Home Condition At Closing
- Adam Garrett
- Apr 20, 2024
- 7 min read
Updated: Apr 26, 2024
Image Courtesy Art Louis Photography from a Former Listing of Adam's
What can buyers and sellers expect in terms of condition at closing?
Condition Details at Walk Through Inspection Depends Heavily on Contract
By the time that you get to the walk through inspection, you'll be relying more on the contract (& if applicable, a home inspector) than you will be on any other element in VA.
2 Main Contract Types Used in SE VA
In SE VA there are 2 main contract types used for homes, though there are others used less often (i.e. for land, commercial, and other types of contracts for homes):
REIN Contracts (Hampton Roads)
VAR Contracts (Typically Outside of Hampton Roads, though Some in Williamsburg/James City County & Gloucester County; these may be used throughout VA)
Default Buyer & Seller Responsibilities at Time of Walk Through Inspection in SE VA
I go over a number of responsibilities of the seller at closing in my spreadsheet linked in this article (or if you're my client, I've probably sent you one already that's been adapted to your situation & is likely more up to date). When going through it, be sure to skip down to the "Walk Through Inspection" items:
It's best to use the spreadsheet primarily as a point of reference to the contract so that you can get the most accurate information directly from the contract. The spreadsheet states what location various terms are located at.
Final Walk-Through Inspections should include review of the contract, any addendums, and the walk through inspection form. Physical requirements contractually should be verified that have not already been verified by an independent 3rd party, and by you also if viable. Walk through inspection forms are typically geared toward the terms of the corresponding contract. It includes an optional list of items that should be checked, like water at every source, appliances, HVAC, etc. I generally recommend leaning toward being more thorough than less thorough, even though it will be more time consuming. A thorough walk through inspection can save a buyer thousands of dollars in some cases.
Best Times to Redact Terms: Offer, Counter, Inspections, Etc.
The best times to redact terms in a wide variety of arenas, including but not limited to regarding property condition, where the other side may agree or counter are:
At the time of the offer by the buyer (the primary time, though keep in mind that additional conditions do weaken an offer's likelihood of acceptance)
When countering or responding to a counteroffer
When buyer is submitting a home inspection contingency release addendum, when warranted by uncovered findings in the home inspection that weren't previously known
When buyer is submitting a walk through inspection contingency release addendum, when warranted by uncovered findings in the walk through inspection that weren't previously known
If a seller is unwilling to do something that exceeds a given cap (i.e. termite/moisture inspection findings on REIN offer), and the buyer still wants to proceed with closing (if possible, i.e. with an escrow hold back in some cases), they may want to request an additional non-monetary concession or low monetary concession.
Other times prior to closing by mutual consent, whether a concession by good will to an extenuating circumstance that pops up, for compensation, or otherwise
Condition Obligations Depends on Any Redacted Offer Terms
As is offers are one of the most common examples of changed language regarding property condition at time of closing. One method of writing an as is offer that is particularly compelling to a seller is when a number of terms are struck from the offer regarding property condition, walk through inspection, and home inspection. Even when that doesn't occur, if an offer is written "as is" there is still a lower expectation at closing for property condition. When I write as is offers, I typically don't strike a number of terms to help protect buyers more.
In some cases, a buyer may request, and the seller may agree to doing something more than the default contract template, like a professional cleaning of the carpet or otherwise.
Disclaimer: Adam is Not an Attorney
Adam is not an attorney, only a licensed real estate agent in the state of VA, and the above should not be construed as legal advice.
What Else Do Condition Obligations Depend On?
Any Redacted Offer Terms
As is offers are one of the most common examples of changed language regarding property condition at time of closing. One method of writing an as is offer that is particularly compelling to a seller is when a number of terms are struck from the offer regarding property condition, walk through inspection, and home inspection. Even when that doesn't occur, if an offer is written "as is" there is still a lower expectation at closing for property condition. When I write as is offers, I typically don't strike a number of terms to help protect buyers more.
In some cases, a buyer may request, and the seller may agree to doing something more than the default contract template, like a professional cleaning of the carpet or otherwise.
Depends on Any Addendum/Amendment Terms
In addition to the initial contract that's created, any addendums associated at that time or at a later time, such as the home inspection contingency release addendum if there's a home inspection, matter when it comes to what's required at closing. If a buyer finds that repairs are (truly) problematic & not in accordance with the contract, they can avoid closing until those matters are corrected.
Depends on Property Condition at Time of Contract/Inspection (Depending on Contract)
If a property looks excellent at time of showing and home inspection, and then tornado, earthquake, or hurricane damage impacts a property or the sellers are negligent and a pipe bursts in the home in the winter while the heat is off, or the sellers trash the place on their way out the door, the buyers have the ability in SE VA contracts (& I suspect most contracts) to not close.
With VAR offers, the condition is based on ratification date of the contract if no inspection is present (or date of inspection if inspected), (VAR section 15 Equipment condition & Inspection b & c). With REIN offers, the condition is based on "the date of this agreement" which is more likely the offer date than the ratification date.
If a property is in poor condition at time of home inspection, in the absence of any other contractual requirement (i.e. "broom clean" term in a VAR offer that is absent from a REIN offer, while REIN offers state the property should be "free of personal property, debris, and trash"), there's no need for a seller to do a lot of cleaning etc. as long as the terms of the contract are being abided by.
Depends on Insurance
Those getting mortgages are typically required to get insurance, and cash purchasers are typically best off getting it. An insurance company may visit a property prior to closing and enforce some of their own minimum property requirements in order for someone to get insurance through them.
Depends on Law
Virginia is considered a "buyer beware" state, so while there are a number of laws regarding property and conveyances, and there are some legal disclosure requirements, there's not a laundry list of specific minimum property standards by default like you have in a number of states, even if mortgage lenders set minimum standards. For instance, cash purchasers can buy a tear down property in VA without having to jump through as many hoops as in some states.
Depends on Possession Agreements
In the event of a seller possession agreement or a buyer possession agreement, the timing of when a property needs to be ready to convey changes, and the rules often change as well according to the terms of the possession agreements in certain regards.
Depends on Loan
For those not buying in cash or non-mortgage financing, mortgage typically goes off a list of requirements by the lender & typically by a higher authority (i.e. Freddie Mac, Fannie Mae, VA, USDA, FHA) that is verified if an appraisal or certain other inspection (i.e. well, septic, wood destroying insect) occurs. If a seller is unwilling to fix a termite problem in a state that requires it or appraisal required problem, the buyer may be prevented from closing. Exceptions to some of those rules may be granted at times via fixer upper loans and escrow hold backs. Also, some non-mortgage financing may have its own requirements, such as with some hard money loans.
What About Concessions Offered in the Listing but Not Present in the Contract?
This issue is one where if you want what is offered in the listing to occur/convey, it's best to include it in the contract directly. If you don't, don't be surprised if it's not present at the walk through inspection.
Examples:
Offer to paint
Carpet allowance
Home warranty
Related:
About the Author: Adam Garrett - 3rd Generation REALTOR®
Adam is the 3rd generation in a line of award-winning real estate agents serving SE VA. He has served full time at Garrett Realty Partners since May 2014 when he joined the marketing department before transitioning to full-time sales to assist buyers and sellers in February 2015. He believes that an educated buyer or seller makes the best decisions, & is dedicated to helping with that both digitally & on-site physically for buyers & sellers. He's also available for referrals to real estate agents around the globe. In several capacities, his resources & direct offerings for assisting sellers & assisting buyers are either unmatched or are top 1% for the SE VA area, and in some cases, nationwide. Not stopping after closing, he also provides information for tenants, landlords, & homeowners.
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