Help reduce the home inspection stress with these tips for buyers.
1. The house is fine, but I could make it look bad
As the housing market recovers, more buyers and sellers are getting reintroduced to one of the most nerve-racking rituals in real estate: the home inspection.
An inspection, which usually occurs after a buyer has made an offer, is meant to be an objective analysis of a home’s condition. Twenty years ago, 75 percent of purchased homes were inspected; today, it’s 95 percent, according to Bill Loden, president of the American Society of Home Inspectors, a Des Plaines, Ill.-based industry trade group.
Inspections aren’t a big financial burden: A review of a 2,000 square foot home typically costs around $450, with the buyer footing the bill. But what can make an inspection so stressful is that a long list of trouble signs, without proper explanation, can sabotage a deal. And real estate pros complain that some of the inspectors themselves are overzealous. Many of the nation’s 25,000 inspectors used to work in construction, or still do, and their expertise can lead them to bombard buyers with encyclopedic lists of minor problems.
A thorough pro will look at the foundation and the framing to make sure nothing is cracked, warped or rotting, and examine the roof for problems with shingles and gutters. Inspectors should also look for plumbing leaks and make sure the water heater, wiring, heating systems and fireplaces are safe.
So what constitutes going too far? A less helpful inspector might dwell on things like surface mold, chipped paint or other superficial problems, or present buyers with a long litany of issues, with no context about their relative importance and no estimate of the cost of fixing them.
The trick is finding an inspector who can relay the critical information and put it in context, says Dave Moersen, of HomeCheck Home Inspectors in Gaithersburg, Md., who’s a veteran of more than 4,500 home inspections. “I used to think this job was 95 percent technical knowledge and 5 percent communication, but now I think it’s the other way around,” says Moersen. “Homeowners just want answers.”
Bohdan Mastykaz, a Redfin real-estate agent in Miami, says the best inspectors take pictures and include them in their report to the buyer: “Pictures make everything black and white, and it’s far less subjective that way.”
2. Get the house, not the inspection
Most realtors and real estate lawyers recommend including inspection contingencies in purchase contracts. But in most cases the law doesn’t actually require an inspection. And in hotter markets, some buyers are opting to skip them. In a competitive bid situation “an offer for $880,000 with no inspection contingency will likely win over a $900,000 offer with an inspection contingency,” says Mark Colwell, a real-estate agent with Redfin in San Francisco.
Of course, skipping an inspection can leave you in a different kind of hot water. If an inspection turns up a home defect, the seller will be under pressure to either drop their price or fix the problem. If the buyers waive that option, and find a defect afterward, they’re on their own when it comes to repairs.
(One other note: If you live in a hurricane- or flood-prone part of the country, you may not be able to get a mortgage without submitting to a home inspection.)
3. Qualifications? I may not have any…
Only about two-thirds of the states have laws regulating home inspectors, according to ASHI, and even where regulations exist, the range of rules is wide. In Maryland, for example, home inspectors are regulated by the Department of Labor, Licensing and Regulation; they have to take a 72-hour pre-licensing class and have a license renewal every two years. In New York, home inspectors need a 140 hour pre-licensing course. But in California, there’s no license needed and no classes are required; and in Virginia, there are no field training or experience requirements.
States that do have regulations on the books typically require home inspectors to take part in as many as 250 home inspections, as observers, before they apply for a license. But those “inspections” just can be a variation of “following Joe around,” and there’s no guarantee your home inspector is getting the knowledge needed to do a good job when flying solo.
If a not-so-sharp inspector misses a defect that eventually costs you, you could sue. But there’s no national requirement that inspectors carry any standard of liability or errors-and-omissions insurance, and insurance rules vary by state. In practice, even an inspector who is found liable for damages may not have to ever pay up.
You may be able to rest a little easier if your inspector be a member of ASHI or the National Association of Home Inspectors (NAHI); those organizations require their members to meet certain standards of practice and ethics to remain in good standing. While hiring a certified home inspector may not protect you from a bad inspector, at least it gives you a place to complain.
4….and my credentials are pretty easy to obtain
“Certified” membership in ASHI requires a minimum of 250 professional fee-paid inspections, as does the same status in NAHI. But you can be a noncertified ASHI member or a standard NAHI member with just 75 inspections under your belt.
Both organizations require some of their higher-level members to pass the National Home Inspector Examination, but neither organization verifies each candidate’s inspections, typically just selecting a handful at random to audit.
ASHI’s Loden says while his group can’t police every one of its members, they’ve removed several from their organization for violations of ethics rules or concealing criminal convictions “When we find people violating our membership standards we try to take care of it, and in states where inspectors are licensed we refer them to the regulatory agency and the real estate board so agents know not to use them,” he says. NAHI did not respond to requests for comment.
5. I’ll cut corners to keep the agents happy
The inspector ideally should work only for the client. But home inspectors also try to build relationships with agents and brokers to get more business, and that can give them an incentive to play down any problems with a house.
Sometimes, the buyer’s agent tries to lean on the home inspector so as not to blow a deal, says HomeCheck’s Moersen. “I’ve had calls from buyers agent’s the day before my inspection telling me to lay off the HVAC system or the electrical system.” Some agents have gone so far as to “weed out” inspectors who they say cause them the most aggravation, he adds: “If you kill a deal, you’ll still hear from the agent, but if you kill more than two, you won’t hear from them again.”
Experts say homeowners should be wary if an agent or broker recommends just one inspector to them, of if an agent tries to discuss the inspection directly with the inspector and cut out the client.
ASHI has developed what it calls a “Client Bill of Rights,” which requires, among other things, that home inspectors’ future referrals from a broker or agent not be contingent on their report findings.
6. Feel free to watch
It happens: Some home inspectors are so thorough they can scare a client out of a deal. One way for a buyer to avoid that fate is to accompany the home inspector room-to-room during the actual inspection, says Paul Reid, a real-estate agent in California’s Inland Empire region.
You’ll learn a lot about the home that way, and you won’t be surprised when the home inspector comes up with a long list of fixes. “A lot of times buyers will say, ‘Do I need to be there for three hours?’ and I tell them ‘Yes,'” Reid says.
Of course, you may have to nag to be allowed to tag along. Mike Tebeau, of National Property Inspections in Frederick, Md., said that some inspectors don’t like it when homeowners follow them around the house because it gets them off their routine. But he says that he actually prefers it. “More than likely they’ve been in the house before and they can point out things that they want me to look at. They’re really a second set of eyes.”
7. You should bring me in earlier
Traditionally, inspections don’t happen until after the buyer has made an offer: the practice is so standard that most inspectors don’t think to question it. But having a home inspected before submitting an offer is a relatively frequent practice in San Francisco and Seattle, and some real-estate agents think it’s a practice worth adopting more widely.
Researchers at the real estate group Redfin in San Francisco say that offers paired with pre-inspections were successful 21 % more often than other offers, and that San Francisco home buyers whose offers included a pre-inspection were more than twice as likely to win a bidding war as those without one.
“It tells the seller that you already know what’s wrong with the home, you still want to buy it, and you’re not going to ask them to pay for repairs later,” says Colwell, the Redfin agent. Of course, doing the inspection early also means the buyer will have less leverage to get the seller to either fix a problem or drop the price.
8. To find a serious problem, you may need someone else
Inspectors admit that there are some problems they aren’t in a good position to detect. “An inspector can look at the exterior of an addition or a recently-remodeled basement, but without pulling the permits, there’s no way of knowing what’s behind the walls,” said Moersen.
In general, home inspectors are only obligated to inspect areas of the home that are “readily accessible.” So anything beyond climbing into a crawl space with a stepladder or removing the cover of an electrical panel with a screwdriver is at the discretion of the home inspector.
For example, a home inspector isn’t required to tell you whether the air-conditioning system is adequate or energy-efficient, just that it works and it’s free of defects. As for fireplaces, unless the flue or chimney is easily accessible, an inspector can’t determine whether it could cause a fire or break away from the house in an earthquake. Moreover, an inspector isn’t expected to uncover a “latent” or hidden defect, or determine how much longer a particular component of a home is likely to last.
9. New construction? New problems
If a house is brand new, of course, it’s unlikely to have any visible foundation or framing defects, or defective or worn-out appliances. But that doesn’t mean things can’t go wrong.
Mastykaz, the agent in Miami, says new homes can still have faults, such as drywall dust and sawdust settled in the ducts. Often plumbing and electrical connections can be left unattached, even if they’re new. And since many new homes are still settling on their foundations, windows and cabinets need to be adjusted or tracks realigned.
A really good home inspector will take the serial numbers off the major appliances even in a new home and ensure they haven’t been recalled by the manufacturer, says Paul Reid, the Inland Empire agent. “Unused isn’t the same as new…an appliance can sit in a box in a contractor or builder’s yard for years,” he says.
10. I can make money from the problems I find
There’s always the potential for conflicts of interest in a business where one hand washes the other. Many home inspectors either used to be general contractors, or still do such work on the side. And it isn’t unheard of for an inspector to steer a home buyer to a pal’s firm, or even to the inspector’s own contracting business, to repair the very same flaws the inspection turned up.
The ASHI code of conduct prohibits members from doing any contracting work on homes that they’ve inspected, within 12 months of the original inspection. State regulations also generally discourage this: California, for example, says it’s an “unfair business practice” for a home inspector to do such work, or to accept a fee for referring the owner to another contractor. Still, self-dealing and kickbacks can sometimes occur.
The best move for a buyer: Take the inspector’s punch list to a contractor you trust, or have your inspector and agent recommend at least three different contractors apiece for any one area of repair. Also be wary of any inspector who promises you a better deal if you go with somebody they recommend.
Daniel Goldstein of MarketWatch