Philadelphia Home Inspection Process - A Primer!

You have been searching for a Philadelphia home for a while and finally found the one you love and want to pursue. Your agent helped negotiate terms and a good price and now the home is under agreement. Congrats! 

So what’s next? Best practice is to go through with a Philadelphia home inspection.

This makes sense of course. As the esteemed architect Le Corbusier famously said, "a house is a machine for living in." After all, homes have heating and cooling systems, plumbing and gas lines, electrical systems -- sometimes very old ones -- and appliances. 

Just like any other system with moving parts, things can and will fail. In Philadelphia, homes can be quite old by American standards -- typical rowhomes are often at least 100 years old and have often been renovated or added on to at least once or sometimes twice or even more. 

A home inspection contingency in Philadelphia

If you are spending big dollars on a home it would be imprudent to not inspect it. Unless you are a contractor or professional in the building trades with intimate knowledge of construction and systems, we always recommend that every buyer engage a licensed home inspector for inspection services to go through the home with a fine tooth comb in order to discover any potential defects.

Your local Prevu agent will go over this with you by the time you are preparing to write a contract and submit it to a seller so you’ll be prepped. In fact, most purchase agreements will have a home inspection contingency such that the deal is contingent on at least one of several inspection types.

Three key types of home inspections in Philadelphia

• General home inspection (is the roof OK, do the major systems work without fault or obvious defect, etc.), 
• Termite inspection, or other wood destroying insect 
• Radon inspection, if applicable, as certain areas in the city are more likely to have radon in basements than others (Roxborough and Manayunk, for example).

The home inspection itself - what to expect in Philadelphia

A home inspection in Philadelphia is a great opportunity for you to walk the home with a professional and ask questions so you can better learn about the home you are buying. The inspector will take time to explain any discoveries and can possibly assuage your concerns by showing what are big issues and what are little issues. 

Typically, the home inspector or other inspection professionals will also give you price ranges for estimating costs of fixes such as guidance that a water heater might be in the $750 - 1,250 range to replace. These estimates will be included in a detailed report, and come in handy for when you approach the seller and try to negotiate a credit or adjustment. More on that later.

What is the average cost of a home inspection in Philadelphia?

A home inspection might cost $300 or so up to possibly even $1,000 for any special systems like stucco, which require a specialist. Be prepared to be present during the inspection and block off a good chunk of the day as inspections can last a few hours depending on the inspector’s years of experience and what condition the property is in.

Caveat emptor

The purchaser has the right to inspect the home in order to potentially discover any defects or flaws or faulty equipment that may not have been obvious or easily noticeable during a normal tour.

If any items are discovered during the inspection contingency period, the buyer can do one of three things after reading the inspection report: 

• They can potentially terminate the deal and walk away with no default proviso or recourse; or, 
• They can try to negotiate a credit or adjustment to the purchase price with the seller as consideration for the defect/faulty equipment; or, 
• They can just buy the property as-is -- maybe the home is fine and has no major issues or maybe the buyer thinks the deal is good on its own merit and doesn’t require any additional negotiations.

As you go through all three scenarios, keep in mind that as we mentioned above, every home has imperfections and flaws. At a minimum, it’s important to remember that any inspection will discover items that will require attention. 

Inspectors will always find something so it’s important to keep things in perspective and keep your eye on the prize -- which is actually getting the home at a price and with terms that are agreeable. The point is to use the inspection to go into the transaction with no surprises. No one wants to buy a home and then immediately have to spend big money to fix something like a roof or some major system that can’t wait.

For example, a typical home buyer would not venture up on the roof to see the condition of the roof when they go to negotiate their purchase price with the seller. But after negotiating a deal for say $750,000 and putting the property under agreement, let’s assume that during the inspection, it is discovered that the roof has a few small breaches that could result in leaking or water penetration. 

If the inspector recommends replacing the whole roof at an estimated cost of $5,000, the buyer can reasonably ask the seller to provide a credit of $5,000 to account for that unknown overage. Or alternatively, instead of a credit, the buyer can ask for a reduction of the purchase price in the amount of $5,000. 

Now just because you ask for it doesn’t mean the seller will accept or give it to you! The seller can accept that request. Or they can say no flat out, or, they might make you a counter offer -- this seems to be the most likely scenario. 

Maybe they will offer you $2,000 and say take it or leave it. Now that they made you a counter offer you can take it or leave it or try to meet in the middle somewhere. It’s all a negotiation. 

Alternatively, instead of asking for a credit or reduction in purchase price, you can ask the seller to fix the roof themselves and make it their issue and responsibility. The problem with that is it may be difficult to agree on how things should be fixed and the seller’s incentive will be to do the repairs as inexpensively as possible. 

Hence we believe it’s cleaner and better to just ask for and negotiate a credit. That way with money back you can do the work yourself and control the process optimally. 

Change in terms

If a credit is agreed to by both parties for say $3,000, the agents will write up and circulate for signature a Change in Terms Addendum to the agreement of sale. This is a simple addendum that shows the revised terms and any other negotiated changes to the original purchase agreement so they are memorialized and not forgotten when it comes time to go to the closing table.

Walking away

If it’s discovered during inspection that there are major issues that just leave the buyer feeling too overwhelmed, then you can walk away from the transaction, again, as long as you do so within the designated inspection contingency periods. This is not legal advice so please make sure to read all agreements carefully before actioning. Please also review with both your Prevu representative and your attorney.

Seller Property Disclosure 

Sellers should fill out and provide a Seller’s Property Disclosure form to the buyer of their property. What does this form look like and what purpose does it serve? 

Well it’s a chance for a seller to disclose any known issues the property may have in order for the buyer to make an informed decision. 

It asks questions like when was the roof last repaired? Do you (the seller) know of any water penetration issues or leaks? What kind of water heater does the property have? Simple things like that.

Keep in mind that the seller should be truthful but sometimes people will fib or forget to include certain things either intentionally or not. As such, it is important to trust but verify as one must take the disclosure with a grain of salt so to speak. Hence the need for a good home inspection and why it’s so crucial to the transaction.

Lead Paint Disclosure

There is also a Lead Paint Disclosure that sellers are required to fill out and provide. The housing stock in Philadelphia is varied but, again, much of it predates any lead paint laws, so it’s safe to assume that most old homes have at least some amount of lead paint buried in the walls (oftentimes, there will be multiple coats of modern paint covering it). 

As such, disclosures almost always indicate that the seller has no knowledge of lead paint and it’s up to the buyer to either test for it or just assume that it’s there.

Your Prevu agent is required to give you this Lead Paint Brochure.

What about insurance? Does homeowners insurance cover things that need to be fixed?

Best to check with your homeowners insurance carrier, but typically no, homeowners insurance will not cover anything except catastrophic events such as a tree falling into your roof and damaging the home during a bad storm or fire damage (assuming it was not started by the property owner as arson).

Wrapping Up

Make sure you get your Philadelphia home properly inspected by a reputable inspection company in order to avoid any major surprises. Keep in mind that as a homeowner you are responsible for fixing anything not working in the home (or ignoring at your own peril). Just like any system or "machine," things will eventually fail in a house. 

Unlike in a rental where you can ask your landlord or property manager to fix a hot water heater that dies in the middle of the night, in a home that you own, you are now responsible to fix that hot water heater or else you’ll be taking cold showers for a while! 

As such, it’s important to make sure to reserve adequate financial resources for after closing -- another reason the Prevu Smart Buyer commission rebate is so valuable!