Preparing Your Home for a Point-of-Sale Inspection in Greater Cleveland
Guide to the Point-of-Sale Process
If you are thinking about selling your house, understanding the point-of-sale (“POS”) inspection process is crucial.
Most cities in Northeast Ohio require a POS inspection before a residential property can be sold. The purpose of the inspection is to identify housing code violations that either the owner will repair before the sale closes or the buyer will assume and repair after the sale closes. In this article, we will discuss how to prepare for the POS inspection and address violations.
To learn about the POS process generally, please check read our article “How to Sell a House with Point-of-Sale Violations”
Table of Contents
What will the city inspect during the POS inspection?
Repairs homeowners should make before a point-of-sale inspection
What happens during a point-of-sale inspection
Seller’s options when a point-of-sale inspection report is extensive
Appeal the POS inspection report
Alternatives to a formal POS appeal
Take care of the repairs
Have the buyer assume responsibility for addressing the POS violations
Can a homeowner decide not to sell to avoid having to make POS repairs?
We buy houses with POS violations
Here is an example of a POS inspection report we recently received. The city required us to escrow a little bit over $2,000:
What will the city inspect during the POS inspection?
The scope of the inspection varies among cities. At minimum, the exterior of your property will be inspected. An exterior inspection will include a visual inspection of the following elements of your home:
- Roof
- Gutters and downspouts
- Windows, including storm windows
- Fences
- Chimney
- Doors, including storm doors
- Sidewalks and walkways
- Driveway, including apron
- Masonry
- Landscaping, trees, weeds, shrubs
- Structure
- Wall, siding, trim, paint, and caulking
- Balconies, decks, patios, porches, and railings
- Stairs
- Garage doors and garage roof
- Exterior drains
Some cities require only exterior inspections while others require interior inspections, well and septic inspections.
A handful of cities have notoriously strict POS inspections while others are more relaxed.
For example, the “Heights,” meaning University Heights, Shaker Heights, Cleveland Heights, and Mayfield Heights, are known for having very strict POS inspections. POS inspections in cities that outsource inspections to outside contractors like Safebuilt (as opposed to inspectors that are employed by that city’s building department), may be particularly thorough.
Repairs homeowners should make before a point-of-sale inspection.
Preparing your house for the POS inspection--by repairing items before an inspector identifies them on the inspection report--can not only save tens of thousands of dollars but also make it easier to sell your home.
First, you should learn the scope of your city’s POS inspection; determine what will be inspected.
Then, make sure those elements of your home are in good condition and look like they have been maintained. Making an effort to repair items that are in a not-so-great condition but salvageable could help minimize the chances of being required to replace them entirely.
For example, if you have a gravel driveway that has not been maintained, fix it up before scheduling POS inspection to reduce the possibility of being required by the city to replace it with an asphalt or concrete driveway as many cities’ building/housing codes no longer allow gravel driveways.
Failure to maintain your gravel driveway could result in losing the privilege of having your gravel driveway grandfathered. Cracks in concrete driveways should be filled to reduce the chances of being required to replace entire slabs. Scrape and paint cracked or peeling paint on the interior and exterior of your house. Inspectors hate seeing peeling paint.
Touching up exterior paint will minimize the chances of being required to entirely repaint the exterior of your property.
Trim and remove tree branches, vines, brush and other foliage touching your house.
If you have potholes on your asphalt driveway, patch them before the POS inspection to reduce the chances of being required to resurface it entirely.
Make sure that your repairs are to code and professionally done. We recently saw a POS inspection report that required the homeowner to entirely rebuild a front porch because they incorrectly replaced rotted beams with 4x4s instead of proper structural supports, and they allowed the flooring to degrade.
The owner could have avoided needing to rebuild the entire porch had they correctly repaired the beams before the inspection.
What happens during POS inspection?
During the POS inspection, an inspector will identify any housing code violations.
It is always a good idea to be present for the inspection, ask questions, and (respectfully and gently) push back if the inspector suggests repairs that seem excessive. The city will issue a formal POS report and give the owner a specified timeframe (usually around 90 days) to correct the violations.
Title of the property may not be transferred until all the violations have been corrected or the buyer agrees to assume responsibility for the repairs. The city will need to re-inspect the home once the repairs are completed.
Buyers who assume POS violations will be required to escrow approximately 1.5 times to 3 times the cost of the repairs with the title company.
Who determines how much money will be escrowed? That varies from city to city. Some cities like University Heights and Cleveland Heights set the amounts (for example, in Cleveland Heights expect $8,000 for a roof replacement; $5,000 for repainting the exterior of a 1700 sq. ft. house).
The city’s estimates may not necessarily be accurate.
Also, a city may not assign a dollar amount to every single violation. Some cities like Shaker Heights require the buyer or seller to hire their own contractor to determine the repair cost.
Seller’s options when a point-of-sale inspection report is extensive
We have seen POS inspection reports requiring homeowners to replace long gravel driveways with concrete ones, replace an entire septic system, connect to city water and sewer, and even demolish and rebuild a garage. Simply put, a seller’s ability to pay for such repairs is not a consideration for the city or inspector.
What might a seller do when they receive a POS inspection report requiring expensive repairs? The seller has four options:
1) Appeal the POS inspection report, sometimes referred to as the “certificate of housing inspection.” While the rules vary among cities, usually a written appeal must be filed in as little as 15 days of issuance of the report. Providing an affidavit or letter from a licensed contractor discussing why the required repairs are unnecessary may help the seller’s case. The appeal process varies from city to city.
Note that sellers must have valid grounds for an appeal. That they cannot afford a repair is not a valid ground. Sellers should be honest with themselves about whether an item on the POS report is actually unreasonable.
2) Alternatives to a formal POS appeal
One approach is to have several licensed, reputable contractors assess the problematic item.
Ask the contractors if the repairs the city is requiring are necessary and whether there are cheaper, easier repairs that may be done to address a violation (i.e. caulking a porch roof that is ponding instead of entirely replacing it as required in a POS report).
If their professional consensus is that a violation can be remedied with a cheaper repair, have the contractors put that in a gently-worded, courteous emails, to be forwarded to the inspector who did the POS inspection along with a very courteous introductory email explaining the sufficiency of the alternative repairs, before resorting to the formal appeal process.
Given the short deadline to file a formal appeal, this informal approach requires speediness.
3) Take care of the repairs, despite the cost. Title will not transfer until the all the repairs are completed, re-inspected, and the city issues a certificate of compliance. The POS report will identify which repairs require permits. Failure to obtain those permits may cause the seller to incur additional fees for retroactively permitting completed work (or even worse, a city might require the seller to demolish and redo work completed without requisite permits).
4) Have the buyer assume responsibility for addressing the POS violations. Note that a traditional buyer who plans to finance the purchase will need their lender will need to approve the assumption.
Having a list of very costly repairs may make it challenging to sell to a traditional buyer who is relying on financing because: 1) the sale will not proceed without the lender’s approval of the assumption; and 2) the funds deposited in escrow for the repairs are unlikely to be available to pay for the repairs.
For example, if the city is requiring the replacement of a gravel driveway with a concrete one (which can cost between $10,000 and $20,000 depending on its size), the estimated repair cost will be set aside in escrow, but most cities do not allow buyers to pay contractors out of the escrow account.
They release escrowed funds only after all the work is complete and the property passes the POS re-inspection.
Consequently, the buyer will need to be able to afford to pay the concrete contractor out of pocket for the work. They will recoup those costs once the city gives the title company the green light to release the escrowed funds.
Can a homeowner decide not to sell to avoid having to make POS repairs?
Likely, no. The violations listed on the POS inspection report must be addressed regardless of whether the homeowner ends up selling the property.
Sellers cannot get out of remedying violations on the POS inspection report by deciding against selling their home. Sellers who are not sure about whether they want to sell should think twice before ordering the POS inspection.
However, the POS inspections are generally good for one year.
This means that sellers do not need to accept the first bid they get, can shop around for the best prices, and save up funds to complete the repairs.
We buy houses with POS violations.
LP Property Group specializes in buying homes with POS violations. We understand that sometimes unexpected things happen, and homeowners may not have the resources to address the violations before selling their property.
That's where we come in - we buy houses as-is, meaning you don't have to worry about fixing any violations. We offer a fair, easy, and stress-free solution to selling homes with POS violations. Contact us today.
Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.