Things Every Buyer and Seller Should Know about Home Inspections
When buying or selling a house, the home inspection is a valuable tool that should not be skipped. Sellers often consider this something their buyer will do after a purchase agreement has been negotiated and accepted. In fact, many sellers feel very stressed as they wait for the buyer to have their inspection and submit their "inspection response". Home inspections can and should be done by a seller before putting the house on the market. I almost always recommend that my sellers have a home inspection done. The most common question sellers ask me is "We can do that?" Yes! And you should. This way if there are hidden issues in need of repair, you can find and fix them before putting your house on the market instead getting a surprise repair bill after you've accepted an offer. But what is involved? How much does it cost? It’s important to understand what a home inspection entails and how it affects the sale of your current home or the purchase of a new one. The more you know, the less likely you are to get ripped off or taken by surprise. Even if you're buying new construction, you still need to have a home inspection.
What is a Home Inspection?
A home inspection is not the same thing as an appraisal. This is a very common misconception. An appraisal is an estimate of a property’s overall market value. A home inspection is detailed review of all the major systems and elements of a home, with a purpose of confirming that everything is in good repair, determining the age of major systems like HVAC and water heater, and finding any problems that people can’t see through normal usage such as plumbing problems, substandard or defective electrical components, and structural issues. It is an objective visual examination of the structure and systems of a home by an impartial, neutral third party not related to the buyer or seller.
The three main points of the inspection are to evaluate the physical condition of the home, including structure, construction, and mechanical systems; identify items that need to be repaired or replaced; and estimate the remaining useful life of the major systems, equipment, structure, and finishes. Bottom line: a home inspection is to inform the parties of any readily visible major defects in the mechanical and structural components, and to disclose any significant health or safety issues.
What Areas Does a Home Inspection Cover?
A home inspection includes a visual examination of the house from top to bottom. There are hundreds of items a home inspection covers, including general structure, flashings, basement or lower level, framing, central cooling and heating, chimneys, plumbing and electrical systems, drainage, bathrooms and laundry facilities, foundation, common safety devices, fireplaces and wood stoves, kitchen and kitchen appliances, general interior, attic, insulation. ventilation, roof, and exterior.
An inspector cannot report on defects that are not visible. For instance, defects hidden behind finished walls, beneath carpeting, behind storage items and in inaccessible areas, and even those that have been intentionally concealed. Systems that are seasonally inoperable (swamp coolers, air conditioning, heat) will not be turned on during the inspection.
Home inspectors do not perform any repairs — this is a major conflict of interest, not to mention unethical. Never allow an inspector to contract with you to make repairs he/she has suggested.
How Do I Find an Inspector?
To hire an inspector, get recommendations from your Realtor, or from friends and family. If you don’t know anyone who has hired a home inspector, you can find home inspectors by doing an internet search for “Home Inspection Services” or "Home Inspector", but recommendations from those familiar with a company's work are always valuable if you can get them. When interviewing inspectors, be sure to ask for references, certifications, and memberships in professional associations. Find out about the inspector’s professional training, length of time in the business, and experience.
It’s a good idea to be present during the inspection. It's your chance to learn a significant number of important things about the home. You can and should ask the inspector questions during the inspection. The inspector will point out areas of potential trouble in their inspection report, but these items will mean more to you if you see them with your own eyes. Many inspectors also will offer maintenance tips as the inspection progresses.
Is the Seller Obligated to Make Suggested Repairs?
The short answer is no, the seller is not required to repair, replace, or perform maintenance. However, if buyer and seller cannot come to an agreement on items found to need repair or replacement, the buyer may have the right to void the purchase agreement and not proceed with the purchase of the home. If this happens, the seller is faced with having new knowledge about the condition of their home and the corresponding need for one or more repairs. The seller would then need to either repair / replace the defective items or update the seller's disclosure informing all future potential buyers that the defect exists. For instance, pretend for a moment that the furnace is found to have a major defect. In this scenario the buyer requests that the seller make the necessary repair, the seller refuses to make the repair, and the buyer decides not to purchase the home. When the seller puts the home back on the market, they are legally obligated in Indiana to disclose that they are aware the furnace is defective. A prudent buyer is likely to a) ask the seller to repair the furnace, or b) make a lower offer to cover the cost of the repair.
This scenario is an example of why it makes the most sense for a seller to repair the defect and keep the buyer that is already in contract to purchase their home. Even if they answered "do not know" on the seller's disclosure regarding the condition of the furnace, now they DO know the condition and there is documented proof of that. It doesn't make sense to refuse to repair a "disclosable defect" only to have to tell everyone else who comes along that the defect exists.
As the buyer it is important to understand what is and is not considered a "defect" for the purpose of responding to the inspection report. It is not a time to nit-pick or ask the seller to do things like paint or do other cosmetic work. Maintenance items that your inspector may suggest are typically not an appropriate request for your seller on the inspection response. There is no such thing as a perfect house. Maintenance is an ever-present obligation of every homeowner. Items like old, dirty, or ugly carpet, holes in drywall, missing closet doors, etc. are things that were visible when you toured the home before making your offer. It is your responsibility to set the offer price having done a thorough visual inspection of the home. It is not appropriate to make a list of items before the offer that you plan to ask the seller to do on the inspection response. You should limit your repair / replacement request to items found during the inspection that negatively impact your ability to use the home as it is intended.
How Much Does It Cost and How Long Will it Take?
Remember that a thorough, accurate home inspection takes time. The last thing you want to do is to try to rush the inspector, whose most important priority is accuracy. The chances of mistakes and missed conditions are much more likely the more the inspector rushes through. Expect your home inspection to take anywhere between two and five hours (allowing about one hour for each 1,500 square feet of living space over 3,000 square feet). Older homes often take longer than newer ones, but not always.
Expect your inspection to cost anywhere from $300-$600 for a single-family residential property, depending on the total square footage and location. The inspector may add a small fee if they must travel over a certain number of miles to get to the property. Multi-family homes will almost always cost more as the inspector will typically charge for each individual unit.
A home inspection may be one of the most important investments you make when buying a home, making it very much worth the cost. A home is typically the largest investment of money and time that any person makes in their entire life. An inspection is an opportunity to explore and get familiar with the less visible areas of your new home. That small fee and a few hours of your time is sure to give you valuable insight and knowledge and provide the peace of mind that comes when you know as much as you can know about your investment before you close.