The Value of Home Inspections
Atop the long list of items to do when buying or selling a house is the home inspection. But what is involved? How much does it cost? Why is it done in the first place? It’s important to understand what a home inspection entails and how it affects the sale of your home or the purchase of a new one. The more you know, the less likely you are to get ripped off or taken by surprise.
What is a Home Inspection?
First of all, let’s clear up a commonly misunderstood point: a home inspection is not the same as an appraisal. An appraisal is an estimate of a property’s overall market value by a licensed appraiser hired by the bank. A home inspection is much more detailed and practical. It is also not a code inspection and therefore does not report on building code compliance or give a “passing” or “failing” grade. It is defined as an objective visual examination of the structure and systems of a home by an impartial, neutral third party not related to the buyer or seller. In layman’s terms, it shows you what’s wrong with the property you want to buy or sell and if it is serious enough to prevent a sale.
The three main points of the inspection are to evaluate the physical condition of the home, including structure, construction and mechanical systems; identify items that need to be repaired or replaced; and estimate the remaining useful life of the major systems, equipment, structure, and finishes. Bottom line: a home inspection is to inform the buyer of any readily visible major defects in the mechanical and structural components, and to disclose any significant health or safety issues.
What Does a Home Inspection Cover?
A home inspection includes a visual examination of the house from top to bottom. There are hundred of items a home inspection covers, including general structure, flashings, basement or lower level, framing, central cooling and heating, chimneys, plumbing and electrical systems, drainage, bathrooms and laundry facilities, foundation, common safety devices, fireplaces and wood stoves, kitchen and kitchen appliances, general interior, attic, insulation. ventilation, roof, and exterior.
An inspector cannot report on defects that are not visible. For instance, defects hidden behind finished walls, beneath carpeting, behind storage items and in inaccessible areas, and even those that have been intentionally concealed. Systems that are seasonally inoperable (swamp coolers, air conditioning, furnaces) will not be turned on during the inspection.
How Do I Find an Inspector?
To hire an inspector, get recommendations from your real estate broker, or from friends and family. When interviewing inspectors, be sure to ask for references and any memberships in professional associations. I recommend choosing an inspector that belongs to the American Society of Home Inspectors (ASHI) as they have the highest level of certification, training and continuing education requirements . Find out about the inspector’s professional training, length of time in the business, and experience.
It’s a good idea to be present during the inspection for a couple of reasons: First, you can ask the inspector questions during the inspection. Also, the inspector will have the opportunity to point out areas of potential trouble, which will mean more to you if you see it with your own eyes than read it in the inspector’s report later. Many inspectors also will offer maintenance tips as the inspection progresses.
Is the Seller Obligated to Make Suggested Repairs?
The seller is not required to make any repairs, replacements or maintenance since this is not a code inspection. However, the buyer can use the inspection report as a negotiating tool to ask the seller to make repairs or offer concessions for repairs if they offer was made contingent on a home inspection. For instance, if certain repairs or replacements are made the buyer will move forward with the purchase. However, if the seller won't or can't make the repairs your broker can can help you negotiate a credit or reduction in sales price. The seller can always say 'no' to any repair request and the buyer then has to decide if they want to move forward with the purchase. However, if you are buying the home as-is or have waived the inspection there would not be an opportunity to re-negotiate the contract or ask for credits for repairs.
Also, never allow an inspector to contract with you to make repairs he/she has suggested — this is a major conflict of interest, not to mention unethical. However, some inspectors do offer a guarantee or warranty on their service for an additional fee, although it is not a standard practice and not required.
How Much Does it Cost and How Long Will it Take?
Remember that a thorough, accurate home inspection takes time and the last thing you want to do is to try to hurry the inspector along. The inspector’s most important priority is accuracy, and accuracy takes time. The chances of mistakes and missed conditions are much more likely the more the inspector rushes through. Expect your home inspection to take anywhere between two and five hours (allowing about one hour for each 1,500 square feet of living space over 3,500 square feet). Of course, older homes or homes with a lot of deferred maintenance issues may take longer.
Expect your inspection to cost anywhere from $250-$600 depending on the size of the home and if you run additional tests. Items such as a lead based paint test or a sewer scope may be suggested by the broker or the inspector depending on the age and condition of the home. The cost is worth it and may be one of the most important investments you make when buying a home. Not only do you find out potential repairs needed, the inspector will educate you on maintenance suggestions to keep your investment in great condition.