The Value of a Home Inspection
Updated: Jul 29, 2019
Congratulations! Your offer was accepted and you’re on your way to home ownership! The Seller says there are no known problems with the property so naturally there's nothing to worry about. Start planning your house warming party now.
And ... time for a reality check. While the home may look like it’s in great shape, how can you be certain there are not any hidden problems lurking? If you’re like most Americans, your home is the largest investment you’re going to make. So it makes sense to spend some smart money on a home inspection.
Do I Need A Home Inspection?
If I did a real estate purchase FAQ, this is definitely in the Top 3. I get asked this all the time. Do you need a home inspection? Yes!
Ok, not exactly. Well, sort of. I mean, yes, you definitely should. Don’t ask, just do it. Eat your vegetables.
On a $300,000 purchase, a $450 home inspection is 0.015% of the purchase price.
If your purchased is financed, the short answer is yes. Your lender will require a home inspection. If you are paying cash, then no, you are not required to have an inspection but on such a substantial investment, it’s a smart and prudent decision. Why wouldn’t you? If you were purchasing a used car for $10,000, wouldn't you spend $100 for a qualified mechanic to inspect it? That's 1% of the purchase price. On a $300,000 home purchase, a $450 home inspection is 0.015% of the purchase price.
Disclosure laws specific to real estate vary by state. In Nevada, a Seller is required to disclose issues with the property that may affect its value that the Seller is aware of. The key phrase here is issues the Seller is aware of. If there's a slow leak in a pipe running through the attic, the Seller may not be aware of it because they can't see it. It's reasonable to assume that even an honest, well-intentioned Seller can't be aware of every problem in their home.
A home inspector is experienced in common problems in residential construction. An inspector is also a neutral party with no horse in the race. Even if the sale does not move forward, the inspector still gets paid. If I’m a Buyer’s agent and the Inspector finds a deal-breaking problem with the property, then I’m grateful my client didn’t just inherit someone else’s problem(s). If I’m the Listing Agent, I’m grateful my client is aware of problems they need to fix so they don’t expose themselves to liability and possible lawsuits.
Do Your Home Inspection During Due Diligence
When I get an offer accepted, my first call is to the Buyer to congratulate them. Second call is to the title company to open escrow, immediately followed by my third call to schedule the home inspection. It’s that important.
Don’t wait. Some buyers want to make sure their financing goes through or some other metric happens before paying for a non-refundable home inspection. Don’t. If there are problems, you want to find out at the beginning of the transaction, not the end and you absolutely want to find out during your Due Diligence.
Due Diligence is a defined period of time typically 5-7 days during the transaction where the Buyer satisfies themselves as to the condition of the property. During this time, the Buyer may cancel for any reason without penalty. IMPORTANT: Due Diligence is negotiable and not guaranteed to the Buyer.
A thorough home inspection will take a few hours. I like to be present during the inspections regardless of which side I’m representing. I stay out of the inspector’s way so they can do their job and make it a point not to hover. If I’m present, the inspector will often take a moment to summarize their findings. If there's going to be bad news, I like to find out in real time. I've also found that inspectors will sometimes tell me about things in person they may not put in the report because then it's in writing.
Inspectors are not perfect and, like any profession, have differing levels of experience and expertise. I was representing the Seller in a transaction where an over-zealous inspector wrote in the report that the garage door did not meet fire code resulting in a very nervous, ready-to-cancel Buyer. I knew the door was up to code and I immediately went to three other vacant homes for sale in the same neighborhood and presented him with photos of those homes built by the same builder with the same fire-rated doors. He issued a correction.
Home inspections may not reveal every potential problem but they are prudent. The important thing is to have your facts and be familiar with the issue. It's reasonable for both Buyer and Seller to ask for clarification or additional information on any findings.
Now go get a home inspection, even if you’re not buying a house. Seriously, they are that important. Just get one.