How to Sell a House with Point of Sale Violations
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TABLE OF CONTENTS
Navigating the Point-of-Sale Process in Greater Cleveland
What is a Point-of-Sale Inspection in Ohio?
What will be Inspected During the Ohio Point-of-Sale Inspection?
A. You Cannot Rely on Consistency with Inspections and Inspectors
How and When to Prepare for and Schedule a Point-of-Sale Inspection in Ohio
A. Make Sure a Point-of-Sale Inspection is Required by Your Ohio City
B. Optional but Recommended: Take Care of Obvious, Easy Items Before You Schedule the Point-of-Sale Inspection
C. Schedule and Complete the POS Inspection Early
D. How to Schedule a Point-of-Sale Inspection (Side Tip: Be There When it Happens!)
How to Sell an Ohio House with Point-of-Sale Violations
A. How to Respond to the Ohio Point-of-Sale Inspection Report
(1) Seller Completes the POS Requirements
(2) Seller Sells “As-Is” and Requires the Buyer to Assume the Point-of-Sale Requirements
(3) Seller and Buyer Negotiate Over Shared Responsibility for POS Repairs
Recap: How the Point-of-Sale Process Typically Works (Step-by-Step)
Navigating the Point-of-Sale Process in Greater Cleveland
A point-of-sale inspection can require repairing raised shingles like the ones shown.
If you want to sell a property in Greater Cleveland’s suburbs, you have likely heard of the point-of-sale inspection (“POS”). Many cities in the Cleveland MSA require homeowners to complete a point-of-sale inspection before their property can be sold. For ease of reference, I have begun making a list showing which cities in Northeast Ohio do, and which do not, require point-of-sale inspections at this link, and I will keep updating it until it is complete.
The point-of-sale inspection process varies from city to city. The process can add significant costs for a seller and buyer depending upon how aggressive the assigned inspector is and how many items the inspector says must be repaired or replaced.
It is therefore important to have a good grasp of how the process works and what options are available to buyers and sellers when responding to a point-of-sale inspection report so that you can effectively sell a house with point-of-sale violations.
This article will help you sell a house with point-of-sale violations by explaining: (1) what a point-of-sale inspection is exactly, (2) how and when point-of-sale inspections are typically scheduled, (3) how the POS process typically works from start to finish, and (4) how to address and respond to a point-of-sale inspection report to put yourself in the best position for a sale.
What is a Point-of-Sale Inspection in Ohio?
Point of sale inspections will often require clearing plants away from siding and cleaning siding that has a green hue like this house.
A point-of-sale inspection is a (i) legally required inspection of a property (ii) which must be completed before a property can be sold to a new owner, (iii) and is either (a) completed by a city official or (b) what we are seeing sometimes now is cities are hiring a third party company called SAFEbuilt (although there may be others) which has its own inspectors who will complete the point-of-sale inspection.
The purpose of the POS is to identify items both inside the home (if the particular city conducts interior POS inspections - some cities only conduct exterior inspections) and on the exterior of the home that the city inspectors believe need to be repaired or replaced.
Once the city identifies these items, they will produce a point-of-sale inspection report which they will send to the property owner. In our article here you can see a copy of the POS report we received on a property we purchased. The report will include a date by which all of the items identified by the city inspector must be repaired or replaced.
Before the property can be sold, the property owner will need to repair or replace all items identified by the city inspector in the report or, alternatively, the seller can ask the buyer to formally assume responsibility for addressing the violations. This brings us to the first important point about selling a home with POS violations:
As the city permits buyers to assume all of the POS violations, and that option will relieve the seller of any and all responsibility for repairs and replacements required by the city, finding a buyer willing to take on all of the POS violations can be a critical lifeline for a seller who wants to sell but does not have the resources to tackle the city’s requests.
When sellers work with us, we always assume 100% of the POS violations as the buyer so that the seller does not have to take on the expense and the headache of working with contractors, obtaining permits and satisfying the sometimes unreasonable city requirements.
What Will be Inspected During the Ohio Point-of-Sale Inspection?
The point-of-sale inspector for this Ohio house required the replacement of this rotted railing.
Here is a list of 20 items we have run into in many POS inspection reports in homes that are in average to below-average shape. This list is not comprehensive by any means, but it will give you a sense of the kinds of things the inspectors call out:
(1) Repair/replace damaged siding (this will typically refer to select areas of the siding that are damaged, but rarely if ever require total replacement unless it is all in horrible shape);
(2) Trim bushes and trees away from house and garage, and remove all weeds/overgrowth;
(3) Replace pitted/cracked driveway apron;
(4) Replace driveway (note that this requirement comes up when you have an asphalt driveway that is heavily cracked, when you have a concrete driveway that is heavily cracked, or if you have an asphalt overlay on top of an old concrete driveway and the asphalt has deteriorated to the point where you can see the old concrete underneath);
(5) Scrape and paint all peeling paint areas (interior and exterior);
(6) Repair/replace damaged gutters and downspouts;
(7) Tuckpoint areas with missing mortar and any crumbling masonry (often found in chimneys, steps and brick porches);
(8) Replace torn window screens;
(9) Scrape and stain/paint old decks;
(10) Install CO/Smoke detectors;
(11) Inspectors will sometimes ask that very old electric panels/fuse boxes “be verified for functionality” which will require you to hire an electrician to provide a written confirmation that everything is functional and safe;
(12) Install GFCI receptacles in garage if the garage has existing non-GFI receptacles;
(13) Clean very dirty siding;
(14) Repair loose railings on stairs and porches;
(15) Seal chimney flue where furnace and hot water heaters vent into it (this typically involves using something like FireBlock caulking and is an easy fix);
(16) Roof replacement/repairs (for very old and clearly leaking roofs);
(17) Clean/clear gutters;
(18) Label electric panels;
(19) Replace cracked sidewalk blocks (this is a frustrating one, but many cities in Ohio do make homeowners responsible for the sidewalk blocks in front of their home); and
(20) Repair inoperable light fixtures.
Note that when the inspector requires the “replacement” of an item (as opposed to “repair”) , they will often note that item with an asterisk next to it and explain that you will need to obtain a permit for that item, which is of course more burdensome.
While many municipalities allow homeowners to pull permits, if your property is in an LLC or separate entity, you may not qualify for a homeowner’s permit and will need an insured, bonded contractor to pull the permit for you.
You Cannot Rely on Consistency with Inspections and Inspectors
The point-of-sale inspection report for this Ohio home required replacement of flooring in this house (which pretty much all looked like this nasty carpet).
Unfortunately, from experience we can say that the POS inspection is not uniform from city to city and is also not uniform from inspector to inspector within the same city, which makes it very difficult to predict exactly what you will be asked to repair or replace and how much to budget in advance for those items.
Additionally, some cities require only exterior point-of-sale inspections, while others require full interior inspections which of course greatly expands the potential list of requested repairs and therefore the potential cost.
For example, in one particular city where we have purchased three homes, the results of the point-of-sale inspections have been very different when a city staff inspector completed the inspection compared to when a SAFEbuilt inspector contracted with the city completed the inspection. The SAFEbuilt inspector was far less friendly and far more aggressive/nitpicky, while the city staff inspector (someone who lives in the community) was far more reasonable.
What the cities in Northeast Ohio inspect and focus on also varies from municipality to municipality.
For example, one city where we invest seems to be particularly obsessed with imperfect concrete. They have created an unwritten rule (communicated to us in person by a city staff inspector) that if concrete driveway blocks or sidewalk blocks have any cracks or pits larger than the size of a quarter (the coin), the entire concrete block with that quarter-sized crack or pit must be replaced. You are not permitted by this city to fill the crack or pit with an epoxy, concrete caulking or other repair material.
Naturally, with concrete being so expensive, this rule has created a lot of angst and consternation for buyers and sellers in this particular city.
A different city where we invest always seems to include the requirement to clean any green moss growth off of siding. This could just be something that bothers the particular inspector who we have dealt with each time we purchased in that city.
I give these examples just to point out how you can never be absolutely certain what you will be asked to repair when heading into a POS inspection. Each inspector will have their own focus and biases, and as they are ultimately just people, they can also make their own unique misjudgments on any given day. Indeed, we have had to push back in some instances (sometimes successfully and sometimes not) when requested repairs did not make sense.
How and When to Schedule a Point-of-Sale Inspection in Ohio and How to Respond
The point-of-sale inspection report for this house required scraping and painting the walls and ceilings.
A. Make Sure a Point-of-Sale Inspection is Required by Your Ohio City
If you want to sell your home in Ohio, the first thing you should do is find out if your particular city requires you to complete a point-of-sale inspection. One easy way to find out is to call your city’s building department and/or check out its webpage. Simply googling the name of your city and “point of sale” can also often quickly lead you to the answer.
At the time of this writing some cities, like the City of Beachwood, OH, the City of Berea, OH, the City of Aurora, OH and the City of Chagrin Falls, OH, do not require a point-of-sale inspection prior to selling a home. Other cities, like the City of University Heights, OH, the City of Cleveland Heights, OH, the City of Lakewood, OH, Highland Hills, OH, Orange Village, OH, and Brook Park, OH all require both interior and exterior point-of-sale inspections. I have just started putting together a list of cities that do and cities that do not require POS inspections, so in the future you will be able to find a comprehensive list here, but for now it is a work in progress.
As an aside, point-of-sale inspections are typically not required for gratuitous property transfers (i.e. transfers where no money changes hands like when a home is inherited or otherwise gifted).
B. Optional but Recommended: Take Care of Obvious, Easy Items Before You Schedule the Point-of-Sale Inspection
It should come as no surprise that the POS for this house required door replacement.
Some items that will show up on your POS report will be easy and highly affordable to address, and addressing those items yourself can improve your chances of achieving your sale goals when your house has point-of-sale violations.
For example, moderate amounts of overgrown landscaping/weeds, cracks in concrete and asphalt (where the cracks are limited enough that the city is not going to ask for a full replacement and caulking can be used to fill them), very dirty siding, and highly chipped paint in limited areas are all examples of items that require very little skill to address but that are highly likely to be added to your POS report by any inspector.
Longer POS reports can spook some buyers (not us though!), so it can be worth it to chip away at obvious and low cost repairs to make that inevitable POS report more friendly looking to any prospective buyers.
This is particularly true because the escrow for some point-of-sale inspections (i.e. the amount of money the city requires the buyer to set aside in an account and not touch until all repairs are completed) can be significant. We just put in an offer on a home that had a $24,000.00 escrow requirement for its point-of-sale requirements, for example. Many buyers will simply walk away from this situation.
Check out our article for advice on how to prepare your home for a point-of-sale inspection here.
C. Schedule and Complete the POS Inspection Early
Another obvious one: the POS for this Shaker Heights, OH house required removing all of the plant growth on the chimney. Shaker Heights is particularly tough because of their strict POS requirements and high property taxes.
You should not wait until you are in contract to sell your home to schedule a point-of-sale inspection .
Most, if not all, buyers will want to see the point-of-sale inspection report before they will be comfortable providing an offer, or they will make an offer subject to reviewing the POS report.
Consider the fact that any buyer who will be asked to assume the city-required repair items will be taking on a specific (sometimes very high) cost, and they will have no idea what that cost is until the POS report is completed and they have a chance to review it. That cost will need to be considered as part of their offer.
If you don’t have the POS report in hand from the start, and you accept an offer subject to review of the POS report, you could find yourself in a situation where the POS report is so tough that the buyer either walks away (and you have thus wasted time and damaged your listing which will show that it fell out of contract) or where the buyer asks for a hefty price reduction that you do not want to accept.
My opinion is that it is better for all involved to have access to the POS report from the get-go, so there will be no surprises and smoother sailing to the closing table. However, it is true that once you have your POS report completed, the clock will start on the city-prescribed time frame to complete the repairs. For that reason, some sellers choose to wait until the last possible minute to schedule the inspection.
Ultimately, if the POS report reveals that your property requires extensive and expensive repairs, you will want to take that into account in establishing your asking price. If your asking price is completely disconnected from the reality of what the city wants repaired/replaced in your home, your property will not sell and the experience will be highly frustrating.
D. How to Schedule a Point-of-Sale Inspection (And Be There When it Happens)
This is an asphalt-over-concrete driveway that the Point-of-Sale inspection required to be torn out and replaced.
Scheduling a point-of-sale inspection is normally easy and straightforward. Most cities require you to fill out an application and pay a fee of somewhere between $50 to $200 for a single-family home. An appointment for the inspection will be scheduled with the building and housing department.
It is always a good idea to be on site for the inspection. Asking questions and seeking clarification from the inspector helps build rapport and may help you avoid the need to seek clarification after you receive the inspection report. We have seen many reports which contained some ambiguities about exactly what the inspector wanted repaired, and as inspectors are often in the field during the day it can be frustrating to try to get ahold of them for clarification.
Additionally, inspectors can sometimes be overly aggressive initially. Homeowners who are present and friendly at the time of the inspection may be able get the list of issues whittled down and may be able to negotiate on site for alternatives to the more expensive initial requests made by the inspector. This negotiation, if successful, will of course help you sell your home with point-of-sale violations because your report will be more manageable for potential buyers.
Expect the inspection report about 5-10 days after the inspection.
How to Sell an Ohio House with Point-of-Sale Violations
The point-of-sale inspection for this house required me to, “investigate and repair the source of the water damage and remediate the mold.”
How to Respond to the Ohio Point-of-Sale Inspection Report
With the point-of-sale report in hand, you will see that the city states that the violations listed on the report must be corrected within a specified period of time (typically 30-90 days).
The options for responding to a POS report and setting up your home for a sale are limited. The options can generally be broken down into the following three categories:
(1) Seller Completes the POS Requirements
The seller can of course address all of the point-of-sale requirements.
It is rare to find a listed home which says it is “POS violation free” in the listing (meaning the seller has taken care of every POS repair request required by the city), but such homes are popular and can command a premium from buyers who will have the peace of mind to know they can close on the home without the city requiring any out-of-pocket expenses.
Seeing such language in a listing also gives a clear sense that the home was well maintained, which will benefit the listing greatly.
(2) Seller Sells “As-Is” and Requires the Buyer to Assume the Point-of-Sale Requirements
The POS for this Ohio house required the rebuilding of the upper porch.
Many buyers will buy properties with point-of-sale violations and assume responsibility for the repairs. Having the buyer assume point-of-sale violations may be the only option for sellers who do not have the time or funds to take care of the violations on their own.
If the POS report is obtained after the seller enters into contract with a buyer, and the buyer is expected to assume the POS violations/repair requirements, the seller should expect the buyer to ask for a price reduction to reflect the cost of repairing the violations.
(3) Seller and Buyer Negotiate Over Shared Responsibility for POS Repairs
The seller and buyer also have the option of dividing up responsibility for the list of required repairs in the POS report. Under such a scenario, before the sale closes the seller could address their agreed-upon list of city-required repairs, confirm with the city that those repairs are acceptable, get them removed from the original POS list of required repairs, and then the buyer can assume the remainder of the list to be completed after the closing.
Another alternative would be for the seller to give the buyer a credit at closing to use toward the point-of-sale repairs. In that scenario, the title/escrow company would withhold some of the purchase money deposited into escrow by the buyer for the purchase of the home, and credit it back to the buyer upon the consummation of the sale. This way, the seller does not have to come out of pocket for any of the expenses associated with the city-required POS repairs.
Recap: How the Point-of-Sale Process Typically Works (Step-by-Step)
As you can see, there are lots of ins and outs to consider with respect to point-of-sale inspections. I thought it might be helpful to end this article with a “bullet-point” overview of how the process typically works, in case this type of overview works better for how you process information. While the point-of-sale process varies from city to city, this is generally what you can expect:
A city in Ohio requires that a point-of-sale inspection be completed prior to a sale;
Buyer contacts the city to schedule a POS inspection;
City completes the point-of-sale inspection and provides a list of repairs that either (a) seller must complete before the property can be transferred to buyer or (b) buyer must agree to complete within a specified period of time after the sale, (c) and buyer must set aside a sum of money with the escrow company handling the sale (the, “escrowed money”) that the city deems appropriate to cover the repairs should the buyer not complete them. Buyer only gets the escrowed money back from the escrow company once the city tells the escrow company that they can release it to the buyer;
If the buyer is assuming the POS repairs, the buyer submits a Point-of-Sale Assumption Agreement to City. Some cities may require the Point-of-Sale Assumption Agreement to be notarized while others do not.
City sends Buyer an Escrow Request Letter which specifies the amount of money that must be held in escrow as security/collateral for the point-of-sale repairs. The Escrow Request Letter states that the City will only issue a Point-of-Sale Transfer Release (which allows the legal transfer of title from the seller to the buyer) upon receipt of a letter from the escrow company stating that the escrow company will set aside and hold the city-specified sum of money.
Escrow sends an Escrow Holdback Agreement to the City stating that they will withhold the specified sum of money from the buyer until the POS repairs are completed;
City issues Point-of-Sale Transfer Release to Escrow;
Title transfers to buyer;
Buyer completes point-of-sale repairs;
City confirms point-of-sale repairs are completed;
City notifies Escrow that escrow can release the escrowed point-of-sale money back to Buyer.
Note: Here is a wrinkle that can drive away conventional buyers—the money in the point-of-sale escrow account is usually not available to do the repairs. While some cities like Shaker Heights allow buyers to draw funds from the account as the work is being completed and reinspected, many municipalities do not release the funds until all the work is done. Buyers who assume point-of-sale violations would need to set aside funds for both the city-required escrow and the repairs, and this might not something that some buyers (whose budgets are already stretched thin due to inflation and high real estate prices) can stomach.
When we buy houses, we assume point-of-sale requirements and make it easy for sellers to sell homes needing repairs. Having an experienced buyer assume point-of-sale requirements at the outset can help sellers avoid the headache of, and potential delays caused by, point-of-sale violations and repairs. We assume all sorts of point-of-sale requirements for both interior and exterior work and have bought properties with extensive lists of point-of-sale violations. Interested in quickly selling a property for cash that has a lengthy list of point-of-sale violations? Reach out to us at (216) 694-8246.
Disclaimer: The above is solely intended for informational purposes and in no way constitutes legal advice or specific recommendations.