Category: Home Inspections
Why Have a Home Inspected
By John Chavez
May 7, 2007 - 11:27:18 PM

Why Have a Home Inspected. (When Buying a House)

After much planning, second-guessing, and decision-making time, you have finally decided to buy a house. Now, you either, walk into a real estate office and talk to an agent that has been recommended to you, or you start the process of buying the house on your own. Then the questions arise. Should I have the house inspected? Is it worth my money? And, am I going to get a good inspector? Etc.

If you have decided to use the services of a real estate agent, most of the time your agent will suggest and recommend that you have the home inspected. In most cases, the agent will help you choose, or will recommend, an inspector he or she feels comfortable with. Some agents will explain why it is important to have the home inspected and will encourage you to retain the services of a qualified Home Inspector. In the event that you chose to not have the home inspected, the agent will most likely require you to sign a disclaimer stating that you prefer not to use an inspector.

Regardless of whether you are using an agent for your transaction, and regardless of whether the home is brand new or 30 years old, the following questions should always be asked to help you make up your mind as to whether or not to have the house inspected.

Is the home being listed for sale “as is”?

If it is, then the assumption is that you are taking the home with all the problems, and wear and tear it has received over the years. Chances are, the reason the home is listed “as is”, is because the current sellers realize that there are repairs that need to be made and the cost of the repairs may exceed their budget. Or perhaps the home is a foreclosure and the bank is offering it at a lower price knowing that repairs are needed. Or, the home may have been a rental that has been run down by tenants, etc. With homes listed “as is”, it is understood by most parties involved in the transaction that money will have to be spent performing repairs, and it is a forgone conclusion that problems will be present. Nevertheless, an inspection is recommended, as there are always issues with a home that are not readily visible during a walk through. The issues can range from structural components such as the foundation or framing, perhaps plumbing leaks under the home, wood rot, faulty furnace components, leaky roof, etc.   A good inspector will give a detailed report of any visible items during the inspection that may need attention, thus allowing the purchaser to make an assessment and get quotes for the cost of repairs. Some components or issues may require a large amount of money to correct. Having an idea of what needs to be fixed and what the costs will be, can be a valuable tool in the negotiation of the transaction, and can have a definite impact on the cost of the property and the perceived value.

Is there a set amount of money that the seller is willing to pay for repairs?

Most agents will suggest or recommend to the sellers of a home when listing it, to set aside some money for needed repairs that may be discovered during the inspection process. This amount is typically $500 to $1000 for a medium sized home, but can vary significantly depending by the sellers’ economic situation. Some transactions only provide for as little as $250 for repairs, while others may be as high as $5000 depending on the value of the property. If this is the case, having a detailed report by a qualified inspector can give the buyer an idea of all the items that need to be corrected. Some items may be minimal and may be able to be corrected with little money, while others may need more money to repair. With a detailed list of issues, the buyer can make an assessment based on the priority of the issues discovered. As a rule of thumb, safety and hazardous issues are first priority, followed by water related problems, structural, electrical and other issues, depending on the degree with which they affect the structure are next. For example, there may be a water leak from a bathroom sink that can be corrected by the homeowner or the buyer. Although the potential problems that can arise from a leaking sink can escalate into the thousands of dollars if not taken care of properly, they are typically easy to reach and correct. On the other hand, if there are ungrounded outlets in some areas, due to the safety issues related to electricity, it is better to have those items addressed by a licensed electrician which will increase the cost of the repairs. Without an inspection report, these decisions may not be made to your best advantage as a homebuyer.

Is the home and older home?

By older we are typically talking 40+ years. If it is, there are several things to consider. Among them is the type of plumbing used, electrical systems and wiring, roof type and condition, etc. These items tend to be of importance to insurance companies as older homes may contain components that insurance companies may not be willing to cover. Since most standards of practice for inspections, either State standards, or those by a National Association such as ASHI, call for an inspector to describe the main components; the report becomes a source of information for the buyer to provide to the insurance company. Some home owners have found out the hard way that items they believed were covered by their insurance company were actually not as they filled their insurance application assuming the plumbing was copper, the wiring was grounded, etc.

Another thing to consider is the conditions of the components that have been worked on throughout the years by the different owners of the home. Unfortunately many people think of themselves as being “handy”, and most “handy-men” will perform repairs on their homes as needed. Because of this, it is rare to find an older home without some sort of “rigged” repairs. For some reason duct tape and caulking seem to be the repair materials of choice for many people, especially on drains under the sinks.

Is the home a new construction or just a few years old?

With interest rates so low in the last few years, many people have upgraded their homes and moved out of the old and into a newer one. Construction is booming and with the demand for new homes comes the supply from builders and developers. However, what most people do not realize is that reputable developers or quality construction firms are not the ones building the homes. A contractor will hire sub contractors to complete, make, or install, the different areas of a structure. The sub contractors whether electricians, framers, roofers, etc. make their living by doing the specialized work of their trade in many different homes at the same time. For example, a drywall sub contractor could have from one or two houses to fifty houses being worked on by their crews at the same time at different stages. Since completing the jobs in a timely manner is how profits are made, finishing jobs as quickly as possible becomes the priority. Thus, the assembly line approach to building home tracts is the end result. With this approach, quality is one of the first things to go out the “unfinished” window. Add to that, the changing technologies of the components used in new construction and the lack of specialized training for sub contractor crews, and you have a recipe for mistakes being made and things being overlooked. Consider this fact, in the last six years, I have personally inspected over 400 homes that were either brand new “never lived in”, and/or less than 12 months old. In all cases, there were issues with all of them. Some of the things that I have found (documented) as needing attention in “new” homes include: broken thermal seals on newly installed windows, missing protection barriers for gas appliances in the garage, over-rated breakers for circuit and wiring size, drain traps missing under tubs and showers, water inside heating ducts, drain leaks under sinks, missing insulation inside attics, etc. Of course there is my all time favorite, I found on a home that the builder had “finished”, had passed city inspection and received the certificate of occupancy, and yet there were no flashings installed around the vents and flues on the tile roof line. Coincidentally, the developer for that subdivision had in the contract a clause that prohibited the buyer from having a home inspection. Had I not inspected the home, there would have been several thousands of dollars in repairs charged to the builder, and innumerable headaches for the buyers.

A buyer should always look at the issues that could arise when buying a home. The days of buying a home based on the word of the seller are unfortunately gone. Buyers should hire an inspector that: (a) has the appropriate license as required by their State or the governing body for the industry in their area, (b) has sufficient errors and omissions insurance effective during the inspection, (c) produces a complete and detailed report, and (d) most importantly that the inspector is qualified. The buyer can rely on the expertise and knowledge of the inspector and the information the report provides to purchase a home based on factual information on the conditions of the property.

As for the cost of the inspection, most inspections for an average sized home cost between $250 to $400. The rule of thumb for the cost of an inspection is the size of the home. Most inspectors will have a fee schedule based on square footage. The larger the house, the higher the cost of the inspection. Regardless of the inspection cost, when hiring an inspector, a buyer should look at the amount of liability the inspector will offer within the scope of inspection agreement, the time of liability, and the quality of the report. Many inspectors will have samples of their work listed on the Internet or will provide a copy of the scope of inspection agreement upon request. It is important to look carefully into the time and amount of liability an inspector offers. Some inspectors will limit the liability or errors and omissions coverage to the amount of the inspection fee, others will add a multiplier that could range from one and a half times the cost of the inspection to five times the cost. Some State regulations like California’s, will not permit an inspector to set a limit on the amount of liability. The inspections have by law, a four-year statute of limitations. Others, like the State of Nevada, will not have either a statute of limitations time frame, nor a clause or law dealing with the monetary amount of the liability carried by an inspector, hence, reading and understanding a scope of inspection agreement becomes crucial when choosing and inspector.

If you are working with an agent that recommends an inspector, ask for the scope of inspection agreement. If the inspector chosen has a fill in the blank form for the scope of inspection agreement liability coverage, it is some times good to negotiate on the amount and time. Inspectors that will give a longer period of time for the statute of limitations, and a large amount or no limit on the amount of liability, will tend to be the ones willing to put their money where their experience is and may offer a better service. Of course the more liability the inspector is willing to take usually reflects in the price of the inspection.

Again, when buying a home valued in the hundreds of thousands, a few hundred dollars for the cost of an inspection is money well spent if a qualified inspector is hired.