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Making the Most From Your Home Inspection

January 30, 2018 Real Estate Comments Off on Making the Most From Your Home Inspection

One of the most important due diligence items for buyers of real estate is the home inspection. Whether you plan to live in the home or whether you plan to hold it as a rental, it’s a big investment and one you want to make sure you’re not overpaying for or that you’re inheriting problems and unknown costs for. In most purchases, buyers have very little opportunity to familiarize themselves with the “in’s and outs” of a property before they commit to the purchase, and so the home inspection presents a critical and often times the only opportunity to gain real knowledge about the condition of the property before committing to the purchase.  Most people would not consider buying a used car without having it inspected by a professional mechanic, and so having a professional inspection done as early on in the purchasing process will help reduce the risk that an unknown defect will get by, give you some valuable information about the details of the home on its systems, and perhaps give the buyer crucial information needed to further negotiate the terms of the purchase before close of escrow.   As such, home inspections can be the most important step in the home-buying process and so these tips will help ensure that you get the most you can out of a home inspection.

1. Do your own inspection beforehand.   An inspection is not only about uncovering defects, but also learning more about the property and its systems.   A qualified home inspector with the training and experience of inspecting hundreds of homes will usually have valuable insight about the property that even the most seasoned real estate investor might overlook.  However, the day of the inspection is usually a whirlwind and so taking the time and opportunity to inspect the property on YOUR time and at YOUR pace without the seller present before the inspection will allow you to formulate questions and create a checklist that you can cover with the inspector on the day of inspection.   As discussed, below, being actively involved in the inspection process and asking many questions to your inspector is key to get the most you’re your inspection.  There are home inspection checklists available online including, at the time of this writing, from nachi.org, Zillow, Homeinspector, org, Realtor.org, etc. which can provide areas which are usually part of the inspection.

2. Schedule the inspection as soon as possible after acceptance. A home inspection is usually limited to a visual inspection of the property and testing of its systems.  It usually does not include any inspection that is invasive.  Usually the home inspector will not be an expert in every aspect of a home, and will frequently recommend certain questionable items such as plumbing, heating, air-conditioning, etc. to be inspected by an expert specialist.  Give yourself enough time before your contingency period ends in case you do need to schedule an additional inspection from a specialist or if you need to research the costs involved in repairing a particular defect so that you can be armed with this information if you need to ask for concessions from the seller.   Make sure the electricity, gas, and water are all on for the inspection so you can fully test all the systems.

3. Use a Duly Licensed or Certified Inspector and do your due diligence on the inspector. Not all states have licenses for home inspectors.   If your state licenses inspectors, then you definitely want to make sure they are properly licensed and insured.  Even if your state has a licensing requirement, you also want to check the national or state trade inspectors associations such as homeinspectors.org, www.nachi.org, or www.creia.org .  Members in those associations generally agree to abide by a certain code of ethics and professionalism.  You might also want to check how long the inspector has been in business, and see if your home inspector was previously licensed in the construction industry generally.  However, don’t assume that a general contractor or engineer can do a comparable job as a licensed or certified inspector as they may not have the specific training that is required to inspect the various aspects and systems on the property.  The competence and qualifications of your inspector itself may be just as much a factor as what his/her report says when it comes to negotiating with the seller as a shrewd seller could use your inspector’s lack of qualifications against you.  Don’t necessarily rely on your realtor to recommend an inspector as your realtor may not have the same incentive to uncover hidden defects.

Let the inspector know that you will attend the inspection and will be asking questions about the inspection and property.  Again, the inspection should be an opportunity for education for you, and any inspector that discourages this is a red flag.  Ask for a sample of their inspection report before you make a decision (many inspectors have sample reports on their websites).  I’ve seen inspection reports that provide great detail about the various aspects of the property and systems right down to identifying the manufacturer of various items, providing estimates of its useful life, and other helpful details supplemented with specific pictures that illustrate the condition of the system; with specific recommendations for correcting defects or monitoring the system for future evaluation.  On the other hand, I have seen other reports that provide no detail about a particular system aside from “Heater:  Working Properly.”  Remember, the inspection report will be a prime tool for you as the buyer to negotiate with the seller, and so there needs to be sufficient explanation of any defects so that you can present these to the seller for correction or further negotiation, or so that you know what you may be looking at in terms of future maintenance or repair costs.

4. Be present at the inspection if possible.  Some buyers rely on their realtor alone to be present at the inspection, but this could be a problem as suggested above.  You, not the realtor, will ultimately be the one to deal with any problems and repairs that need to be done so ideally both you and the realtor should be present.  The realtor should only be there to add possible insight, not to supervise the inspection.   By being actively involved in the inspection, not only are you likely to learn more about the specific structure and systems in your house, but a good, experienced inspector will likely provide a lot of additional helpful information and tips regarding maintenance of your investment.  Take pictures and bring a flashlight and tape measure in case you need to take information for get additional estimates for repair.  Being actively involved in the process offers you the opportunity to ask questions from a professional that may not necessarily show up on the actual report.   For example, the report may state the A/C was functioning normal, but additional questioning may reveal that the unit is nearing the end of its useful life and that a future repair may be looming.  However, remember that the inspector is there to do a job and the typical inspection takes a few hours, so give the inspector enough space to do his/her job.

5. Follow up on Items Requiring Attention and Don’t be Cheap on Due Diligence. Being actively involved in the process has the further benefit of allowing you to discover which defects are a higher or more expensive priority than others.  Is the defect something that you can easily repair yourself or could there be a major repair or safety issue looming?  Although a home inspector may offer you a general estimate of what they believe a repair might cost, they are generally prohibited from offering a specific bid to correct the item.   Therefore, it may well be worth the extra effort and expense to get an unbiased opinion (and estimate) from a specialist which you can then use for negotiation.   Who knows what skeletons lurk behind the walls and investing a few hundred dollars now to get an expert opinion could clue you in on a major headache that may be looming, or at a minimum, give you unbiased ammo to re-negotiate the terms.

Every property, even new developments will have some defects.  A qualified, licensed (or certified) home inspector should have the requisite training and experience to investigate the various details of the home in a manner that usually cannot be accomplished by other building professionals, most of whom operate solely from minimum requirements set by the applicable building code.   Getting the most out of the inspection for your most valuable investment requires that you not only get a solid professional inspector in your corner, but that you as the buyer also take the initiative to be actively involved in the due diligence and inspection process.  No process is 100% guaranteed, but having a good procedure for your inspection will minimize the chance that something major will go by unnoticed and will likely save you hundreds or thousands in the process.