What Home Sellers Need to Know About Inspections and Appraisals in Edmonton, Alberta

Thinking of buying or selling an Edmonton, Alberta home? Then its vital you are aware of how appraisals and home inspections can affect the process.

Two key elements of the home selling process in Edmonton, Alberta are inspections and appraisals. Its not uncommon for real estate transactions to be quite complicated. So in order to make the best financial decisions, it is important to get a firm grasp on the process. Read further to discover what Sunrise Home Buyers suggests home sellers need to know about inspections and appraisals in Edmonton.

Conditions And Contingencies

As I’m sure most readers are aware, inspections and appraisals are a key element of traditional real estate purchase and sale contracts. These contracts have an inspection contingency or due diligence contingency. This allows for a measure of protection for would be house buyers, who are given a specific time period for a home inspection to be completed. Typically this period ranges from seven to fourteen days.

If any unknown issues are discovered with the Edmonton property, the options for both buyer and seller are clearly written in the contract. The outcome of the inspection could result in a range of outcomes. These outcomes range from no change to the timeline or outcome, a delayed closing, to the entire deal coming apart. The end result depends on how the contingency clause was written and how any further negotiation was conducted.

Although uncommon at the present time in Alberta, there are some house buying scenarios where potential home buyers might choose NOT to write in any contingencies. Typically this occurs in a hot market, or one with a low inventory of homes.

Failing to write in any conditions in a contract would mean that the buyer, having decided not to go through the purchase based on the outcome of the inspection, would lose their deposit. Sometimes the property sale ends here. But we have heard of cases where the home seller took legal action against the would be purchaser if he is unable to find another buyer. So if you choose to write an unconditional offer, BE CAREFUL! Please sure you understand the potential implications of your actions.

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Repair Expenses

Sometimes, but not always, major issues are uncovered by would be homeowners from having inspections and appraisals completed. Home inspections will focus on the condition of the property structurally, as well as on the systems which keep the home functioning and making it a viable property. The key areas inspected include items such as the roof, foundation, air conditioning, heating, plumbing, and electrical systems. Local Edmonton inspectors will also key in on any potential water damage, heat loss and the state of drainage and sewer lines.

A report will be created by the inspector for the buyers, to make them aware of any issues that were found. Depending on the conditions written into the contract, if several and/or severe deficiencies are found, buyers may have several options providing there were conditions written into your purchase offer. The home purchasers may request a second inspection to do a deeper dive into the problem or try and renegotiate the sale price of the Edmonton property. Alternatively, they may request the sellers complete the repairs themselves, with the cost for those repairs going to the seller.

You Need At Least 3 Estimate And Here’s Why

Any time you need work done by a professional contractor, we recommend contacting three professionals to get a wide range of realistic price estimates as well as possible timelines for completion. Depending on the nature of the problems discovered in the inspection, these out of pocket expenses could range anywhere from hundreds of dollars into the tens of thousands if something as severe as a horizontal crack in the foundation is discovered.

The reason you should contact three Edmonton, Alberta inspectors is NOT based solely on getting the best price or best contractor. Speaking with three qualified trades will educate you, the consumer, about different approaches to getting the job done, potential solutions and a realistic timeframe. If one contractor is out to lunch in a good or a bad way as far as price or timeframe on the repairs to the Edmonton property in question, you should know pretty quickly. No one cares as much as you so do your due diligence. Take the time and educate yourself.

In the end, maybe you are just too busy or lazy and I still haven’t gotten through to to you yet. In that case, simply telling the one contractor you call to quote a job that you will be getting other bids may be enough to keep him on the straight and narrow. What more can I do to help?

basement foundation in edmonton with severe damage

Something tells me this basement foundation could be an issue come inspection time! Seriously though, finding signs of water in the basement is a key task for a qualified Edmonton home inspector. Since most foundations are not visible behind the framing, insulation and drywall, you will need to hire an inspector who has the right equipment to assess the situation properly.

Property Valuation

Inspections and appraisals ultimately help determine the current market value of any Edmonton property and consider all the possible variables. Where the inspection focuses on issues with the physical home, the appraisal is completed by taking several variables into account to arrive at a market value. Many variables are used to arrive at a value by comparing the subject property with similar properties that have recently sold near the subject property.

Appraisers have predetermined values for bedrooms, bathrooms, square footage and so on. They will add value to a property with more features than the comparable properties, or subtract value from the subject property for what may be missing.

What Real Estate Appraisers Look at During an Appraisal!

Appraisers have predetermined values for bedrooms, bathrooms, square footage and so on. They will add value to a property with more features than the comparable properties, or subtract value from the subject property for what may be missing.

Common elements that add or subtract value are square footage, a finished basement, adding a full bathroom, level of finish, and size of the garage. Mortgage lenders will require the appraisal to meet the necessary loan-to-value (LTV) ratio. How do you calculate this? Glad you asked! The mortgage amount is divided by the appraised value. Lenders use this measurement as a guideline, the lower the number, the lower the risk on the loan. Should the loan-to-value be a higher number, the lender may require CMHC mortgage insurance to be purchased as well (LTV over 80%). In conclusion, wise buyers will ensure that there is a condition in the contract based upon the appraisal results.

Deal Breakers

Financial disasters can result when potential Edmonton home buyers fail to understand the impact of inspections and appraisals. This can end up costing a home buyer valuable time and a great deal of money. Sadly, buyers may find their target property isn’t worth what they thought only after the inspection and appraisal have been completed.

And that is why these clauses should be put in place to protect home buyers. You never want to be in a spot where you have purchased an Edmonton, Alberta property and the lender will not approve the loan! The buyer may ask the seller to pay for repairs, out of pocket, before closing or to deduct the value of the repairs from the price of the home and renegotiate a contract. All the while, the clock keeps ticking and the seller is now paying to hold the property longer than expected, meaning that in reality, they are losing even more of the valuable equity that had been built in the home, and actually making even less on the sale.

Sunrise Home Buyers Can Help

Sunrise Home Buyers can make real estate transactions hassle-free, even for first-time home buyers or sellers. Our goal is to eliminate any of the problems that can accompany inspections and appraisals when we make an offer to buy your Edmonton, Alberta home. At SUNRISE HOME BUYERS our network of trusted professionals will lay out a plan to save you valuable time and avoid what could potentially be thousands of dollars in renovations. So if you are hoping to sell your Edmonton house fast, why not let a professional buyer like us guide you through the process? Send us a message or CALL US TODAY to learn more! (587) 982-7576

If you feel like you’d like to dig deeper into the appraisal and inspection process, more information on how to find a good appraiser can be found by clicking the link.

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