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Market Update

Home Inspections – Buyer Beware

It will probably be helpful for you to understand the history of buying a home in San Miguel de Allende.  In the mid 2000’s, almost every home was sold AS IS and without a formal inspection.  There were no inspection companies at the time and only occasionally an architect or builder would be called in to inspect a home before a purchase.

Realty San Miguel and other leading agencies begin to recommending an inspection by someone who could at least catch the critical defects.  Every buyer understood that there may be a few hundred to a couple of thousand dollars’ worth of things in the house that would need repair.  The idea at the time wasn’t to find every little thing defective in a house so that a better price could be negotiated, it was more of insuring that the buyer wasn´t inheriting a $10,000 or $50,000 problem.

In the late 2000´s an expat started a formal inspection company.  His inspections were fairly benign, but at least he had a meter to check for gas leaks and checked the basics of the plumbing, electrical, mechanical systems and roofing.  His reports were very simple, but at least a buyer had something

Over time, inspections became more common and more architects and builders jumped into the game. .  A large portion of homes were still sold AS IS, but over time buyers begin to negotiate for repairs or credit based on the inspection report.

Today, few houses are listed for sale AS IS and negotiating over the results of the inspection report is common.  Most offers, here like in the US or Canada, have a dollar amount that will be accepted, which is generally between $1,000 to $2,500 USD. What this means is that the buyer will accept the house in less than perfect condition as long as the repairs listed in the inspection report don´t surpass the specified amount.

This system is fine and works well in most cases.

However, the Buyer Beware part comes in to play when you compare the inspections here to the inspections in the US or Canada.  First, no inspectors here are insured or bonded and I have never seen an inspector compensate a buyer for something that is missed during their report.  In the US or Canada, when an inspector misses something, for example, a fountain pump ends up not working after closing, the inspector or perhaps his insurance company will pay for the necessary repairs.  Unfortunately though, that is not going to happen here for a long time.

The reality is that electrical, plumbing, painting and minor repairs to your new home will be incredibly cheap compared to what it would cost you at home.  So, my best advice is to go into the property inspection process knowing what you are getting and what you are not.  Think of buying the home more or less in AS IS condition and that you will have to do at least some minor work after it’s yours. Do the inspection to make sure you are not inheriting a major problem and don´t stress over it.  If your inspection report comes back with needed repairs which will cost more than the amount you specified in your offer, most sellers will work with you to make up the difference. They will either make some of the repairs before closing or they will offer you credit against the sales price.  If not, and at least in our offers, you would have the opportunity to back out without penalty.

The agents in our office know well how to handle details like this in a manner that protects your interest.  We would be privileged to help you find the perfect property for you and guide you through the whole process.

Philip Hardcastle