The condition of a property being considered for purchase is a major concern. Several protections regarding the property condition are all built into standard real estate contracts and stronger protection for the buyer can be added if desired.
The Appraisal required by a lender is primarily done for the lenders’ protection to insure that the value of the collateral for the loan is sufficient. New homes must be complete except for minor cosmetic items, and existing homes must be habitable and provide standard systems. FHA appraisal guidelines are more specific and require a higher level of condition than conventional appraisals. Foundations, flooring, appliances, heat & air, roof, and exterior wood and paint must meet certain specifications for FHA financing.
The Termite Inspection is also required by the lender and protects the buyer. Within 30 days prior to closing, the property must be inspected by a licensed pest control company for the presence or evidence of damage caused by wood destroying insects. Any damage must be repaired prior to closing and any active infestation must be remedied.
The Tennessee Residential Property Condition Disclosure Act requires that sellers of an existing property must complete a form disclosing any known defects and other pertinent information regarding the house, lot, and neighborhood surroundings. Any intentional misrepresentation by the seller can result in severe penalties. This form is required by the state of Tennessee solely for the buyers’ protection. Exemptions to this requirement include sales by non-occupants, foreclosures, estate sales, and new homes with a builder warranty.
The Property Condition and Inspection clause of most real estate contracts states that the seller must deliver the property to the purchaser with plumbing, electrical, heating, air conditioning, built-in appliances in proper working order, and the roof with no visible leaks, at the time of closing. An inspection of the property is allowed to determine the condition of the items and identify those items in need of repair. Weichert Realtors - BenchMark strongly recommends having a professional home inspection. These companies produce comprehensive reports that will identify items needing repair as required by real estate contracts and provide other valuable information regarding your new home.
Real estate contracts include protections for the buyer that are fairly specific and as a result can be somewhat limited in scope. Buyers are not automatically protected for cosmetic items or systems that may be on their “last leg.” A contract can be conditioned with the buyers’ “satisfaction” with the information learned from the inspections. Some sellers are hesitant to accept this language due to the general nature, but this provides the buyer with maximum protection.