What Is a Home Inspection – Checklist, Process, Costs & Tips
The cost of housing varies widely from market to market. According to Zillow, Dallas’s mid-2015 median home price sat near $126,000, up from about $91,000 three years earlier. By contrast, Zillow pegged San Francisco’s mid-2015 median at a cool $1.08 million, up from about $620,000 just three years earlier. Though the average San Franciscan earns more than the average Dallasite, the latter still pays a far lower percentage of income for housing.
Of course, even in Dallas – or any other buyer’s market – a home is a major investment. Prospective buyers need to carefully consider their options and conduct thorough research before pulling the trigger. Poring through real estate listings, attending open houses, and arranging private showings can be great to get an initial sense of what’s available in your preferred neighborhood and price range. However, as you get deeper into the buying process, these basic methods no longer cut it.
If you’re serious about purchasing a particular home, order a professional home inspection as soon as you put in your offer – and don’t close until you have the results in hand.
How Much Does a Home Inspection Cost?
According to the Department of Housing and Urban Development, home inspections typically cost between $300 and $500. However, the Department also notes that “costs vary dramatically, depending on the region, size and age of the house, scope of services, and other factors.”
For reference, our home inspector charged my wife and me $350 to inspect a roughly 1,500 square-foot (plus basement) house built in the 1910s. Payment is typically due before or during the inspection.
How to Find a Home Inspector
According to the Bureau of Labor Statistics, the United States had more than 102,000 construction and building inspectors in 2012. Though this figure also includes inspectors who specialize in commercial properties, there are undoubtedly tens of thousands of residential building inspectors in the business today. Depending on its size, your local market likely has dozens or hundreds of competent inspectors.
Given the importance of a home inspection, it’s critical to pick the right inspector from your local crowd of contenders. Good resources for finding a competent, experienced professional include the following.
1. Your Real Estate Agent
If you’re working with real estate agents during the home-buying process, ask them to recommend a few home inspectors they’ve done business with in the past. Since home inspections are so common and important, most real estate agents are very familiar with their local home inspector communities.
2. Service Provider Review or Clearinghouse Site
If you don’t trust your agent to make a recommendation or aren’t working with one at all, check out a contractor or service provider clearinghouse site such as Angie’s List or HomeAdvisor. The majority of home inspectors in any given area are likely to be on Angie’s List, at minimum, though independent operators who mostly get work through referrals are less likely to see the benefit in being listed.
3. Home Inspector Professional Association
In the United States, there are three national professional associations for residential building inspectors: the American Society of Home Inspectors, the National Society of Home Inspectors, and the National Association of Home Inspectors. These groups have strict professional standards of practice and require their inspectors to complete at least 100 paid inspections before receiving full membership.
In addition to the three main associations, your state or locality may also have smaller, localized home inspector associations. There are also a few international associations that welcome U.S.-based members. However, definitely check the standards of practice of these groups to make sure they don’t hand out certifications to anyone with a flashlight and clipboard.
4. Friends and Family
If you know folks who recently purchased a house in your area, ask them to recommend a home inspector. Ideally, source several different recommendations, then interview each prospective inspector and choose the one who makes you feel most comfortable.
5. Local Business Association
Home inspectors often register with their local chamber of commerce, the Better Business Bureau, and other well-known business associations. These groups often feature user testimonials and possibly formal complaints (particularly the BBB) on their websites, so they’re great for evaluating quality without conducting an interview.
Interview Questions for Home Inspectors
While you don’t need to subject each home inspector candidate to an hours-long inquiry, don’t be shy about asking direct questions. Thorough home inspector interviews cover the following:
Experience. Ask how long inspectors have been in business. If they’re relatively new, did they train or apprentice with an experienced inspector? Since home inspectors don’t need two- or four-year degrees, on-the-job training and experience are critical.
Prior Work. What did they do before getting into the home inspection business? Many home inspectors have experience in related industries, such as electrical work, plumbing, and construction. Relevant work experience is particularly germane to older homes, which tend to have a wider variety of problems that aren’t obvious at first glance.
Professional Memberships. Do they belong to reputable professional organizations? Above-board inspectors hold memberships with at least one national or international association. Be wary of folks who say they haven’t had time to become members or claim that membership isn’t worthwhile.
What’s Included. A thorough home inspection covers all visible, accessible parts of the home and property. This includes the basement (including mechanicals, such as the water heater), attic, and exterior (including the roof), outdoor areas, outbuildings, and property boundaries, but not the insides of walls or blocked-off crawlspaces. During our recent home inspection, the inspector apologized profusely for not inspecting the sealed-off attic crawlspace under the north eave of our one-and-a-half-story house. Hopefully there’s nothing scary in there. Make sure your inspector plans to hit all these spots.
What to Expect From the Report. Inspection reports contain a lot of information, but that doesn’t mean they shouldn’t be understandable to the average layperson. Ask to see copies of previous reports, or at least an up-to-date report template, to ensure that your report will be easy to decipher. Also, ask how long you must wait for your final report – 24 hours from the end of the inspection is a typical time-frame.
Whether You Can Attend. Prospective buyers are strongly encouraged to attend part or all of the home inspection – at least the last hour or so, when inspectors review everything they went over for your benefit. You should be allowed to attend the entire inspection though, if you want. Be wary of candidates who prohibit you from doing so. That’s a red flag that they’re cutting corners.
Once you’ve interviewed all candidates, call back the one who seems to be the most experienced, competent, and honest. It’s more important to choose a good fit, regardless of cost, than to simply choose the cheapest option.
Inspection Process, Coverage, and Reports
Most residential real estate purchase offers contain a clause known as the inspection contingency. The inspection contingency makes the final purchase price, terms, and actual closing conditional on a satisfactory home inspection. It also outlines how long the buyer has to actually order and complete the home inspection – usually not more than 10 days after the purchase offer is accepted.
Inspection Scope and Coverage – Checklist
Standards of practice and inspection scope vary somewhat by professional association. For instance, the American Society of Home Inspectors requires its members to inspect all “readily accessible, visually observable, installed systems and components” of the home and property. In practice, however, there are many areas and components that aren’t included in an inspection.
If you work with a member of a legitimate professional association, expect your inspection to cover the following:
Structural Elements. Floors, walls, ceilings, crawlspaces, attic, and foundation. Inspectors note the placement and condition of each, but don’t provide a detailed architectural or engineering analysis.
Visible Exterior. Exterior doors, wall coverings, flashing, decks and porches, railings, walkways, screened elements, eaves, fascia, siding, window components, driveways, and patios. This also covers exterior vegetation, slopes, drainage elements, and retaining walls that could adversely affect the home’s structure.
Roofing. All roof components, including the principal roofing material, flashing, protruding elements (such as skylights and cooking vents), and drainage systems (such as gutters). This usually doesn’t include external wiring and antennas.
Plumbing. Water supply lines and fixtures, waste removal lines and fixtures, water heaters and associated fuel storage systems, sump pumps and sewage ejectors, and any accessible drains (such as a basement floor drain).
Electrical. Visible wiring (not in the walls), service wire entry points, disconnect points, grounding wires, circuit breakers, service panels, surge protection devices that come with the house, and “a representative number” of light fixtures – for instance, a single track light in a series of five.
HVAC. Permanent heating and air conditioning generation and source systems (such as the furnace and outdoor main unit, but not window air conditioning units), ducting, and related distribution systems. Importantly, as most home inspectors aren’t familiar with renewable energy technologies, this usually doesn’t include solar panels and other eco-friendly HVAC power generation systems.
Visible Interior. Interior walls, floors, stairs, countertops, railings, garage interiors, and functional, connected appliances.
Insulation and Ventilation. Insulation and secondary ventilation systems (including bathroom and dryer vents) in all accessible areas such as crawlspaces, attics, closets, kitchens, laundry rooms, and basements. This usually includes such safety equipment as carbon monoxide detectors and smoke alarms.
Fireplaces, Chimneys, and Stoves. Given the threats associated with poorly maintained fireplaces, chimneys, and open-flame stoves, home inspectors devote special attention to these components. Inspectors note the condition and cleanliness of all accessible system components, as well as the condition of accessible exterior elements, such as roof chimneys.
General Limitations
Though the typical home inspection is extremely thorough, it’s also designed to be noninvasive. To ensure that they don’t damage the home or the seller’s possessions, home inspectors are bound by some important restrictions and limitations.
Home inspectors will not inspect the following:
Inaccessible Areas or Systems. Home inspectors aren’t required to inspect areas or components of the home that aren’t readily accessible. This covers a wide range of situations, including underground fuel tanks and wells, anything obscured by debris (inside or out), the insides of walls, capped chimneys, or vents, and sealed-off interior spaces.
Uninstalled or Nonworking Systems and Components. Home inspectors do not have to turn on, test, or troubleshoot systems, fixtures, and other components that either aren’t installed or are obviously not working. For instance, if the gas to the house is shut off, inspectors aren’t required to turn it on to determine whether the stove functions properly.
Situations Presenting a Danger to the Home or Inspector. Inspectors aren’t required to put themselves in harm’s way, such as by squeezing through a tight crawlspace or walking on an unsafe-looking roof.
Hazardous Materials. Home inspectors do not have to test any components or systems for hazardous materials, such as lead and volatile organic compounds. They are also not required to determine whether a particular component, material, or system violates consumer protection laws or is subject to a corporate recall.
Soil Composition and Condition. Soil is actually incredibly complicated, particularly in terms of how it holds and distributes water. Most home inspectors don’t have the advanced degrees necessary to understand these concepts and aren’t required to evaluate them.
Outdoor Cooking Equipment. Outdoor cooking equipment, such as propane grills and outdoor kitchens, are excluded from the list of appliances to be inspected.
Also, home inspectors are charged with reporting facts, not making predictions or offering opinions. For instance, they may be happy to estimate the age of an old-looking water heater, but not how much longer it has to live, how much it would cost to replace, or whether it should affect your decision to purchase the property.
Keep this in mind as you shadow home inspectors or speak after they’re done. Trying to squeeze forward-looking, opinion-based statements out of them is apt to frustrate both of you.
Home Inspection Report Formatting and Interpretation
All legitimate home inspector professional associations require their members to issue a full home inspection report within a set interval (usually 24 hours) of the inspection’s completion, provided all fees have been paid. The typical home inspection report has several sections:
Property Information. A basic description of the main house (approximate size, orientation, floor count), house type (single family, duplex, and so on), any outbuildings, and current occupancy.
Weather Conditions. An overview of weather conditions during the inspection, usually including an approximate temperature range, cloud cover, and recent or current rain. This information is important because weather can affect certain aspects of the inspection – for instance, during or after a heavy rainfall, moisture is likely to be present in an older home’s basement or lower level.
Recorded Observations. This is the meat of the inspection report. It’s usually divided into subsections, each covering a room (say, “bedroom #1”), system (“electrical”), or major appliance (“boiler”). These subsections are further divided into components, each with detailed descriptions of their construction, condition, and status. The report may employ a color-coding system to underscore components in various states of disrepair – gray might indicate low priority, blue medium priority, and yellow or red urgent.
Glossary. This section defines any non-obvious terms used in the report, such as “risers” (height between stair steps).
Summary. A page or two (hopefully) outlining the general condition of the home and any issues that the inspector recommends addressing prior to closing – generally potential safety hazards. For instance, my report recommended some minor updates to a few electrical outlets and the installation of a working carbon monoxide detector upstairs – two easy fixes that definitely improved the home’s safety.
The wealth of information in a typical home inspection report is overwhelming. It took me more than an hour to get through mine, and I definitely didn’t absorb all of it.
For this reason, it’s important to take advantage of the face-time you get with your inspector and ask as many questions as possible – even if you’re worried about sounding uninformed. Most inspectors are happy to explain key concepts, with the caveat that they can’t verge into opinion or prediction.
Remember, a house is a valuable and complex asset – you need to know how the one you’re planning to buy works.
How to Respond to Major Problems
Home inspections are meant to be thorough. Unless you’re buying a new home, your inspector is likely to uncover some minor defects or items of concern. Many older homes have a laundry list of minor problems that inspectors recommend fixing as time and budget allows.
You can wait to deal with minor issues, such as nonworking light fixtures. However, home inspections sometimes turn up more serious problems that weren’t previously known or disclosed. Any discovery that threatens the home’s structural or mechanical integrity, or presents a safety risk to its occupants, needs to be dealt with quickly. Common examples include the following:
A ruptured sewer or water line leaking into the home’s yard, foundation, or surrounding properties
Major structural issues caused by water or termite damage
Extensive mold infestations
Outdated electrical systems that present a fire risk
Non-functioning mechanical or HVAC systems
Remember, the possibility of discovering a serious defect requiring immediate attention is the single most important justification for getting a home inspection in the first place. Depending on the nature of the problem and your family’s current living situation, you can respond to an urgent defect by taking the following steps.
1. Ask the Seller to Make Repairs
The most common response to an urgent problem is to ask the seller to make the necessary repairs. It’s customary for the seller to pay out-of-pocket for these repairs, though you can agree to shoulder some costs at your discretion. Note that for major repairs, such as extensive electrical, plumbing, or foundation work, it’s often necessary to push back the closing date.
You can address all these issues – what needs to be fixed, who pays, and any changes to the closing date – in an amended purchase offer. Once the seller accepts the new offer, it becomes binding on both of you.
2. Renegotiate the Purchase Price
If the seller balks at making the necessary repairs before closing, consider renegotiating the purchase price. This reduces the financial impact of tackling the problem shortly after moving in. Look into a home improvement loan to cover any portion of the costs you can’t or don’t want to cover out-of-pocket.
The most effective way to renegotiate the purchase price is simply to get a professional repair estimate, subtract that amount from your original offer, and threaten to walk away from the deal unless the seller agrees. Any price change requires you to send – and the seller to accept – an amended purchase offer.
3. Walk Away From the Deal
Your purchase offer’s home inspection contingency allows you to rescind the offer entirely and walk away from the deal if the seller refuses to make repairs or accept a lower purchase price. Depending on the purchase offer’s wording, you could lose your earnest money – usually about 1% of the offer – by walking away. However, a major problem can cost more than 1% of the home’s value to fix, so you’re likely to come out ahead regardless.
On the other hand, walking away isn’t always practical. If you’re being relocated for work or you’ve already sold your previous house and have to move quickly, you don’t have the luxury of restarting your home search from scratch. Continue reading > > >
via MoneyCrashers
No Comments