Is a home inspection important when buying a condo in NYC?
We’ll discuss this topic in the following video.
I’m Nick at Hauseit, based here in NYC. Check out our website hauseit.com to learn how to
save money if you’re buying or selling real estate here in New York. So let’s get started!
A home inspection is fairly uncommon for condos in New York City.
While you’re welcome to request an inspection, this is rarely done, as we’ll explain momentarily.
However, if you do ultimately decide to proceed with a home inspection,
this customarily occurs prior to signing the contract.
Any issues discovered are negotiated and otherwise sorted out prior to signing the contract.
Many buyers, sellers and brokers often associate the word ‘contingency’ with an inspection request.
But this is somewhat misleading since an inspection is typically done
before a contract is signed. If a buyer and seller can’t agree on how to solve an inspection
related discovery, the deal just doesn’t happen. So, there is generally no contingency language in
the contract itself, since any issues are sorted out before the contract is signed. Therefore,
it’s better to phrase an inspection request as an ‘offer term’ as opposed to being a ‘contingency.’
So, now let’s answer this question: why are condo inspections uncommon in NYC?
Well, inspections are rare because condos have a board and management
whose responsibilities include inspecting and maintaining the common areas of the building.
While each unit owner is responsible for the inside of her or his apartment,
not much can really go wrong inside a typical condo assuming it’s reasonably well maintained.
That being said, a home inspection may be a good idea if you’re buying into a small condo building,
and by that we mean, a building with a small number of apartments in total. An inspection might
also be worthwhile if you’re buying an unrenovated apartment, perhaps its an estate sale, or if your
unit has outdoor space, such as a roof deck, or perhaps a skylight, or if you’re buying a garden
level apartment or something with a basement. But for a typical condo unit renovated in the
past 20 years and reasonably well maintained, an inspection is, in our opinion, overkill.
So, why is an inspection important when dealing with a small condo building?
Well, buying an apartment in a smaller condo is generally risker than buying into a larger
building. When a small building needs capital upgrades to expensive components such as the roof,
boiler, façade or elevator, there are fewer apartment owners who share the bill.
As a general rule of thumb, an inspection might be a good idea if the condo building has 10
or fewer units. If you’re buying a condo in a townhouse conversion in Brooklyn, for example,
there might just be 2 or 3 apartments total. So in this case, you’re essentially buying a townhouse,
and inspections are always done for brownstones in New York City.
Should you decide to do an inspection, it’s important to keep in mind however that there is
no guarantee your inspector will be allowed access to building common areas, like the boiler room.
So the inspector could show up, only to be denied access, and there’s not much you can do about it.
Even in the case of a small building, an inspection still might not be truly necessary.
Here’s why. Let’s take a step back and consider this: what’s the ultimate point of an inspection?
Well, it’s to save you money by predicting possible repairs you’ll need to take care of,
and then trying to make the seller cover some or all of the cost.
So even if your inspector discovers that the boiler needs to be replaced soon,
why does that matter if we can look directly at the building financials
and discover that the building is well aware and has already budgeted for this expense?
And this brings us to buyer due diligence. Prior to signing the contract, you will
review a due diligence report prepared by your real estate lawyer. This involves your attorney
doing a deep dive on important items such as building financials and board minutes.
And this due diligence will give you far more comfort and context about the physical
and financial standing of a building than what any inspector can provide.
Let’s also remember that even the most well run buildings need large repairs from time to time.
What actually matters is whether or not the condo building is in good shape financially.
Another reason why smaller condos are risker is due to the fact that there is a limited budget
available to pay a managing agent. Some managing agents who service small buildings aren’t very
good, and they may not conduct routine inspections or follow adequate maintenance procedures.
Larger buildings on the other hand are usually well maintained. They almost always have
professional management companies, a live-in super and in some cases an on-site operations team.
So, in our opinion, an inspection for a condo unit in a large building is a colossal waste of money.
However, you’re more than welcome to request one should it give you additional peace of mind.
Moving along, an inspection might also be a good idea if you’re buying a unit which
requires a total gut renovation. This is particularly relevant in
the case of an estate sale, where someone has continuously occupied an apartment for decades
while doing little or no maintenance. Another risk factor warranting an inspection
is if your unit is a garden-level apartment or a duplex with basement access. Common issues with
garden-level units include flooding and draining challenges, vermin as well as moisture issues.
Next question: Does Your Apartment Have a Roof Deck?
Special caution should be exercised in the event you’re buying a condo with a private roof deck
or if your apartment is on the top floor. While liability for most leaks originating
outside your unit resides with the condo, this won’t stop you from having a miserable
time if your ceiling starts leaking. As such, it’s a good idea to request a
home inspection if your unit is on the top floor or if your apartment has a private roof deck.
Liability for any future repairs of your private roof terrace will be evaluated as part of your
real estate lawyer’s due diligence report which is prepared before you sign a purchase contract.
So there you have it! We hope you enjoyed this video, and if you did, please like, subscribe and
leave us a comment. We’d greatly appreciate it. And if you’re looking to buy or sell, check out
hauseit.com to learn how to save money. I’m Nick at Hauseit, and we’ll seen you on the next video!