Is a home inspection necessary when buying a condo in NYC?

Is a home inspection important when buying a condo in NYC? We’ll discuss this topic in the following video. Visit https://hauseit.com to learn how to save money if you’re buying or selling real estate in NYC. So let’s get started!

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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 un renovated 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.

Even in the case of a small building, an inspection still might not be truly necessary. 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.

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.

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