Whether you’re buying or selling a home (or both), pay special attention to how a home inspection can serve your interests. A professional home inspection protects both buyers and sellers from legal action sparked by problems found after a home is sold.
Buyers have long been advised to include a home inspection contingency in their purchase offers. The cost ($500 or so, often less for condos) is well worth the information it buys, protecting the purchaser from costly surprises later on. In fact, many homes harbor problems that their owners aren’t even aware of until a professional inspector points them out. That’s why some savvy sellers have been getting their homes inspected before putting them on the market.
Inspection Contingencies
A sales contract may include one of two types of inspection contingencies:
- A general contingency inspection clause stipulates that the contract is contingent on the buyer conducting a satisfactory, professional home inspection. The contingency specifies a certain number of days for the buyer to conduct the inspection and report back to the seller whether buyer intends to move forward with the contract.
With a general contingency clause, if the buyer dislikes anything in the inspection results and chooses not to go forward with the transaction, the contract is null and void. Obviously, this type of contingency favors the buyer.
- A specific home inspection contingency inspection allows a buyer to inform the seller of particular shortcomings and negotiate a repair or a credit. The buyer can back out if the negotiation fails, e.g., the owner’s failure to fix a problem identified by the inspection. The buyer can’t just walk away for any reason. Although not ideal for buyers, this type of contingency offers more protection than no home inspection clause at all.
Checking It Out
The most reputable home inspectors are members of the American Society of Home Inspectors (ASHI) and are bonded, licensed and insured.
What do these professionals look at? ASHI standards of practice require that an inspection evaluate the following:
- Structural Components.
- Exterior.
- Roofing.
- Central Air-conditioning.
- Heating.
- Plumbing.
- Electrical.
- Insulation and Ventilation.
- Interiors
It’s equally important to understand what a professional inspector is not supposed to do.
An inspector can’t tell you everything you want to know about a house. Remember, inspectors are generalists who have a fair amount of information about all home systems but usually are not experts on any of them.
Professional inspectors are not supposed to fix problems they find. How much would you trust someone if you knew they were looking for a repair job while searching for defects in your home? If a major problem is found, the buyer can ask a reputable contractor how much it would cost to repair or replace it.
Don’t expect the inspection report to include the condition of every single nail, electrical wire or piece of plumbing. Inspectors check out the overall systems—not all the joints and nail pops (unless they are visible).
Inspectors can’t give you the reason for the defects they find. Their job is to find defects, not to explain them.
Don’t expect a listing of cosmetic concerns—that’s the buyer’s job.
The inspector has no way of telling how long a system will last and shouldn’t volunteer an opinion about it. The inspection is not intended to be a guarantee of future performance.
Non-Contingent Inspections
As many real estate markets in the nation have heated up, buyers have increasingly been scheduling a ‘pre-offer’ or ‘pre-contract’ inspection to eliminate having an inspection contingency in the contract. An alternative is a ‘walk-and-talk’ inspection, where an inspector conducts an abbreviated walk-through with a verbal report to the buyer. This is not as thorough an inspection, but should give the buyer a good sense of the condition of the property in general.
Some buyers been making purchase offers without including a home inspection contingency. In an active market, this strategy can help make your offer more attractive to a seller, even though it puts you at risk for purchasing a home with problems that could be expensive to correct.
If you’re considering forgoing the home inspection contingency, think seriously about having the home inspected anyway. Finding out ahead of time what you’ll need to fix will help you budget more realistically for your home purchase. For example, you may want to make a smaller down payment so you’ll have the cash you need for repairs.
Home Warranty
Another reason to order a non-contingent inspection is if you’re thinking about purchasing a home warranty. These warranties can afford you some protection in case a system in your home malfunctions, but they will not cover “pre-existing defects.” If something does go wrong later, your home inspection report can help you prove to the warranty provider that the problem did not exist when you purchased the home.
Seller Benefits
Especially in slow markets, sellers do well to order home inspections (and make needed repairs) before putting their homes on the market. Being able to show that your home has a clean bill of health can encourage purchase offers from skittish buyers and speed up your contract settlement.
Even if you’re selling in a seller’s market, you may want to accept a contract with an inspection contingency or have your home pre-inspected. Letting buyers know about defects you don’t intend to correct will help provide protection against legal action later. More and more buyers have been filing after-purchase lawsuits against home sellers for major defects found in homes that were not inspected before settlement. Whether such lawsuits are successful or not, they represent a real hassle for sellers.
Give us a call if you have any questions about ordering a professional home inspection. We would be happy to provide you with a list of reputable inspectors in the area.
