the seller put some
money into escrow or write a check to cover the repairs paid directly to the
buyers. But if the home seller is not interested in negotiating and
offers a take it or leave it attitude then the buyers will have to weigh the
cost of fixing the damage themselves versus the cost of not being able to move
into their new home when they planned to.
What
Should A Home Seller Do Prior To The Final Walkthrough?
The final walkthrough is not just
for the benefit of the homebuyer. A home that looks good on walkthrough
day means as a home seller you are one step closer to being done with the long
process of selling your home. The last thing a home seller wants to do is
cast any doubt into the buyer’s mind that they are doing anything but making
the right decision by buying your home. What that means for the home
seller is that everything should be moved out, cleaned up and repaired as
needed. Minor bumps and scratches in a wall should not kill a deal at this
stage of the process.
Broken windows, broken doors,
non-working appliances and more can kill the deal to sell your home or reduce
the proceeds from the sale that you are expecting to put into your bank account
or into your new home. Even worse is if all of the proceeds from the sale
of the home are expected to pay off the mortgage and leave you at a break even
position if repairs require a repair escrow account to be setup that money is
coming out of your personal savings and you walk away from selling a home by paying
out of your own pocket. Don’t like that option? Then the other
choice is to cancel the sale and start the home selling process all over again
if the buyers will not agree to anything less. Most home sellers have
already moved out by the time of the final walkthrough and are in a new home or
renting a place under a long term lease. Either way that means paying for
two homes while only needing one. You may even want to sue the buyer but
even if your lawsuit has some merits it can take a case years to get resolved
in the court system.
If damage to your home was covered
by insured movers ask them to cover the cost of the repair and have the repair
done as soon as possible. If you or uninsured movers caused the damage
then be prepared to make the repairs yourself if it looks professionally done
or bring in a contractor to make the repairs. If the repairs cannot be
done right away let the buyers know about the damage and that repairs will be
made either before or after closing as the case may be. Be ready to put
money into an escrow account if the buyers are demanding it. Better
to pay some money into an escrow account or sign an agreement to make the
repairs and close on the property on time rather than delaying closing. A
delayed closing could also lead to a cancelled closing due to no fault of your
own. The buyer could have purchased a brand new sports car the original
day of closing and now due to delayed closing the loan won’t be approved due to
the new loan for the sports car showing up on the radar for the lender.
Should
An Investment Property Buyer Do A Final Walkthrough
If an investment property buyer is
buying a vacant building or vacant single family home then by all means a final
walkthrough should be conducted. Even if the building is in need of
complete rehabilitation everything should be looked at again to know what needs
to be repaired and in what order or to even make sure the building is still
standing. With vacant ready to move in investment buildings there still
may be the transfer of fixtures and appliances that were present at the time of
contract. Buyers should make sure the building they are buying is the
building and has the internal fixtures and appliances they contracted to
buy. For occupied investment properties while the buyer may not be able
to access all occupied areas they should at least do a final walkthrough of
vacant common areas and vacant living units to make sure they are in the
condition they originally saw them when they made the offer and that all
fixtures and appliances that are supposed to stay with the property are in fact
present.
Bottom
Line
The final walkthrough is an
important activity that all buyers should do in order to make sure the home
they want to buy is in as good condition as when they saw it prior to making an
offer. While minor bumps and scratches should not be a deal killer,
buyers need to watch out if major issues are present. Rather than
delaying or cancelling closing the option to have money from the proceeds of
the sale going into an escrow account to cover any needed repairs should be
considered.
Call Marc Moran (956) 784-9874 for your Real Estate Needs.
