How binding are Home Inspection reports..

Jay H · 05-11-2007, 07:38 AM

My father is under contract on a buyer of his home, just got the report from the home inspector. One of the items is "update the electrical panel". How binding is this agreement, I mean his electrical box is much newer than the pushmatic panel that I got when I bought mine, his is at least uses pole type breakers (I don't know the specs or brand). Now if the electrical panel is up to the current NEC code, how can they report that the electrical panel be upgraded? I know hiring an electrician to replace the thing is going to be expensive and I've never heard of a seller having to replace an electrical panel just because it's not the newest thing. Obviously it's a used house, I wouldn't expect the latest and greatest so long as it's up to code.

Jay

DaveHo · 05-11-2007, 08:03 AM

Unless there is a safety issue, expecting the seller to update the electrical panel is crazy. What reasons are being given? In most states anyone can call themselves a home inspector. I don't put much faith in them. The buyer will probably ask for compensation to update the panel if your father won't do it before the sale. It's up to your dad to decide if he wants to or not. If an agreement can't be reached, usually any deposit is refunded and both party's walk away from the deal. What does the contract state?

Philip Hamm · 05-11-2007, 08:19 AM

Home inspections are not binding at all whatsoever (unless something is built into the contract, and there shouldn't be/usually isn't). All they can do is flag major flagrant problems which would cause someone to back out of buying a home.

And a lot of (most?) home inspectors are incompetent. The best way to get a good one is through a referral from a very experienced realtor.

Saying that the electrical panel needs to be updated is ridiculous IMO unless there are actual FUSES in the damn thing. Even then it would probably be OK.

ChrisMatson · 05-11-2007, 08:43 AM

As a recent home buyer, my understanding is as stated above.
We had a few small items that we wanted addressed specifically (plumbing and sidewalk repair). When the buyer makes a demand, the seller can either address the item or couter-offer with cash or a lowered price. If the seller is unwilling to address the issues, the buyer can walk. If the seller addresses the issues, the buyer can't walk.

EDIT:
Remember, it is a buyer's market in most places, so we felt comfortable making small demands on a house that we wanted. I could see some people using this tactic as an excuse to walk away from a deal.

Jeff Ulmer · 05-11-2007, 08:51 AM

Houses sell based on the condition they are in. If every house needed all the upgrades that someone could potentially come up with, no one would ever buy a house. That $100K special won't be $100K if it means all new electrical, new hot water, new roof, new floors, new kitchen, new baths, new deck, new appliances etc. The panel may "need" upgrading if the current service is too small, or there are no free circuits available. If the current install is to code (or even if it isn't - the buyer just needs to be aware of the issue, and the seller isn't misrepresenting it), then what's the problem.

I also agree that home inspectors are sometimes not worth a dime, I know the one I hired wasn't, missing every major problem while pointing out that the fence needed painting.

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Dennis*G · 05-11-2007, 09:30 AM

yes, home inspection is hit or miss. And what the inspector says is not stuff that needs to be done, just stuff the potentail buyer should be aware of.

Our inspector story is on our first house, the inspector gave it the green light with no major problems found, first rain fall we had water in the house, there was an actual hole in the roof!!! They never bothered to inspect the roof at all.

Our second house, the inspector was referred by our realtor, and was VERY through and friendly.

Michael Warner · 05-11-2007, 10:12 AM

When I sold my first house a while back the buyers had a professional looking home inspection team come out and run a very thorough inspection. Their truck even had a printer built in so they could generate a nicely bound final report. At the end of the day they too wanted a new electrical panel installed which I gladly had done for about $500. What their inspectors failed to note (even though all the issues were all listed on the seller's disclosure form) were the broken sump pump, leaking plumbing, partially cracked foundation, and 50 year old roof and siding that were about to give up the ghost. All they wanted was that new panel.

Home inspections run the gamut and even the best should only be considered a cursory glance at the condition of the house.

Philip Hamm · 05-11-2007, 11:03 AM

FWIW if you're buying a new construction home, a good home inspector is going to want to see it multiple times. Mine would only do business wth me if he could do this. He inspected the foundation after it was laid, came through the pre-drywall walk-through, and inspected at closing.

Dennis Nicholls · 05-11-2007, 12:15 PM

When I sold my place in San Jose last year, the inspection report was divided up into clearly-marked sections with 'real problems' vs. 'nice to have' items.

Matt Stryker · 05-11-2007, 03:55 PM

I would call the home inspector and ask specifically what he was recommending - eg, the panel doesn't have enough slots/load capacity for the home, isn't wired to code (and specifically what he found wrong).

Unless the install was non-standard for the time the home was built (someone put really old equipment in a pretty new house) I would think the buyer wouldn't worry about it.

And I will echo what others said - home inspectors miss SOOOO much.