Should Renters Get a Home Inspection?

Margaret Woda shared this recently. I read the blog. I read through the comments. Then I shared the following.

Margaret – I handle clients that are seeking rental property. Sometimes, I feel like one of the last men standing. The majority of my referrals come from other agents that do not want to expend the time or effort in helping rental clients.

They do present some challenges –

  • Often, they do not have a great deal of cash reserves beyond the required security deposit and first month’s rent.
  • Many times, their credit is a bit impaired.
  • Several of them are working in positions that allow them limited time to view properties.
  • Lots of the property offered is owner managed by owners that do not know local law.

One would think that listing agents would be up to date on local laws and that they would counsel their clients. That view is challenged when you review properties listed for rent. The vast majority of them do not indicate a cooperative fee of 50%. The appearance of minimal compensation for bringing a tenant has left me to conclude that most rental listing agents, get a listing agreement signed, put a lock box on the door, a sign out front and enter it in the MLS. The shoddy and incorrect information in the MLS is yet another indication that minimal effort or knowledge has gone into the process.

My efforts have been to educate the rental public that they do need representation. Listings are not accurate and leases are being signed that do not conform to local laws. People are paying more for repairs than necessary, etc.

Sorry, the preamble to my comment was a bit long. Passion for representation creates a prologue. The State of Maryland requires that property that is rented remain in safe condition. It is the law. If something is discovered to be unsafe or unhealthy, there are remedies.

The cost of a home inspection is often out of reach for those renting a home. I have considered this and talked about with many clients. It is something that sounds like a good idea on paper, but in practice it may not be so beneficial.

There are issues and all of them would have to be addressed in the application. The application would then become a binding contract with contingencies.

  • The scope of the inspection would have to be standardized.
  • How long the prospective tenant had to accomplish the inspection would have to be in the application.
  • The nuances of whether or not a security deposit could be collected and how it’s return would have to be codified.

Then you have the hypothetical situations that must be addressed in consultation with the prospective tenant. If the home fails to pass inspection, the prospective tenant will have paid for the inspection, but in the way you present it, they would just move on. How many homes can the average prospect pay for an inspection? The timing involved is another issue for the landlord and tenant. If the law says 5 or 10 days to complete the inspection, the landlord is on hold for one third of a month, the tenant is out of the rental market for the same period of time.

Like I said, it sounds like a good idea but I fear it is not practical and if we start down that road, we will be increasing the paperwork needed exponentially. Our contract of sale is already a legend across the nation.

A better solution would be to make a law that homes for rent be State or County certified. Let the inspections for safety issues and health issues be done by the inspectors that are already working for the various jurisdictions. If they discover a problem, the home can not be rented until the situation is corrected.

Today, the best risk management practice is to become rental certified and make it your business to know the landlord and tenant codes in the places you practice. Rather than develop one more disclosure to put on file proving that “I warned them”, educate yourself and sub-sequentially your clients. And while I realize that co-op fees are set without collusion, it is time listing agents acknowledged that keeping more than 50%-60% of your fee is an indication you are more interested in lining your pocket for doing pretty much nothing.

Of course, this is all just my opinion, but as I mentioned…I work with renters every day.

Via Margaret Woda, Maryland Real Estate & Military Relocation Services (Long & Foster Real Estate, Inc., Crofton, MD):

Q. Should I get a home inspection before moving into a Crofton rental property?  I’m concerned about safety issues and hidden defects.

A. Frankly, a home inspection for rentals isn’t customary in this area… but it’s probably a good idea.  Here’s why I say that…

The typical rental move-in checklist deals primarily with cosmetic issues: The carpet, walls, windows…  But what about the things you can’t see?  These are the things a home inspection would disclose.

Wouldn’t you like to know before moving into the property if some of the electrical outlets aren’t grounded?  What if there’s an open electrical junction box in the attic?  If the roof leaks or basement floods?  Does the furnace have a cracked heat exchanger?  Is there aluminum wiring and, if so, are there any safety precautions the tenant should take?  Would you recognize a wood-destroying insect if you saw it?  Was the deck built well enough to hold the 30 people expected to attend your son’s graduation party?

A home inspection usually costs about $250-$300 in the Crofton area, but that could be a small investment in your family’s safety.

If a home inspection indicates any compelling safety issues, you should ask the landlord to correct them before you move in.  You can (and should) still make a record of cosmetic discrepancies, which you can identify on your own, but there’s more to property condition than cosmetics.

If you’d like me to provide contact info for 2 or 3 local home inspection companies, let me know as soon as possible because it may be a few days before they can fit you into their schedule.  Then, if they find anything you want to report to the landlord, you may need a few days to negotiate requested repairs.

____________________________________________

Maybe a home inspection SHOULD be customary for rentals… Perhaps a landlord should get one before listing his property for rent.  That wouldn’t be a bad risk-management strategy for landlords.

There’s no simple answer to the question about whether a renter should get a home inspection.  Or… perhaps there is.

Many thanks to the renter who asked this question and inspired me to consider this issue.  I am going to start offering a home inspection to my rental clients and landlords.



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