What Happens During a Home Inspection?
Home inspections are a vital part of the home buying process; they allow homebuyers to know what they're actually getting for their money.
The home inspection process usually occurs after the seller accepts a contingent offer on the house. The prospective buyer's Offer to Purchase typically includes an inspection contingency clause, which allows the buyer to withdraw the offer if the inspection turns up a major problem affecting the safety, integrity, or value of the home.
The American Society of Home Inspectors maintains high standards for its members and makes it easy to find a certified inspector in your area.
New home inspection costs vary by location and size of the home, but are typically in the ballpark of $400. The buyer pays for the inspection unless another arrangement has been previously agreed upon. It's a smart investment that could potentially save thousands of dollars by uncovering major maintenance or repair issues before the buyer is legally obligated to the house.
Home Inspections Cover Specific Areas of the Home
Home inspections performed by a certified inspector should cover the basic structure and the major systems of the home. According to the American Society of Home Inspectors (ASHI), the home inspection will likely include:
- Basements, foundations, crawl spaces, and attics
- Additional structural components of the home, including exterior walls, porches, and siding
- Interior systems, including plumbing, electrical, and heating and cooling systems
- Windows, window frames, doors, and door frames
- Walls, floors, ceilings
- Visible condition and amounts of insulation
Home Inspections May Not Cover All of the Property
Although home inspections strive to cover the most important parts of the average home, they may not cover everything. Some common omissions include:
- Non-visible areas, such as inside walls or spaces between floors of the home
- Septic tanks and drain fields
- Water wells, cisterns, sheds, pools and other features or structures separate from the home
- Roofs, chimneys, or repairs that have been made to either
Professional inspectors may vary in the systems, structural features, and additional parts of the home covered in their particular inspection and some may include roofs or other parts of the property that others do not. When calling to schedule an inspection, buyers should always ask for specific information regarding what will and will not be included in the home inspection before confirming the appointment. Parts of the property that are not covered under the home inspection can be professionally inspected by a reputable, experienced building contractor who specializes in that particular area of construction. Buyers can ask their agent for referrals to contractors capable of inspecting any parts of the property not covered in the home inspection process.
What a Home Inspection Can Do For You
Getting a home inspection before buying lets you know if you're making an investment in a great home or a lemon that will end up costing you more in repairs down the road. Think of it as having a trusted mechanic look over a car's engine before you drive it off the lot – an expert pair of eyes is a big benefit to help you look under the hood to understand the things you might not know much about.
Specifically, here are a few reasons you should never skip the home inspection before you commit to buying a house:
Find Hidden Damage
Buying a home is often an emotional experience, and you're likely to be swayed by the way the home looks on the surface. Sellers know this, which is why they work hard to spruce up their properties and stage their homes to make a strong first impression. You might love the neighborhood and the interior paint palette, but it's also important to know the condition of the roof and foundation, the age of the furnace, the amount of insulation in the attic, etc.
A home inspector is an expert in all the important areas of home building, and they will make a comprehensive report about each appliance and piece of infrastructure, so you know if you'll need to make immediate repairs or if there are areas of concern.
Negotiate a Better Price
If there are one or more red flags on the home inspector's report, you may use that information to your advantage to negotiate a better price on the home. For example, if the inspector notes missing shingles on the roof and signs of water damage in the attic, you can return to the seller to ask that they either repair the roof or lower the price of the home by several thousand dollars to cover your repair costs.
Your home inspector will likely be able to give you a ballpark figure about repair costs as a guide; your real estate agent will help you through any additional price negotiations if you decide to go through with the purchase.
Meet FHA Loan Requirements
If your financing is through an FHA loan, you are required to have a home inspection. This is to make sure that the house meets basic safety requirements and is, therefore a good investment for the lender. If there are safety standards that aren't met, the seller will need to rectify these issues before the sale can proceed.
Additionally, repairs may need to be completed by a licensed contractor for the work to be approved. In many cases, the seller will be willing to make changes because they won't be able to sell the home to any other FHA-financed buyer, either.
What to Expect From a Home Inspection
The home inspector will examine both the exterior and interior of the house. Then, he or she will compile a report regarding the condition of:
- Plumbing and electrical systems
- Heating and air conditioning
- Roof, attic, and insulation
- Walls, ceilings, and floors
- Windows and doors
- Foundation and basement
- Structural elements such as support beams
If you're wondering how to prepare for a home inspection, just know that you really can't, nor should you. When and if issues are discovered, the buyer has the opportunity to request repairs, or some other type of modification of the contract. This is usually the best way to approach it without wasting time and money on unnecessary repairs. The seller may agree to pay for needed repairs or offer an allowance so the buyer can fix repair issues after purchase.
An inspection report is a description, not a pass-fail examination. A real estate agent will provide counsel, but it is up to the buyer how to proceed based on the results of the inspection report.
In cases where neither the buyer nor the seller is willing to make the repairs, the buyer can typically withdraw the contract without penalty, assuming there aren't any previously agreed-upon terms preventing contact termination — for example, if the buyer previously waived their inspection contingency.
What a Home Inspection is NOT
A home inspection is not invasive, meaning the inspector will not cut into walls or take things apart.
This means that possible latent defects, such as hidden mold or a pest infestation, may not show up on the report. If the buyer suspects a particular environmental problem, such as termites, or if the home has a swimming pool, an additional, specialized inspector may be needed. The inspector usually does not check to see whether appliances such as the washer and refrigerator are in working order.
An inspection is not intended as leverage for price negotiation. In most cases, the offer has already been made and accepted based on the visible condition of the house. This is not to suggest that buyers shouldn't feel compelled to further negotiate on price, based on major flaws discovered during an inspection — seeking a price reduction would be normal in that case.
In addition, cosmetic issues such as worn carpeting, ugly cabinets, scuff marks on flooring or walls, and other issues that are solely cosmetic are not typically noted or discussed in the home inspector's report to the buyer. Buyers who have concerns about cosmetic issues and the cost to remedy them should consider asking their agent to refer them to specific home repair or renovation contractors for bids on the expected cost to remedy these conditions.
What Are the Laws About Home Inspections?
A home inspection is not required by law, but it is highly recommended by both legal and real estate professionals. Most states do have seller's disclosure laws requiring the seller to be transparent about any known defects in the home. Federal law requires owners of homes built prior to 1978 to warn potential buyers about the presence of any lead-based paint.
Home Inspections are Suggested, But Usually Not Mandatory
Home inspections are now so routinely performed during the purchase process that some buyers may not be aware that they are actually not mandatory unless the inspection is required for the purpose of obtaining certain types of mortgages, such as FHA, USDA Rural Development, or VA home loans. Homes that are newly constructed and offer builder warranties or condos and other types of housing that are routinely repaired or maintained under some type of homeowners agreement may not benefit as much from a home inspection as the typical, owner-occupied single-family home.
Sellers are Not Legally Bound to Correct Issues Noted on the Inspection Report
While most sellers are prepared to negotiate inspection report items fairly with their buyers, some may not be willing to do so, or may not be financially able to complete all of the repairs or renovations that the buyer requests. Buyers must always remember that the seller is not legally bound to agree to the buyer's demands regarding the inspection notice. In cases where the seller refuses to make any repairs or offer any credit in lieu of doing so, the buyer will then have to decide whether they will move forward with the contract and accept the home in its present condition or whether withdrawing their offer is their best choice.
Always Opt for a Reputable, Certified Home Inspector
Home inspection charges vary across the nation, and may cost several hundred dollars for an in-depth inspection performed by a reputable, certified inspector. This cost can lead some buyers to consider asking a trusted friend or family member in the building industry to do their inspection for them, instead of hiring a professional inspector. This is a bad idea for the two following reasons:
- Although the friend or relative may be well-versed in one or even a few areas of home construction, they may lack sufficient knowledge in other important areas and be unable to spot significant issues that could impact the buyer's safe use and enjoyment of the home.
- A home inspection performed by someone not certified as a professional home inspector will make negotiating any repairs or safety issues much more difficult because the seller may not see this informal inspection performed by the buyer's friend or relative as being done by an authoritative expert in the home construction industry.
How Can a Real Estate Agent Help?
A real estate agent is a great asset during the home inspection process, acting as the buyer's representative and advocate. Ideally, the agent attends the inspection, reviews the report, and assists the buyer in seeking clarification on any matters with the inspector.
An agent can help the buyer understand the results of the inspection and offer advice on what to do if the inspector's report is less than satisfactory, which may result in suggesting the buyer seek modification of the sales contract. Can you negotiate the home price after inspection? Yes, and this is the real benefit of working with a trusted, knowledgable real estate agent. The agent will provide an objective perspective that counterbalances the emotional investment of the potential buyer, which may otherwise blind the buyer to the home's flaws.
Always Review the Home Inspection Report Carefully Before Deciding How to Proceed
Because there are really no perfect homes, home inspectors will likely find one or more notable issues in nearly every home they inspect and they are doing their due diligence by documenting these defects or conditions on their report to the buyer. The buyer is then charged with determining whether or not to ask the seller to remedy the situation under the purchase contract's inspection contingency.
In most cases, negotiations with the seller for repairs, renovations, or a buyer credit in lieu of making any repairs or renovations should be reserved for items that are serious in nature, such as items that cause an issue with the type of mortgage the buyer is seeking, such as an FHA or VA home loan; items that will be expensive for the buyer to repair; or items that impact their safe use of the home. Discussing the inspection report with their agent is a good way for the buyer to determine the best course of action for negotiating items on the report under any existing home inspection contingency.