Massachusetts walk through

My Boston.com colleague, buyer’s agent Rona Fischman, has a great post today on walk-throughs, or pre-closing inspections. I’ve re-posted it here, along with my commentary (in italics) and my own tips.

The walk through is the last thing that the buyer does before closing. The buyers, plus the real estate agents, walk through the empty house to check that it is in the same condition as inspection day — except that the seller has moved out. I advise clients to do it immediately before closing. This gives the seller the most time to move out properly.  Rich’s Note: In the purchase and sale agreement, we always require that the seller leave the property in “broom clean” condition, free of all personal property and debris.

What can go wrong?

Planning: Sellers often underestimate the time and energy required to get everything out of the house. Then, as the deadline arrives, they get sloppy. The result is that the seller leaves a mess behind. Commonly it’s something like a pile of debris left in the basement, or some piece of furniture falls down the stairs and makes a hole in the plaster.

Here are some unusual ones:

1. A seller who was a landscaper had some plants that she was fond of. She was entitled to dig them up. But, she was in such a hurry that she left the yard looking like a crazed raccoon had attacked it. We brought pictures to closing. She came back and made it nice for the buyers.
2. A seller who coached a hockey team left the team equipment in a window seat. Although it was heavy, we hauled it to closing.
3. A seller who was cleaning up put his wallet in the kitchen cabinet. We found it on walk through and brought it to closing (the listing agent was not at walk through.)  Rich’s Note: The more serious situations are when sellers leave hazardous materials behind, such as old paint cans, chemicals, asbestos covered materials, or old insulation–often without the buyer even knowing they were in existence. This is often not discovered until after closing, and the best protection is to draft a contract provision where the seller represents and warrants there are no such materials, so the buyer can pursue the seller later.

Sometimes the problem involves the way the house was working. Here are a few examples:

1. Easy: Old-style washing machine spigots often drip. A homeowner just doesn’t know it until they disconnect the machines.
2. Hard: Once, I went to a walk through where there was a washing machine in the kitchen. The kitchen sink had no water at walk through. We found out why: if we turned on the sink, the laundry hook up ran (they had no shut-off and were on the line with the sink.)
3. Easy: Sometimes drip-leaks start under sinks or downspouts fall off outside.
4. Hard: sometimes a gutter tears off the house or a tree comes down shortly before closing.
5. Only once have I seen heating that failed at walk through. It was a condo that had just gotten a new boiler. It was on warranty. The company that installed it fixed it that afternoon.

What is the remedy for a problem at walk through? Whether it is easy or hard, there is usually a solution that money can buy. Frequently, the attorneys write out a quick agreement to hold some of the seller’s money to pay for correcting whatever the problem is. Rich’s Note: This is called a “hold-back agreement” where a portion of the seller’s proceeds are held in escrow until the problem is fixed. Sometimes the seller than fixes it and gets the funds released. Sometimes the buyer fixes it and gives the seller the bill and any remaining money. It depends on what it is and who it is.

Rich’s walk-through tips:

• Do not waive the walk-through! You snooze, you lose, if there are subsequent problems.
• Always go with your agent.
• Bring your camera, Iphone, etc. to document any issues
• Turn on/off all major appliances to see if they are working properly
• Check under decks–sellers often leave nasty stuff behind
• Scour the basement, check for water seepage and stuff left behind
• Check repairs if the sellers agreed to make any
• Turn on and off every light fixture
• Run water & look under sinks for leaks
• Check garage door openers
• Have broker test alarm system
• Open and close all doors
• Flush toilets
• Inspect ceilings, wall and floors
• Run garbage disposal and exhaust fans
• Test heating and air conditioning (even if off season)

After The Walk-Through

When the buyer arrives at the closing, the first thing I always ask is how did the walk-through go? I can usually tell how it went by whether the buyers (and their agents) are smiling or frowning when entering the closing room. The good thing is that no matter how poorly it went, the attorneys are almost always able to draft a hold-back agreement or some other solution to enable the transaction to close as scheduled. This is just another reasons why buyers and sellers should have experienced real estate counsel at the closing.

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