Did you know that one out of 20 home sales offers doesn’t go through? And that nearly a third of those missed deals are the results of a home inspection? (Source)
For most people, buying a home is the most important investment of their life. So investing a few hundred dollars in a home inspection makes sense. It will give you the information you need to make an informed decision. It will also help you build conviction on your investment.
This guide will help you:
- Avoid the pitfalls of doing a home inspection.
- Decipher the report itself.
- Pay the right price for your house.
Chapter 1: Introduction
What is a home inspection?
A home inspection is an in-depth evaluation of the main components and systems of a house. Certified home inspectors should look at over 1,600 items, according to Claude McGavic, executive director of the National Association of Home Inspectors.
Many systems, such as the roof, foundations, HVAC, etc, are crucial for your home’s longevity. They can also affect each other. If one element doesn’t get enough preventive measures, it may need repairs (sometimes urgently). An inspection will tell you the current state of each of these main components.
When does the home inspection happen?
A home inspection is an essential step in the home buying process. Say you are interested in a home. You’ve visited a few (typically about 10) and you think you’ve found “the one”. You make a contract offer and it gets accepted. Now you’re excited!
The contract typically stipulates the offer, any contingencies and terms, and the inspection period. Now the home buying process starts.
A deposit amount can be held in escrow to secure the contract and protect the seller from illegitimate buyers. Typically, the inspection period will last from 10 to 14 days. This period (the due diligence) is where the buyer acquires as much information on the property as possible to decide to move forward with – or walk from – the sale.
How much does a home inspection cost?
Home inspection costs can vary depending on the size, age, and location of the home. A home inspection will typically range from $300 to $500 for an average-sized house. But factors like the size of the house, when it was built, where it’s located, etc, all affect the price you’ll pay for an inspector.
How long does a home inspection take?
A home inspection typically takes between 2 to 4 hours, depending on the size and the complexity of the house.
Chapter 2: Before the inspection
What should you to do before hiring a home inspector?
Before putting money on an inspection, we advise you to look for noticeable defects yourself. You won’t be able to do a thorough examination, but you can look for the obvious. Are there visible cracks on the exterior walls? Does the house look straight? Are the balconies, doors and windows in good order? If it’s obvious that the house will soon need major repairs and you don’t want to deal with them, you might want to move on to another house.
Here’s a great, 9 part guide to help you self-inspect your future home without spending money.
If you don’t find anything apparent, it’s time to hire a qualified inspector.
How to hire a great home inspector?
I wish this could be an easy task, but some inspectors give the trade a bad name. This industry has been around for over 50 years, and as the homes and technology evolved, some inspectors haven’t. So how do you find a great one?
Porch surveyed about 1000 homebuyers and found which sources do people use the most to find a professional:
Almost 60% of the time, buyers used a referral from their realtor. They have good reasons to refer you to one. They might have worked with them in the past and trust them. But also, they might know them to “downside” potential problems, which might scare you and eventually kill the deal.
“Unless you deeply trust your agent, find your own inspector,” says Kevin Brasler, executive editor of Consumers’ Checkbook (source)
Ask family and friends.
This is our preferred way of finding a professional. They’ve been pre-vetted by someone you trust. If it’s been a few years since they used their services, ask them if what he wrote in the report came true or not. It’s a great way to judge their competence.
Finding one by yourself
This is another good option, but it takes longer. Here are some ways you can search for yourself:
There are two leading home inspector associations: ASHI (The American Society of Home Inspectors) and InterNACHI (The International Association of Home Inspectors). Both websites provide a list of their certified inspectors.
The advantage of using Google is to find someone close to your area quickly. You’ll also see if they got prior reviews on their Google Maps listing.
The vetting process
Once you have a few names in hand, you can start vetting them. Here’s how I would suggest someone vet me:
When you call them, look for signs of professionalism. Here are a few good questions you can ask them:
- Are you certified, licensed and a member of a professional home inspector association?
- Are you insured and bonded?
- Can I get the names and contact information of your last few references?
- Can I see a sample report?
The report should also be readable and have real content. If it’s mostly copy-paste, generic stuff, it might be a bad sign. You can find a few examples of good inspection reports here.
- Do you use specific inspection tools, like a drone, thermal imaging camera, and temperature/humidity monitor?
For example, drones are useful when the inspector can’t walk on the roof by himself. He can also use a thermal imaging camera to detect roof leaks, gaps in insulation, uninsulated areas, problems in the electrical systems, etc, which would be impossible to see for the naked eyes.
- How long have you been doing this?
Finally, consider how long the inspector has been in business.
“Assuming he does four inspections a week over a five-year period, that’s over 1,000 inspections,” says Richard Haber, a home inspector and licensed architect based in Dobbs Ferry, N.Y. (source)
After the call, ask yourself these questions:
- When you call them up, how long does it take for them to answer?
- How do they answer the phone?
- Are you left with more questions than answers after the phone call?
Once you find a trusted professional, it’s time for the home inspection.
Chapter 3: During the inspection
House inspection tips
During the inspection, it is easy to get blinded by the looks of the house. You might already imagine yourself living there! But as a potential new homeowner, you need to focus on the essential systems. Yes, it’s boring, but it’s time to ensure your investment will be worthwhile.
Also, keep in mind that the seller wants to sell. And while I’m sure that most of them are trustworthy, others might want to embellish their property artificially. Look at some of the ways sellers might try to mask potential defects.
Finally, listen carefully to the inspector during the inspection. You might not understand everything, but you will have a much better understanding of the report if you do.
What do home inspectors look for?
Home inspectors look at all the systems and components of a home to ensure they are all functional, safe, and not affecting each other in a bad way.
A study by Porch found that inspectors found issues in a house 86% of the time. Here are the percentage of each issue:
Now let’s go over the main components that the inspector will examine (Obviously, these are just initial pointers, but we linked to more information on each element that is much more thorough):
Ideally, the inspector should go on the roof. But if it’s deemed too dangerous or inaccessible, he probably won’t. If he doesn’t, he should at least use a drone to get detailed photos of the roof as it’s one of the most important components of a house.
Depending on its materials, a roof has a life expectancy of 10-30 years. At the end of the inspection, you need to have a good idea about its current state because repairs can be costly.
The inspector should inspect the following:
- Vents for plumbing;
- Flashing and sealant;
- Gutters and downspouts;
- The general structure of the roof;
If the attic is accessible, the inspector will probably take a look. Armed with a thermal imaging camera, he can easily spot leaks in the ductwork, leaks in the roof, and gaps in the insulation.
HVAC is one of the most complicated and intricate systems and can cause many issues in a house. It’s also responsible for almost half your energy bill.
Most homeowners believe that heating and cooling is just about controlling temperature. But relative humidity plays a significant role in the HVAC’s performance and efficiency. A malfunction can also lead to fire, so the inspector will ensure the system is safe and efficient. Ideally, he will use a moisture meter and an infrared camera to do so.
Some of the worst issues in a home originate with water, so plumbing is an essential system. Over the years, we used various plumbing materials, and not all of them were safe and efficient. The materials you want to avoid are cast iron, galvanized steel, lead, polybutylene, and copper. Depending on the condition, age, and other factors, these materials might make it difficult to obtain homeowners’ insurance as they see them as high potential liability factors.
The inspector should look at these 4 primary potential defects:
- A leak;
- Inadequate water supply;
- Water contamination;
- Incorrect installation of a component.
Did you know that almost half of the fires are due to electric systems?
The electrical systems are a significant area for a home inspector. Any home with original wiring built before 1966 probably doesn’t have grounds run to the outlet receptacles. Grounds are vital as they give excess electricity an alternate safe pathway which can prevent shocking and protect electrical appliances.
A few old electrical panels are known to cause issues, like the Federal Pacific Electrical (FPE) and the Zinsco Electrical panels. If you buy a home with one of these panels, you should change it.
In the 1960s, aluminum wiring was used in a lot of homes. Aluminum is causing corrosion, and it cannot pass the same amount of electricity as copper, which can cause subsequent heat and possible fires.
The inspector should check the state of the foundation in a few ways:
- Look for cracks in the concrete, water, or moisture on the exterior walls.
- Look for leaning interior walls and uneven floors.
- If the crawl space is available, look for moisture and the state of the supports.
If he finds a few of these signs, he will probably suggest a professional foundation inspection. We recommend you to do so as foundation repairs can be very costly!
Optional, but recommended inspections
Lastly, here are a few things the inspector won’t specifically look at. But if he hints that there may be a problem with one of the following, you should order a specific inspection.
- Sewer and Waterline Inspection (about 100$-300$).
- Gaz line (about $100 to $500).
- Radon Testing (about 150$)
- Pest (about 50$-150$)
Chapter 4: After the inspection
What happens after a home inspection?
Once the inspection is over, the inspector will go over their findings and finalize the report. He should hand it to you a few days later.
Once you get it, you must read and understand what’s in it, as it should indicate whether you’re going to buy or pass your house.
If you feel you’re short on time or running over the inspection period, you can always ask the seller to extend the period for a few days.
Ultimately, the report will help you decide to do one of these four things:
- Buy the house as-is
- Ask the seller for repairs
- Negotiate a lower price
- Walk away from the deal
How to extract the relevant info from the report
Reports come in many shapes and sizes. But we won’t lie; reports are notoriously hard to read for the uninitiated. An essential step in choosing a home inspector is seeing a sample report to ensure it is something you will be satisfied with.
The report should be thorough. You should focus on trying to grade the information from most to least important. You might want to ask the inspector to help you (but he might not be able to give you more than what he’s written in the report.
Ultimately, you want to know if there’s one of the main components and systems that will soon need significant, costly repairs? We advise you not to focus too much on the small things; they’re part of the usual home usage and don’t cost too much to repair.
Here are some pointers that will help you decipher a home inspection report.
What fixes are mandatory after a home inspection?
There are no fixes that are mandatory typically after a home inspection. The home inspector can only advise, consult, and provide information. If there are local laws requiring safety guidelines, they might mandate items to be remediated before closing. Insurance underwriters are also a strong influence that may require specific systems to be remediated or replaced based on what they might be considering liabilities on the home. If the home loan is an FHA, VA, or USDA loan, they might require items be remediated or replaced based on HUD guidelines which are mainly based on safety. It is important to look through the report to ensure there are not any of these red flags.
Negotiating after the inspection
This is likely going to happen. In fact, the Porch study found that 46% of buyers negotiated a lower price of 18k, on average.
This is a significant part of the deal; here’s what you should do:
Provide a list of the significant, structural, and major repairs that are likely to come in the following years.
Attach a cost to each of the repairs. If you feel that the roof, siding, or foundation may need repairs, you should ask a contractor for a quote. But you could also use an online cost estimator such as HomeWyse. It can provide quick and roughly accurate costs for most repairs.
Approach the seller with your research and your rationale and clearly explain why you’re negotiating. This will prove your seriousness, and the buyer is more likely to accept your request.
Lastly, consider the market. Is it a buyer or a seller’s market? If the seller received a lot of offers, you might have less latitude for negotiation. This is an essential factor to consider.
Negotiating is an art. Here are some additional tips to successfully negotiate after the inspection.
Buying a home can be stressful and it’s the biggest investment of our life for most of us. We hope this guide will alleviate some of the stress and will help you find your dream home!