Buyer Contingency Period

One of the first items of business for the buyer is the inspection period. The time frame is pre-negotiated during the offer process and must be adhered to or the buyer could risk losing their earnest money.  If additional time or inspections are needed, the buyer will have to go back to the seller and ask for a time extension. Once the inspections are complete, the buyer can negotiate repairs or any issues that may affect the sale. 

Professional Home Inspections

OBTAINING A PROFESSIONAL HOME INSPECTION IS THE SINGLE MOST IMPORTANT THING A BUYER CAN DO FOR THEIR PROTECTION.  A professional home inspection report will provide the buyer with detailed information about the home’s physical condition, its systems and fixtures and usually note any potential problems.  The buyer should carefully review an inspector’s proposal to determine the scope of the inspection.  Some home inspectors may not inspect heating and cooling systems, the roof or other systems or components.  A home inspection should be done by a home inspector or contractor licensed by the Oregon Construction Contractors Board (CCB).  To inspect two or more components (i.e., roof, siding, structural), the home inspector must be certified and either be a licensed construction contractor or work for a licensed construction company.  Also, a home inspector is not allowed to perform the repairs within a twelve-month period following the inspection. 

Buyers can review state home inspector requirements on line at: http://ccbed.ccb.state.or.us/WebPDF/CCB/Publications/HI%20consumer%20Protection%20notice.pdf. 

Additional information about inspections and inspectors is available from the Oregon Association of Home Inspectors at: www.oahi.org  or the International Association of Certified Home Inspectors at www.nachi.org.  Inspection of property is beyond the scope of expertise of a real estate licensee, but real estate licensees can provide buyers with a list of local inspectors. Licensees ordinarily will not recommend a specific inspector.  Before hiring an inspector, the buyer should check with the CCB to determine the inspector’s current license status and whether there are any past or pending claims against the inspector.  This can be done by visiting: https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm.  Buyers should not rely upon reports done for others (previous buyers and/or sellers), because the report may not be accurate and buyers may have no recourse against an inspector they have not retained.  Most residential sale contracts contain a clause that allows the buyer to withdraw from the agreement if a professional inspection they have done shows defects in the property.  You will want to take advantage of this important right by obtaining your own professional home inspection report from a licensed professional inspector within the time frame specified in the sale contract.  Unless otherwise provided for in the Sale Agreement, the cost of the inspection will not be refunded should you withdraw from the Agreement.

Buyers should look for signs of repairs or remodeling when viewing property.  If repairs or remodeling have been done, the buyer will want to make certain the work was done properly.  Buyers can ask the seller for any invoices or other documentation for the work but, as with other questions of property condition, there is no substitute for a professional inspection. A real estate licensee can help the buyer assess the need for a building code compliance inspection but do not themselves have the training or expertise to evaluate building code compliance. Information about building permits can be found at: http://www.permitsprotect.info/, a service of the Department of Consumer & Business Services Building Codes Division. If building permits were required for work done on the property (such permits are typically required for structural changes, new additions, and new plumbing and electrical work), the buyer should check with the city or county building department to make sure the permits are in order.  If permits were not properly obtained, the new property owner could be held responsible. Ask your agent for assistance or you can find the website for the county in which the property is located by visiting:

http://www.aocweb.org/aoc/AboutOregonCounties/CountyLinks/tabid/72/Default.aspx.

If repairs or remodels have been completed very recently, the buyer should take steps to determine if there is any possibility of construction liens being filed against the property after the sale has closed. This can be done by the buyer raising the issue with their title insurance provider.  

If any repairs are being required during the transaction, the buyer should insure a licensed construction contractor is doing the repairs.  After the repairs have been done, the buyer should consider having a re-inspection done to assure the repairs were done properly.

Pest and Dry Rot Inspection

Pest and dry rot inspections are performed in many residential real estate transactions and may be required by the lender.  A pest and dry rot inspection may or may not be included in a whole home inspection.   If a pest and dry rot inspection is desired or required and the buyer is obtaining a whole home inspection, the buyer should verify that the inspection obtained covers pest and dry rot and that the inspector is properly licensed.  The license status of home inspectors can be checked at: https://ccbed.ccb.state.or.us/ccb_frames/consumer_info/ccb_index.htm. Pest control operators who do inspections and apply treatment are licensed by the Oregon Department of Agriculture.  Buyers can check on licensing of pest control operators and applicators by calling the Oregon Department of Agriculture at (503) 986-4635 or check online at http://oda.state.or.us/dbs/search.lasso#pesticide.   Real estate licensees do not have the training or expertise to inspect property for pests or dry rot.  Like any property condition report, buyers should not rely on the report of an inspector they did not hire.  A pest and dry rot inspection is a limited inspection and is no substitute for a complete whole home inspection by a licensed home inspector.

Title Report and Commitment

The title report or commitment to insure, produced by a title insurance company, contains important information that must be reviewed by the buyer.  In particular, the report will list certain “exceptions” to the policy the company will issue. Buyers should request copies of any documents mentioned in the report that are not understood or raise concerns about the state of the title.  General information about title issues can be found at: http://www.titlelawannotated.com. Questions about the title report and associated documents can be directed to the title or escrow officer issuing the report or to the buyer’s attorney or surveyor.  Review of title reports for legal deficiencies involves the practice of law.

Homeowners’ Insurance

The insurance claims history for a home may affect the cost of homeowners’ insurance, or even its insurability.  Most insurance companies use a database service called the Comprehensive Loss Underwriting Exchange (CLUE) to track claims made.  Depending on the content of the CLUE report, and the insurance company’s policy, home insurance may prove more difficult to get than expected.  The buyer’s claims history and credit report may also be used to determine insurability.  Insurers have used CLUE reports and other information, coupled with termination provisions in the policy, to cancel coverage after closing.  IT IS CRITICAL THAT BUYERS ARRANGE FOR HOMEOWNERS’ INSURANCE EARLY IN THE PROCESS OF PURCHASING PROPERTY RATHER THAN WAITING UNTIL CLOSING TO GET INSURANCE.  If difficulty is experienced in obtaining the insurance, the buyer can ask the seller to furnish them with a copy of the CLUE report on the property. 

Homeowners can obtain a copy of the report for their property online at: https://www.choicetrust.com/servlet/com.kx.cs.servlets.CsServlet?channel=home&product=ror&subproduct=order  Buyers may want to talk to the licensee they are working with about whether obtaining suitable homeowners’ insurance should be made a contingency of the sale. More information on homeowners insurance in Oregon can be found at: http://www.insuranceoregon.org/home/.

Home Warranties

A home warranty is an insurance contract. Home warranties for existing homes are common in today’s real estate market. The warranty generally covers the repair and replacement of equipment and appliances such as dishwashers, plumbing systems, electrical systems, and so on. Optional coverage may be available at additional costs for pools, built-in spa equipment, well pumps and other systems. Coverage and price vary considerably among warranty companies. A home warranty can be included as a term of a purchase agreement.  Buyers should discuss home warranties with their agent prior to purchasing a home. Your agent can provide you with information on companies offering home warranties for purchase.