Importance of the Home Inspection Contigency
Great article on home inspections courtesy of Amy Fontinelle. Link to original article on Investopedia. https://www.investopedia.com/articles/mortgages-real-estate/08/home-inspection.asp
Before you buy a home, one of the things you should do is to have it checked out by a professional home inspector. Yes, we can hear your objection: "Buying a home is expensive enough as it is! Why would I choose to fork over hundreds more if I'm not required to?" In this article, we'll delve into what a home inspection can reveal and whether it's worth the investment.
The Home Inspection Contingency
Home inspections are used to provide an opportunity for a buyer to identify any major issues with a home prior to closing. Your first clue that a home inspection is important is that it can be used as a contingency in your contract with the seller. This contingency provides that if significant defects are revealed by a home inspection, you can back out of your purchase offer, free of penalty, within a certain timeframe. The potential problems a home can have must be pretty serious if they could allow you to walk away from such a significant contract.
In some situations, realtors are also known to include home inspection clauses in contracts, such as those for a newly built residence. In new home construction, inspections generally cover:
Foundations: Checking before the concrete is poured (once poured, there’s very little that can be corrected).
Pre-drywall: Checking the structure and mechanics before the drywall is laid.
Full inspection: A full walk-through is performed of the completed home.
What a Home Inspection Covers
Inspectors vary in experience, ability, and thoroughness, but a good inspector should examine certain components of the home and then produce a report covering their findings. The typical inspection lasts two to three hours and you should be present for the inspection to get a firsthand explanation of the inspector's findings and, if necessary, ask questions. Also, any problems the inspector uncovers will make more sense if you see them in person instead of relying solely on the snapshot photos in the report.
The inspector should note:
Whether each problem is a safety issue, major defect, or minor defect
Which items need replacement and which should be repaired or serviced
Items that are suitable for now but that should be monitored closely
A really good inspector will even tell you about routine maintenance that should be performed, which can be a great help if you are a first-time homebuyer.
While it is impossible to list everything an inspector could possibly check for, the following list will give you a general idea of what to expect.
The inspector will complete a full inspection of the outside of the structure. This will include climbing into any crawlspaces under the home and using a ladder to reach and inspect the roof and other items.
The inspector will check for damaged or missing siding, cracks and whether the soil is in excessively close contact with the bottom of the house, which can invite wood-destroying insects. However, the pest inspector (yes, you might want to engage one of those too), not the home inspector, will check for actual damage from termites, etc. The inspector will let you know which problems are cosmetic and which could be more serious.
If the foundation is not visible, and it usually is not, the inspector will not be able to examine it directly, but they can check for secondary evidence of foundation issues, like cracks or settling.
The inspector will let you know whether the grading slopes away from the house as it should. If it doesn't, water could get into the house and cause damage, and you will need to either change the slope of the yard or install a drainage system.
Garage or Carport
The inspector will test the garage door for proper opening and closing, check the garage framing if it is visible and determine if the garage is properly ventilated (to prevent accidental carbon monoxide poisoning). If the water heater is in the garage, the inspector will make sure it is installed high enough off the ground to minimize the risk of explosion from gasoline fumes mingling with the heater's flame.
The inspector will check for areas where roof damage or poor installation could allow water to enter the home, such as loose, missing or improperly secured shingles and cracked or damaged mastic around vents. They will also check the condition of the gutters.
The inspector will also complete a thorough inspection of the interior of the home. He will inspection everything from the ceiling to the cabinets under the sink.
The home inspector will check all faucets and showers, look for visible leaks and test the water pressure. They will also identify the kind of pipes the house has if any pipes are visible. The inspector may recommend a secondary inspection if the pipes are old to determine if or when they might need to be replaced and how much the work would cost. The inspector will also identify the location of the home's main water shutoff valve.
The inspector will identify the kind of wiring the home has, test all the outlets and make sure there are functional ground fault circuit interrupters (which can protect you from electrocution, electric shock, and electrical burns) installed in areas like the bathrooms, kitchen, garage and outdoors. They will also check your electrical panel for any safety issues and check your electrical outlets to make sure they do not present a fire hazard.
Heating, Ventilation, and Air Conditioning (HVAC)
The inspector will look at your HVAC system to estimate the age of the furnace and air conditioner, determine if they function properly and recommend repairs or maintenance. An inspector can also give you an idea of the age of the home's ducting, whether it might have leaks if your home has sufficient insulation to minimize your energy bills and whether there is any asbestos insulation.
Water heater. The home inspector will identify the age of the heater and determine if it is properly installed and secured. The inspector will also let you know what kind of condition it is in and give you a general idea of how many years it has left.
The inspector will sometimes check kitchen appliances that come with the home to make sure they work, but these are not always part of the inspection. If you think you'll want to keep them, be sure to ask which ones are not included so that you can test them yourself.
The inspector will make sure the laundry room is properly vented. A poorly maintained dryer-exhaust system can be a serious fire hazard.
If the home has an attached garage, the inspector will make sure the wall has the proper fire rating and that it hasn't been damaged in any way that would compromise its fire rating. They will also test the home's smoke detectors.
The inspector will check for visible leaks, properly secured toilets, adequate ventilation, and other issues. If the bathroom does not have a window and/or a ventilation fan, mold and mildew can become problems and moisture can warp wood cabinets over time.
Not Covered in a Home Inspection
A home inspection can't identify everything that might be wrong with the property; it only checks for visual cues to problems. For example, if the home's doors do not close properly or the floors are slanted, the foundation might have a crack, but if the crack can't be seen without pulling up all the flooring in the house, a home inspector can't tell you for sure if it's there.
Some areas inspectors won’t look at include:
Inside walls (won’t cut open drywall or insulation)
Inside pipes or sewer lines
Behind electrical panels
Furthermore, most home inspectors are generalists – that is, they can tell you that the plumbing might have a problem, but then they will recommend that you hire an expert to verify the problem and give you an estimate of the cost to fix it. Of course, hiring additional inspectors will cost extra money. Home inspectors also do not specifically check for issues like termite damage, site contamination, mold, asbestos engineering problems, and other specialized problems.
If they have reason to suspect, though, they'll likely give you a heads up. Some inspectors offer radon testing as an add-on; some will recommend asbestos testing services if your home appears to be at risk.
However, problems without visual cues – pests, radon, lead – may crop up after the inspection.
After the Inspection
Once you have the results of your home inspection, you have several options.
If the problems are too significant or too expensive to fix, you can choose to walk away from the purchase, as long as the purchase contract has an inspection contingency.1
For problems large or small, you can ask the seller to fix them, reduce the purchase price, or to give you a cash credit at closing to fix the problems yourself. This is where a home inspection can pay for itself several times over.1
If these options aren't viable in your situation (for example, if the property is bank-owned and/or being sold as-is), you can get estimates to fix the problems yourself and come up with a plan for repairs in order of their importance and affordability once you own the property.
Worth the Investment?
The average cost to hire a home inspector is $324, but that varies greatly, depending on the size of the home and the region; the range is roughly $300-500.2 Of course, that can go much higher, if the general inspection's findings lead to more specialized inspectors being called in. Ask ahead of time how an inspector charges.
It's important to put things in perspective. Remember that an inspection is:
Not the sole determinant for buying a house. Maybe you’re willing to make some renovations on the house with these problems. The inspection will help you determine exactly how many you’ll need to do.
Never free and clear of problems. An inspection will always find a problem with a home. Even new home constructions will have small issues that need to be addressed.
Not about getting all the fixes done. No seller is going to fix everything for you. They may negotiate on some of them, but expecting resolution of all issues is unreasonable.
The Bottom Line
A home inspection will cost you a little bit of time and money, but in the long run, you'll be glad you did it. The inspection can reveal problems that you may be able to get the current owners to fix before you move in – or else, prevent you from inadvertently buying a money pit. For new home construction, it’s an imperative part of the home buying process. If you are a first-time homebuyer, an inspection can give you a crash course in home maintenance and a checklist of items that need attention to make your home as safe and sound as possible. Whatever the situation, addressing issues early through a home inspection can save you tens of thousands of dollars down the road.