Earlier this year I wrote about how home inspections are going to be implemented more in purchases from April 1st, 2018. This article is a Q&A of what your brokerage agent needs to do from that point according to the new law.
Q: Is the Home Inspection referred to in the revised Home Construction Law different from home inspections that are currently on offer now?
A: In practice no but who can perform these inspections while at the same time having the results included in the language of the sales and purchase contract will.
Below is an example of how the license will change from what it is currently to what it will become.
The current license holder will still be able to practice home inspections but the results of inspections done by companies who haven’t pass the revised test according to the updated Home Construction Law standards can not be included in the language of the sales and purchase contract.
Q: What exactly does a broker need to do from April 1st, 2018 when introducing home inspectors?
A: First, a broker must disclose at the signing of a vendor agreement that recruits services for the sale of a property whether that broker can introduce licensed home inspectors. If not, then you the seller have the option of choosing whether to continue working with that broker or finding another firm who can introduce you to proper home inspectors.
Second, whatever broker you wish to work with must put in the sales and purchase contract whether a home inspection was done or not.
This will come in the form of an extra sheet attached to the sales and purchase contract that outlines the results of the inspection.
The contents of this sheet must be explained to the buyer prior to signing a contract if there was a home inspection done. If there wasn’t, then the buyer can request one to be done. Who pays for it then becomes a point of negotiation between buyer and seller.
Q: Are there any other points I should be aware of regarding this change?
A: There are merits and demerits regarding home inspections.
One large merit is that buyers can purchase second hand houses with greater visibility on whether there were renovations done or not, what needs to be fixed if anything and thus negotiate with the seller with greater confidence.
However, one demerit is that these inspections are still non-destructive, meaning that walls and floors are not broken to gauge the integrity of the frame. They are still visually done by inspectors walking through the property and in the case where the property is owner occupied, furniture and room decorations can effect what the inspector sees.
Also, Home inspections will not be required to look deep into piping, water and drainage issues as a base service so if these areas are of interest to a buyer then optional service must be ordered at the buyer’s cost.
It is important to note too that even though your real estate agent will introduce a properly licensed home inspector, the broker is not responsible at all for the results of the survey. This responsibility is borne entirely by the company performing the home inspection.
Additionally, buyers must have the sellers permission to have a survey performed and it is envisioned that some sellers will be less than cooperative, especially if the house or whole building has sitting tenants.
However, all in all this is a large step forward in an industry that long needed more transparency in the second hand market, making purchases safer for buyers and hopefully spark more life in this segment of the market.
Editor’s Note: Adam German is Vice President of Business Development at Housing Japan and a well-known figure in both the marketing and sales side of Tokyo Real Estate. Originally from Canada, Adam has been behind some of the most successful international residential property services in Tokyo.