Long before I got into the real estate business we bought a house in Atlanta, Georgia. The agent, who was representing the seller and not us, the buyer, suggested I have the central heat and air checked. My response was “Yea, yea.” Bottom line, I ignored him. He reminded me a second time and I blew him off again. One day he said “I think you should really have the furnace checked.” Well, I acquiesced and had the AC people come check it out for all of $60.00. It turned out that the furnace had a cracked heat exchanger and was emitting carbon monoxide. This happened in February and the sellers had to turn off the heat due to the obvious health hazard. As a result of the inspection we were able to negotiate credit for a new furnace as well as avoid a potential death. The sellers were actually grateful that we had the unit inspected.
The point of this anecdote is that it is important to know what you are buying. There are horror stories of people buying houses only to have the AC break down within days or weeks of a purchase. The state of Texas does a poor job of communicating the obligations of sellers of single family residences but the Texas Property Code requires virtually ALL sellers of residential property, whether using a real estate broker or not, to provide a “SELLER’S DISCLOSURE OF PROPERTY CONDITION”. The following link will take you to the form: http://www.trec.state.tx.us/pdf/contracts/OP‑H.pdf. The purpose of the Seller’s Disclosure is to fully inform a prospective buyer of the seller’s knowledge of what the condition of his house is as well as what fixtures and components the house has. The key words are “seller’s knowledge”. This is because most of us, as sellers, are not completely intimate with the condition of our own homes. The most honest of sellers may not be aware that his home has just been infested by termites or that the old galvanized pipes below the wood floor are about to spring a major leak. In preparing the Seller’s Disclosure the seller should make every reasonable effort to disclose negative conditions or potentially negative conditions. The importance of addressing potentially negative conditions is that certain kinds of lawsuits allow a plaintiff to sue a seller for negative conditions that the seller did not know about but should have known about. In the case of the aforementioned furnace a buyer might be able to sue the seller over the damaged furnace by asserting that, if the seller had had carbon monoxide detectors, he would have known about the problem and been able to disclose it so that the buyer could go into the sale with his eyes wide open.
If a seller fails to provide a buyer with a Seller’s Disclosure, the buyer may terminate the contract with the seller at any time up to and including the instant of signing legal documents at the close of the sale. It the buyer does terminate the agreement to purchase, the seller has absolutely no recourse and has to give back any monies advanced to the seller by the buyer.
There are individuals in Texas, who are licensed by the Texas Real Estate Commission to do professional inspections of homes. A typical inspection runs around $250.00 but can vary depending on the size of the house or its construction. If the individual is not licensed by the state he is not legitimate. All inspectors are required to use the same form so that there is uniformity in the profession. A good inspector will make photos available of all conditions observed. Sometime an inspection will kill a sale. If it does, so be it. This is usually a sign that significant defects were found in the property and that the seller and buyer could not negotiate a satisfactory resolution to the problem. Some inspectors are also licensed to do termite inspections. Termites are a problem in East Texas. They are particularly advisable on older homes with a lot of wood and pier & beam foundations. Most inspectors are not certified to do detailed inspections of heating and cooling systems, so hiring a heating and cooling technician is the appropriate course of action for obtaining a proper assessment of mechanical systems.
Unimproved land should not be considered exempt from inspections. One of the key things to look for on tracts of land – particularly large ones – is contamination. If you find discarded tires on a piece of land you are buying, insist that they be removed and lawfully disposed of. If you find disposed batteries you should strongly consider not buying the land unless you have an environmental engineer perform an environmental site assessment. If the batteries have contaminated the land the Texas Commission on Environmental Quality (TCEQ) will get involved. Fines can be involved for unlawful dumping.
The takeaway from all of this is that being penny wise and pound foolish about inspections can cost you dearly in the long run. Spend a few extra bucks and know what you are buying.