A home inspection is like the annual checkup you get from your doctor, covering major systems and diagnosing problems large and small. While may states require sellers to provide buyers with property condition disclosures, it’s a good idea to hire an independent home inspector to examine the property. There are some things the seller may not have noticed. Foregoing the home inspection could cost buyers lots of money later. Also, read more about home pre-inspection and see what it covers.
Let’s take a closer look at the home inspection.
What’s a Home Inspection?
A home inspection is a detailed, itemized report prepared by a certified home inspector who determines the condition of home systems, identifies deterioration, and provides recommendations. Depending on the size and location of the house, the inspection could take between 2 and 5 hours.
Home inspections are often ordered by homebuyers to ensure the major systems are in good condition and that there are no serious, expensive defects unknown to the seller or buyer. This is part of a buyer’s due diligence. The TREC One to Four Family Residential Contract gives buyers the right to have inspections.
What Does the Home Inspector Examine?
The inspector examines key elements, ensuring proper operation, observing the condition, and noting damage:
- The exterior: Roof, driveway, walkways, steps, doors, decks, and siding among other elements.
- The structure: Foundation and framing. The inspector determines whether the foundation and framing are sound and the building skeleton can withstand the elements.
- The interior: Windows and doors; ceilings, walls, and floors; attic and basement.
- Plumbing and electrical systems:
- Water supply, heating, and drainage
- Service entrance wires, breakers and fuses, and control panels
- Heating, cooling, and ventilation/insulation
The inspector also looks for evidence that one system, such as leaky plumbing, has damaged or may damage another system such as walls or ceilings. While home inspectors are not specialists, they will recommend corrective actions. Other types of inspections may be necessary as well, such as a termite inspection and a radon inspection.
The Home Inspection Report
The Home Inspection Report can be in different forms: a checklist, a rating system, a narrative or a narrative combined with other types. The checklist, divided into areas of the house, is used during the inspection to compile the information necessary to complete the report.
- A Table of Contents
- Introduction containing important definitions, date, type and age of the building, weather, and people present during the inspection
- Component sections (Roof, Exterior, Interior, etc.) detailing the items the inspector observed, styles and materials, comments, recommendations, photos, and videos
- Summary of discoveries, problems, and areas that require further investigation
Why is a Home Inspection Necessary when Buying a House?
There are several reasons a buyer needs a home inspection.
- Contingency. A home inspection contingency is a standard contingency included in real estate sales contracts. It makes the contract conditional upon the outcome of the home inspection report. Buyers may purchase the right to terminate the contract within a specified time frame if the home inspector discovers serious problems.
- Repairs and Upgrades. A home inspector may recommend specific repairs or upgrades, for example installing banisters on staircases and replacing outdated windows for safety. The buyer’s agent might insert provisions into the contract requesting that the seller have these repairs completed before closing. Buyers and their agents should do a final walk through to ensure the agreed upon repairs are done and the house is in the expected condition before the closing.
- Learn Something. It’s helpful for the buyer to tag along with the home inspector, who can answer questions, point out concerns, and explain systems. It’s a great opportunity for the buyer to learn more about the house he or she may one day own. Buyer’s agents should accompany their clients during the inspection to take notes and offer advice about asking the seller to complete repairs. Not only is a home inspection a crucial part of a buyer’s due diligence to determine exactly what he or she is buying, it’s a golden opportunity to learn a lot of valuable information about the house, the operation of its systems, structures, and defects. The home inspection is also a tool for identifying and planning future repairs and upgrades.
10 Benefits of a Pre-Inspecting Your Property
Believe it or not, you can cash in on your home before it even enters the market. As a seller, you have a lot to gain by conducting a home pre-inspection on your property. Here are 10 of the many benefits you will get:
- Take care of problems beforehand. No buyer will agree on the price you have set especially if they discover problems. In that case, they will likely ask for a lower price. However, with a pre-inspection, you’ll have an opportunity to nip those issues in the bud and eliminate any trouble later on. Since buyers won’t have to spend money to resolve those issues themselves, negotiations will go in your favor.
- Justify the asking price. If you already have a price set on your house, you can justify it with a pre-inspection. How? For instance if you set a certain price but the inspection reveals that you can go higher, you are justified in going for the second price. In other words, a pre-inspection will give you the upper hand in negotiations since sellers will know that you paid to have it professionally inspected. As such, they will realize that the house is worth the asking price.
- Set accurate prices. If you don’t have enough money to fix the problems in the home you are selling, a pre-inspection will benefit you regardless. All you need to do is factor in the repair costs when you are figuring out the asking price. That way you can negotiate with sellers for a fair price. If you decide to take care of the repairs yourself, you can present a list to the buyer as justification for a higher price.
- Save money. If a buyer initiates a home inspection, he or she may overestimate the cost of repairs during negotiations. That way you will end up losing a lot more money than you may spend on the repairs yourself. As mentioned before, buyers always overestimate repair costs. Do yourself a favor and fix the issues the crop up in the inspection before placing the house on the market.
- Develop trust. A pre-inspection is one of the best ways to make sellers trust you. Since you will disclose all issues in advance, they will feel more confident that you will not try and scam them or hide repairs. This way you can make negotiations easier for yourself and you may also sell the property close to the evaluated price. A pre-inspection report will have all of the details that sellers should know to make an informed decision.
- Make negotiations easier. Since a pre-inspection report reveals issues that you can take care of before selling your property, you can eliminate surprises. Sellers don’t appreciate being surprised with hidden costs after they place an offer. Remember, you cannot change the price you ask for the house after attracting sellers. Doing so will do nothing but make negotiations difficult. Some buyers may also request their own inspection before closing as a condition of the sale. A second report will strengthen the claims in the pre-inspection report which will make negotiations easier.
- Market property easily. Which home would you buy? A home that has been pre-inspected for issues or a house that hasn’t and has hidden repairs? The answer is the former obviously and the reason is clear – a home that has a pre-inspection report to its name will make it stand out. Just mentioning that the property is pre-inspected in an ad will be enough to attract buyers.
- Get legal protection. If you are selling property as a real estate agent you are legally obliged to act in the best interest of your clients. According to the Foundation of Real Estate Associates (FERA), if you fail to discuss the pre-listing inspection with them, you can be held legally liable. That’s because without a pre-inspection your clients can end up losing a lot of money and time which can be saved otherwise. They may blame you for their losses and you might end up paying out of pocket to make things right. Sellers appreciate agents who are upfront about every possible option that can help them make good investment decisions.
- Reduce stress. Selling a home is not easy especially for novices. If you are a first-time seller chances are you are unaware of hidden costs and repairs and which sellers look for. Rather than stressing yourself out by going through the attic and basement with a flashlight, get a professional pre-inspection done. That is much better than risking a deal from falling through in case something turns up during the seller’s inspection. With an inspection report ready, you will not remain anxious during the sale and can ensure it closes smoothly. You may not need to have as many repairs done as you think either.
- Make your job easier. Most real estate agents sell homes that are not pre-inspected since most sellers don’t realize their importance. Think about it. If you know the actual state of the home you are selling on their behalf, you can come up with accurate prices which buyers will appreciate. In fact, you will be able to attract more buyers this way and negotiate confidently. Since you have nothing to hide about the property, you can share everything about it without guilt.