What Buyers and Sellers Need to Understand About a Home Inspection

Are you going to be getting a home inspection? Home inspections are a vital part of the real estate transaction process, so it makes sense to learn as much as you can about them.

In this competitive market, it is common for buyers to waive home inspections in order to have their offers appeal more to the seller.   In order to make this decision, it is important for buyers to understand exactly what a home inspection is, and what is not.

A good home inspector will look for every possible flaw in a home. A typical home inspection will have 20 to 50 items needing attention. That sounds like a lot!  However, some of those items are small maintenance items that have little or no material impact on the safety, functionality, or value of a home. Examples of the small items could be loose railings, shrubs or bushes that are too close to house, squeaky floorboards, etc.

The more you know about what inspections entail, and more importantly, how they affect you as a buyer or seller, the more confident you will be moving forward with your transaction.

A very common misconception by buyers is that whatever the inspector points out needs to be repaired or negotiated with the seller.  Buyers need to understand that sellers have been living with these issues, perhaps not even knowing that they existed, for many years. So, most sellers are not going to be willing to compensate you, and certainly not be willing to repair those issues, just to appease a nervous buyer. It really comes down to how much you want to buy that house, and how much the seller wants to sell it to you. Everything is negotiable, but nothing is guaranteed.

What is a Home Inspection?

A professional home inspection is complete review every aspect of the home that may affect the safety, security, functionality, and livability of a home.  A good home inspector will make a very long detailed list, with pictures, of anything that is not perfect with the house.

Every home Inspection will result in many items on this list. In the past, we’ve had clients inspect brand new homes, and even those inspections resulted in 10 to 15 items needing some attention.

A Home Inspection Contingency

In order for a buyer to have the legal right to request an inspection prior to the purchase of the home, it will need to be included in the offer as an inspection contingency.  The offer will give buyers a specified period of time to conduct the inspections (usually 5-9 days from acceptance of the offer). This is referred to as the due diligence period.

Choosing a Home Inspector

Home inspectors play an integral role in the vast majority of real estate transactions. It is easy to see why picking the right home inspector is vital.

Here are a few pointers to consider in your search for a home inspector:

  1. Get a reference from your real estate agent.  If you’ve worked with your real estate agent for a while and you have learned to trust their judgment, this will probably be a good source. Good agents keep a list of inspectors that they think will do a good job, represent the property fairly, and be reasonably priced. Only your buyer’s agents though can legally recommend one.
  2. You must choose a home inspector licensed in the state that your home is located in.
  3. Find out what the inspection includes and how long it takes. A typical inspection well last between 1 1/2 hours and 3 hours, depending on the size and age of the home.
  4. Additional items that you might ask for include: radon tests, radon in water tests, well tests, mold tests, lead paint tests, and pest inspections.  Some inspectors do not do these services, while others will provide these services for an additional cost.
  5. Ask your inspector to confirm that both you and your agent can accompany the inspector throughout the inspection.
  6. Request a sample inspection report. It’s important to familiarize yourself with what an inspection report looks like prior to your own inspection

What Home Inspectors Can & Cannot Do

A misconception is that home inspectors can provide you estimates of what certain things will cost to repair. In fact, home inspectors are not legally allowed to provide quotes or estimates. All they can do is tell you if something appears to be near the end of its life, or if it is not functioning properly.

Also, inspectors cannot inspect something that they do not have access to. For example, if you’re buying a house with a finished basement, they cannot look behind the sheetrock to determine the condition of the foundation.  All an inspector can do is look for clues that might indicate a problem.

Most inspectors cannot tell you if there is mold in the house. That is a different type of inspection which requires a licensed mold inspector. But a good home inspector can tell you that there appears to be evidence of mold, and you should have it inspected by a professional mold inspection company.

Also, depending on time of year, the inspector may not be able to test the functionality of the air conditioning system. Inspectors are not allowed to test the air conditioning systems unless the weather has been a certain temperature for a few consecutive days.

Inspectors cannot test septic systems, nor can they test private water wells. They can test for water pressure, and they can test for water quality.

So what does the inspector look at?  Pretty much everything else: the roof, the electrical system, the plumbing system, the appliances, functionality of doors and windows, the chimney, signs of pests, signs of water damage, the attic condition, the foundation of the home (based on what they can see), the heating system and the air conditioning system, and the age and condition of the furnace as well as the hot water heater.

Buyers Options after a Home Inspection

Once the inspection is complete, and the report is reviewed, the buyer typically has three options:

1) Proceed with the purchase as outlined in the offer.

2) Attempt to re-negotiate with the seller to either reduce the purchase price, provide a credit at closing to repair or replace items identified in the report, or ask the seller to repair the items prior to closing.

3) Cancel the transaction. If the buyer has a home inspection contingency, they can choose to walk away and get their offer deposit back.

What Are Reasonable Home Inspection Repair Requests – and What Are Not

Some inspection repair requests are entirely legitimate—and probably expected. Of course, there are plenty of home inspection requests that will be seen as unreasonable. You want to make requests that are likely to be granted, not demands that will frustrate the seller and maybe cancel the transaction. Your agent will be able to help you navigate through this process based on their experience.

Inspections for houses should not be seen as an opportunity to create a punch list to make the property “perfect”.  You have to keep in mind that there will be other buyers who may be comfortable with the inspection report as is and purchase the house without any requests. So, it does really come down to how badly you want the house, what is the cost of repairing items that are critical, and whether or not the seller wants to put the house back on the market or negotiate with you.  It also depends on how much you ended up offering for the house. If you paid well above asking price, you typically can I ask for more of a refund as a result of the inspection. But if you got the house at a bargain, below asking price, sellers will often be very reluctant to give you any more than they already have.

What are some reasonable things that you may request a credit for, or a price reduction for?

* An aging roof. If the listing did not disclose that the roof was at the end of its life, it is reasonable for the buyer to request approximately 50% of the cost of a new roof. It is not reasonable to expect that the seller will pay for an entirely new roof that the buyer will benefit from for the next 30 years.

* A non-functional furnace or air conditioning unit. If the heat does not work properly, or the air conditioning is well beyond its expected life, again it is reasonable to request that the seller pay for a portion of the cost to replace these units.

* If it is determined that there is mold in the house, it is very reasonable to request that that mold be professionally remediated and the cost be paid in full by the seller.

What are some items that buyers should not ask for?

Small cosmetic issues, or items that will cost you less than $200 to repair

* A window with a failed seal (these would have been visible at the time you made the offer)

* Renovations you are planning.  You cannot inspect the seller to pay for a new bathroom renovation because he did not like avocado green fixtures!

* Minor repairs for things like loose fixtures, railings, one or two outlets that do not work, etc.

Note:  It is our opinion and recommendation that buyers do not request sellers to repair items. It is much better to get a credit at closing and use that money to hire your own contractors to make the repairs. Why? Because sellers are going to generally find the fastest cheapest way to repair something, and it may not be to your standards, but that is subjective and you will not have any recourse if that happens, as long as the repair fixes whatever the issue is.

Summary

In summary, if you are not buying a new house, you cannot expect the house to be perfect. It is assumed that they will be flaws, items that are aging, needing repair, and some items needing replacement.  When you buy a home you should expect to have to make repairs and replace items on an annual basis. That is the cost of owning your own home.  The purpose of a home inspection is to make sure that there are no major surprises that will result in you incurring a serious expense within the first few years of owning the home. The most costly items are typically roofs, electrical systems, plumbing systems, heating systems, and air-conditioning systems.  And for the most part, those are things that are not quite as easy to spot when you are looking at the home and considering making an offer. Those are the items that the home inspector should focus on. Everything else is simply a list for you to work on repairing and replacing while you are living in the home.

 

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