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Archive for Friday, February 3, 2006

Home inspection uncovers unexpected costs

February 3, 2006

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Q: My wife and I signed a purchase contract for a home, and followed your earlier advice by making our offer contingent on getting a satisfactory report from a home inspector. The inspection report lists only one major problem - it says the remaining life expectancy of the roof is just three to five years. Is the seller obligated to install a new roof before the sale goes through because we made the offer contingent on an inspection?

A: No, the seller isn't required to install a new roof in order to close the sale.

You were wise to make the purchase of the home contingent on first obtaining a satisfactory report from a professional inspector. A standard contingency allows buyers to cancel a sale and get their deposit back if the report uncovers previously undetected problems, such as a roof that's in poor condition or a plumbing system that's in dire need of repair.

A typical inspection contingency does not, however, obligate a seller to fix any problems that the inspector might find. When problems are discovered, buyers have four basic options: Renegotiate with the seller to have the needed repairs made before the sale closes; ask for a lower sales price so that the buyer will have the money to make the repairs after moving in; purchase the property "as is"; or cancel the sale and have the deposit returned.

A roof can cost thousands of dollars to repair, and thousands more to replace. If you still want the house, contact two or three professional roofing companies and ask for written estimates for the cost of the work that needs to be done. You then can show these bids to the seller in an effort to make him pay for some or all of the work, or to at least lower the sales price so that you can afford to take care of the roof after you move in.

If the seller won't renegotiate, you'll have to decide whether to accept the house in its current condition or to exercise your contingency to cancel the sale and demand that your deposit be returned.

You might want to complete the sale if the roof would cost only a few thousands dollars to fix and the offering price the seller originally accepted is far below the property's current market value. But if you've already agreed to pay top dollar for the home, it would probably be best to terminate the sale, get your deposit back and look for a different property that's offered by a more reasonable seller.

Q: We recently applied for a mortgage. We filed all the paperwork and the lender approved the loan, but then we canceled the loan because we have postponed our house-hunting plans until the fall. How will our cancellation of the mortgage affect our credit report?

A: The mortgage you canceled won't have any effect on your credit report or overall credit rating.

A credit report does not show whether you were declined for a loan, or whether you were approved for a loan and then voluntarily turned it down. The only reference to the mortgage you rejected will be a note on the report that shows that the bank reviewed your credit history.

Q: While researching my ancestry, I found a reference that a distant relative of mine once owned a "zygocephalum" of land in the late 1700s. I have looked for a definition of this term in my dictionary, but can't find one. Can you help?

A: In America's early days, settlers and farmers in many parts of the country had no surefire way to determine where their property ended and a neighbor's began, because a standard method to measure real estate hadn't yet been adopted. So, they resorted to a measuring system that had been used for centuries in the countryside of Merry Olde England - the "zygocephalum," defined as "the area of land a yoke of oxen could plow in one day."

This wasn't exactly the most accurate way to establish property rights, perhaps because some oxen moved faster than others (and some farmers worked harder than their neighbors). So, the zygocephalum eventually gave way to our current system of "metes and bounds," which uses a property's physical features to determine its boundaries.

- David W. Myers is a 20-year veteran of the newspaper and magazine business.

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