Home Inspections Recap

Home inspection reports are more important now than in the past. In March of 2008, 53% of all single family homes sold in the three counties of El Dorado, Placer, and Sacramento were owned by a bank. As a first time home buyer there is a good chance you will be buying a home from a bank rather than an individual. Buying a home from a bank is different in several ways. From an inspection prospective it is more important to complete your due diligence inspections. Banks are not required to provide as much documentation regarding the home you are thinking of buying because they have no firsthand knowledge about the home since they did not have the opportunity to live in it. So no one at the bank will know that the circuit breaker trips whenever you run the clothes dryer and coffee maker at the same time. You must rely on the information provided by professional inspectors.

Before hiring your own inspector, we encourage you to carefully review all of the information available from the owner and listing real estate agent. The owner and listing agent are required to disclose everything they know about the condition of the property. For example, you may be thinking about a property that was previously under contract, but the buyer cancelled the contract when an inspector reported a major crack in the exterior stucco wall and foundation. The seller and listing real estate agent are required to include that information in the disclosures provided to you; giving you the opportunity to walk away. This disclosure requirement is a major motivation for the seller to come back to the bargaining table because the new information will have to be disclosed to all future buyers.

All homes include dozens of systems and features, all of which make our lives comfortable and pleasant. The more systems and features a home has increases the potential for serious headaches (expenses) when they malfunction. If you buy a new computer, and it doesn't work, you can take it back to the store. If you buy a new home and discover on the first rainy day that the roof leaks, unfortunately you're now the proud owner of a leaky roof. The role of an inspector is to expose the flaw's in your dream home so you can go back to the seller to negotiate the terms of the purchase. Generally, if the owner (bank in some cases) is selling a home "as-is", the seller may refuse to negotiate. Then it becomes the buyer's decision to complete the purchase with previously agreed to terms (glitches and all) or not.

No matter how busy you are, you should attend all inspections of your future home. It is your big chance to get a professional introduction to the circuit breaker panel, air-conditioning system, water heater, and other systems you may soon own. Additionally, inspectors are not required to move furniture or look under carpets, so it is possible for even good inspectors to miss something. While you probably don't want to move furniture around to see what the sellers are hiding—imagine the liability if you knocked over the entertainment center in your quest to look behind it!—you can certainly flip back the throw rug to see if it's covering cracked tiles. In the end, an extra set of eyes can only help.

The report your inspector provides will be critical to your making a well-informed home-buying decision. So when looking for a trusted advisor is not the time to scan the Yellow pages. Remember, you are hiring a professional so start by collecting referrals from the people you know and trust. Be sure to plan on interviewing several candidates. For a list of probing questions to interview an inspector contact Michael for a Special report on interviewing professional inspectors.

Never be too busy to read the inspection report. Many agents say they are amazed by the number of home buyers who look at the home inspection as a hurdle to jump over rather than a valuable new source of information about the property they are about to purchase. As you read the report, remind yourself that there are no perfect homes (even if it is new). It is almost certain to have some wear and tear. It is the inspector's role to report everything that is not perfect about the home. Potential buyers should be reasonable about the repairs they ask the seller to make. In my opinion all repairs for health and safety issues are reasonable. Use the health and safety rule to decide which items on the inspection report is worth asking the seller to repair. If the repair list is long with trivial items the seller is less likely to consider the real important repairs.
Inspections do not include opening walls to see what is going on inside hidden parts of the home; the inspector may suggest based on what can be seen from the outside further investigation. This will cost (typically the buyer) more money but it could be a good investment and provide a good basis for further negotiations. Remember, the owner and realtor are required to disclose all information regarding the home; even new items found during the investigations of a potential buyer.

Once you have decided what you need to have fixed in order to make the purchase, your real estate consultant will convey your requests to the sellers. Options for reaching agreement include accepting everything as they are, having the seller make the repairs before close of escrow, reducing the sales price to cover the cost of repairs, and requesting a cash repair allowance so you can make the repairs yourself. Once you get to the point of negotiating repairs, the tension can run a little high; don't let a $300 hot water heater blow a $400,000 deal. You don't want the give the seller the feeling that it will be easier to find another buyer than reach agreement with you.

A final note on inspections is New Houses need inspections too. It is not recommended you neglect the inspection just because you're buying a brand-new home. Flaws in new construction can be even harder to spot than in older homes because their symptoms haven't had a chance to show up. If you are buying a new home, definitely find an inspector that specializes in new construction. If the home is being constructed, and you have the budget to have your inspector visit the site during the construction process before everything is sealed up you could indentify issues early on.

Other inspections to consider would be roof, chimney, well and water tests (if the home has a well, it's condition and the condition of the water are very important), septic systems (again if there is one). I always recommend a home warranty and usually the seller will pay for the first year.

Final word on the cost of inspections, if after reviewing the inspection reports you decide the home has too many costly issues to deal with and decide to walk away from the purchase, the home is most likely the largest investment you will ever make and the cost (loss of money) of the inspections is minor compared to the money pit you walk away from.