After hundreds of showings, hours of online research, and careful financial planning, you’ve finally got a house under contract. The next morning your realtor texts you and says you need to schedule a home inspection within the next 7 days. You’re still riding the under contract high so you happily Google inspectors in your area. The happiness begins to fade after you see the cost of a home inspection. You’ve already set aside money for closing costs and the balance in your bank account is at an all-time low. The last thing you want to do is dish out hundreds of dollars for an inspection when the money could be going towards the new furniture you’ve already picked out.
Your mind begins to wander and then you remember that the sellers provided a property condition disclosure which lists everything that’s wrong with the house. If the purpose of a home inspection is to identify what’s wrong with the house and the sellers have already told you, then you don’t even need one, right? Not so fast. Although sellers are required to disclose known defects, it’s not a warranty or substitute for a home inspection. Most homeowners don’t venture into their crawlspace, climb on the roof, or go into their attic on a regular basis. So even if we assume that all sellers are 100% honest about the condition of their home, it’s likely that there are issues present that they simply aren’t aware of. Let’s look at some of the reasons to get a home inspection and see if we can justify the cost.
Mitigate Financial Risk – As the old saying goes, buying a house is one of the biggest investments you’ll ever make. You’ve likely heard this and want to know that the house you’re buying is worth what you’re paying for it – so does the bank that’s lending you the money. To protect you (but mainly themselves), banks will assign an appraiser to view the home, measure square footage, and form an opinion of value. The appraiser will take into account the overall condition of the home but it’s a very general assessment. It’s unlikely that they’ll inspect the entire attic for signs of moisture intrusion or check for foundation issues in the crawl space. After all, that’s not their job. A home inspector will do a more thorough assessment that can uncover costly repairs. For example, let’s say that a house was given C-3 (average) condition rating by an appraiser. While inspecting the crawl space, however, an inspector finds major structural damage. Major structural damage is not an average condition and would certainly decrease the home’s value. Bottom line, to make sure you aren’t overpaying for a house you need to factor in the repair costs in addition to its appraised value.
Identify Problematic or Unsafe Building Materials – While viewing the property you may have run water at all the faucets, turned on all the lights, and everything seemed to be working fine. Just because things are working or appear undamaged doesn’t mean there aren’t problems looming on the horizon. Some building materials are prone to failure and could pose health/safety risks to your family. Here are a few examples that an inspector might find:
- Cast-iron & Galvanized Steel Pipes – Often found in older homes, these pipes are prone to internal rust & corrosion. As sediment builds up over time, water flow is restricted which can cause dirty water to back up at bathtub or sink drains, discolored & contaminated water to come out of faucets, leaks, and eventual pipe failure. The cost of replacing cast iron and galvanized steel pipes varies depending on the type, linear feet that’s being replaced, and accessibility. For example, if the primary drain pipe that connects to the sewer needs to be replaced it would require excavating the yard and the bill could exceed $5,000.
- Stab-lok Electrical Panels – Installed in homes between 1950-1980, Stab-lok electrical panels have been deemed hazardous by industry professionals. The danger lies in the breakers having a high failure rate. When a circuit is overloaded, breakers are designed to trip and shut off the power to that circuit. This prevents heat buildup at the breaker, wiring, and the devices connected to that circuit. Studies have shown that Stab-lok breakers sometimes fail to trip which can lead to fires.
- EIFS Siding – Exterior Insulation & Finish System, or synthetic stucco, is a siding material that has caused nightmares for many homeowners. When improperly installed, this material is highly susceptible to moisture intrusion. The damage not only affects the siding; it can extend all the way to the framing and even the interior drywall. Home inspectors have the tools needed to identify moisture intrusion that isn’t visible on the surface.
- PVC or Flex Dryer Vents & Screened Termination Hoods – A variety of dryer vent materials and types have been used over the years (i.e., metal, plastic, rigid, semi-rigid, flexible, etc.). Ideally, rigid metal ducts should be used for the entire length of the vent and be terminated with a single damper hood. This is the most efficient and safe way of discharging lint to the home’s exterior. Flexible ducts and screened termination hoods are commonly found and both run the risk of trapping lint. When lint gets trapped, heat buildup can occur and possibly lead to a fire. Rigid PVC vents are less common but also pose a fire hazard due to static charges and lint accumulation.
- S-traps – An s-trap is a drain pipe configuration found under sinks that can siphon water and release sewer gases into the home. It’s not uncommon to find these in older homes or houses that have been renovated by unlicensed individuals. Building codes now prohibit the installation of S-traps in new construction. If an existing home has S-traps, we recommend replacing them with P-traps or installing air admittance valves.
Uncover Prior Repairs, Modifications, or Renovations Made Without Permits – In recent years, some have said that home improvement has become the new great American pastime. Shows like Property Brothers, Extreme Home Makeover, and the endless selection of DIY videos on YouTube have contributed to more people taking on home renovations or repairs. A home inspection can help to identify and evaluate any changes made to a home, such as the improper removal of a load-bearing wall. It’s also common to see electrical and plumbing work that was done without permits on homes that are being flipped. To be fair, the quality of some DIY work we come across is exceptional but others, not so much. Other examples of things an inspector might find include: previous repairs that were made as a result of a fire, repairs made to framing members that have experienced rot or termite damage, and structural reinforcement of sagging floors. It’s important to know the entire history of a home so that you don’t inherit problems that make it difficult to sell in the future.
Documentation to Support a New Construction Warranty Claim – If you’re buying a new home you might think that an inspection isn’t necessary since the builder is providing a 1-year warranty. Or, somebody told you that you should get an inspection but wait and schedule it right before the warranty expires. These are both risky propositions. Consider the following before waiving or postponing a new construction home inspection:
- A builder warranty doesn’t cover everything. Be sure to carefully review it before closing to understand its limitations and your responsibilities for maintenance.
- A builder might agree to fix something before closing that’s not covered by the 1-year warranty. You have some ability to negotiate with builders before signing on the dotted line but little afterwards.
- Some builders will not accept a home inspection report after closing.
- Unlike existing homes that have transferred ownership and been inspected multiple times, new construction has only been inspected by the local building & codes department. No one is perfect and a code inspector might overlook something that a home inspector finds.
- Avoid the hassle of submitting repair requests and the inconvenience caused by subcontractors coming out to fix things that could have been done before you moved in.
- One of the most under-recognized reasons, in my opinion, is to have documentation of any conditions or poor workmanship that an inspector feels will cause issues in the future. It’s not uncommon for builders and home inspectors to have different opinions about how something should be done; and unless something they did is currently causing an issue, they probably won’t agree to fix it. This is especially true in competitive real estate markets where they have an endless supply of buyers. If you’re in a situation where a builder won’t address something but you absolutely have to buy the house, it’s important to have documentation of the repairs you requested that they didn’t agree to fix. If something they refused to do does in fact cause issues in the future, then they’re more likely to honor it during the warranty period. Getting an inspection allows you to have before/after pictures of conditions to show that what they did caused the issues.
Leverage to Negotiate Repairs or Price Reductions – Just like you negotiated with the sellers after making an offer, there’s a timeframe for negotiating repairs after an inspection. This is when deciding to hire an inspector really pays off. Let’s say the report included a list of 20 visible defects. You really want the house so you don’t want to ask for too much and upset the sellers. At the same time, there are a few things you’re concerned about that require a trained professional to repair. Your realtor helps you narrow down the list to 5 reasonable repair requests. You send over the list and eagerly wait for a response. The next day your realtor presents you with a new proposal from the sellers that only includes 3 of the repairs you asked for. You know it’s a seller’s market so you reluctantly agree. Even in situations where sellers do minimal repairs, it’s likely that the cost to complete them was more than what you paid for the inspection. In other cases, sellers might not want to deal with repairs so they offer monetary concessions instead. In either scenario, getting an inspection resulted in a more favorable deal for you and it essentially paid for itself.
Anticipate Future Expenses – Homes require routine maintenance in order to function properly. Roofs, heating/cooling units, and water heaters don’t last forever and are expensive to replace. An inspection report will include the approximate age of each and its average life expectancy. This allows you to plan ahead so you aren’t surprised with a $7,500 bill to replace the heating/cooling units the day after closing.
Know What to Monitor – In addition to listing current issues with the house, such as an active plumbing leak, an inspection report will often include conditions or characteristics of the home that make it more susceptible to specific problems. Different foundation types, roof designs, and siding materials all come with their own disadvantages. Home inspectors often see the same issues over and over again and can let you know what to keep an eye on. If something does happen, you’re able to identify the problem quickly and can fix it before significant damage is caused.
Learn How to Make Your Home Safer – Residential building codes frequently change and it’s often for the purpose of improving homeowner safety. While home inspectors do not serve the same role as code inspectors, they can offer insight into what has changed since the house was built. For example, your home’s electrical system may not have ground or arc-fault protection which is designed to reduce shock & fire hazards. An inspection report will document the presence or absence of these devices so you know what improvements you could make to protect your family.
Transition Smoothly into Your New Home – After you’ve waited a month to close and finally started unpacking your stuff, the last thing you probably want to do is fix a toilet that won’t flush. By getting an inspection, you’re able to address these issues prior to closing and make the home-buying process a little less stressful.
Ability to Walk Away from the Deal
In situations where buyers aren’t comfortable with the condition of a home, having an inspection contingency can allow them to terminate the contract. Choosing not to have an inspection forfeits these rights and requires you to accept the house as-is.
Final Thoughts
Buying a home is a very unique experience. On one hand, it’s a massive investment that will affect your financial future; and on the other, it’s a very emotional decision because it’s a place where your family will share memories that last a lifetime. You need professionals helping you along the way to balance the emotional and rational aspects of the process. After all, no one walks around with a calculator when looking at houses to add up repair costs. You envision your family living there and then send an offer based on how it makes you feel.
Some professionals helping you to buy a house may want what’s best for you but will also have a vested interest in the outcome. A home inspector is a neutral third-party who gets paid whether you buy the house or not. Their goal isn’t to scare you or tell you all the reasons not to buy the house, it’s to help you know exactly what you’re buying and provide you with a valuable negotiating tool. Think of an inspection report as guide that can help you buy the house you fell in love with while safeguarding your investment. Simply put, a home inspection gives you peace of mind.
*Disclaimer: Home inspections do not guarantee seller concessions and every real estate contract is different. Consult a real estate professional to know your rights & responsibilities as it relates to home inspections.