Posted by Paul Sian at cincinkyrealestate.com/blog
What Is The Purpose Of The Final Walk through 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 walk through. While a final walk through 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 walk through a home buyer 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 walk through 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 walk through.
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 walk through is explored along with suggestions for both the home buyer and home seller as to what they should be doing prior to and during the final walk through.
How Should A Home buyer Conduct The Final Walk through?
The final walk through 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 walk through 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 walk through is when all the seller’s furniture has been moved out of the home. Home buyers should walk through 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 home buyer should immediately mention the issue to the home seller through their agent.
A home buyer is within their rights to delay a home closing due to faulty systems in the home that were previously working. As an alternative home buyers 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 home buyer 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 home buyer 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 Walk through?
The final walk through is not just for the benefit of the home buyer. A home that looks good on walk through 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 walk through 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 Walk through
If an investment property buyer is buying a vacant building or vacant single family home then by all means a final walk through 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 walk through 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.
The final walk through 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.
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