Greg Bennett - The Home Expert

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Home Inspections - What Do You Need To Know?


These days, if you are buying a home or selling your home, you are very likely to be affected in some way by a Home Inspection. They have become just shy of mandatory for most real estate transactions.

 
So if you’re not familiar with the concept, a Home Inspection is generally conducted, by the Buyer, at the Buyer’s expense, on the property they have made an offer on. The objective is to inform the Buyer if the home they intend to purchase is in good shape overall, if there are any issues that exist, and what the severity of the existing issue are. The home inspection is usually included in an offer to purchase, as a specific clause, and it will give the buyer the option to walk away from the purchase if the Buyer is dis-satisfied with the results of the inspection (usually detailed in a Home Inspection report).
 
Now you might think that buying a house is expensive enough, and the last thing you need is yet another thing to spend your money on. But I will tell you (and most Real Estate Pros will tell you the same thing), this is really something you want to do. In fact, if you choose not to get a home inspection, don’t be surprised if your Real Estate person asks you to confirm in writing that they recommended an inspection, and you have declined. Yes, its that important.
 
At the beginning of this story, I mentioned both Buyers and Sellers are affected by inspections. So I’ll first talk about this from the Buyer’s perspective, and then I’ll talk about what the Seller might expect.
 
So from the Buyer perspective, because of the importance of an inspection, you don’t want to just go through the motions. Here are some of the key things to keep in mind when lining up an inspection.

Not all inspections are the same
 
Now you are securing an Inspector because you want someone with in-depth knowledge of the various aspects of a home. Now if you are buying a fairly standard home (city services, typical ‘builder’ home), your average Inspector should be familiar with most, if not all of the characteristics of the home.
 
However, if the home has some more unique features, you will want to make sure they have expertise with these types of things. For example, if the home is on a well, has a septic system or its heating system is geo-thermal, it would make sense to ask potential inspectors about their experience in these areas.

Make sure your inspection covers everything 
 
You shouldn’t just assume that when the inspector shows up that they are going to inspect everything within the perimeter of the property line.  I’ll give you some examples of things I’ve seen people find out would be left out of the inspection.
 
  • Other Structures: I heard of one homeowner who bought a home with a large shed, which appeared to have electrical service. They found out while they were moving in that the electrical feed was faulty. When they went back to the inspection report, they found out the shed has been excluded.
  • Septic Inspection: I had a situation where the inspector was informed about a septic system in advance of their arrival, however when the inspector showed up, they announced they could not do the inspection at that time (and it would have to be conducted by someone else at a later date). Because of the timing, the status of the septic was left up in the air and the Buyer ended up ‘crossing their fingers’ that there would be no issues. 
As most ‘inspection clauses’ have a time limit, the Buyer needs to get the inspection done promptly, and unfortunately you don’t get multiple shots at it. So you will want to be very clear as to what will be covered at the time of inspection. When you are talking to a potential inspector, you will want to get confirmation in writing as to what they will cover, and if you identify specific things you want included, get that included in the confirmation.

Be aware of ‘Inspection Waivers’ 
 
An inspection is a service. Some service providers stand behind their work. Others, not so much.
 
When you are contacting an inspector, ask them if you will be required to sign a waiver that will hold the inspector blameless for anything that should reasonably be covered by the inspection (or was covered in the inspection), and subsequently turns out is a problem.
 
What I mean by this is by way of example, lets say an inspector completes the inspection and gives you a green light. All is well with the home. Then you find out later that there was a clear and obvious crack in your foundation, and you are looking at a $50,000 bill to repair this problem. If you have signed a waiver holding the inspector blameless, you are out of luck. Would you have bought the house if you had have been informed of the crack? Should the inspector have a certain amount of accountability for this oversight?
 
Some inspectors can be a little sneaky by waiting until they show up to get you to sign these waivers. They know you have to get the inspection done right away, and some will take advantage of the time crunch you are under. Make sure you ask before you book them.

Make sure you take the time to read the inspection report 
 
Most inspection reports will tell you what was reviewed and what the state of the inspected item is. My experience is you get something along the lines of a pass/fail grade. Some may be more in-depth, but you will want at least a pass/fail rating.
 
Inspection reports vary in how they rate things, but my experience is you are not likely to have an inspector go so far as to say a particular component of your home will fail at a particular date in the future. They may inform you that you might expect to have to replace or repair something in the next 1, 5 or 10 years, but there are certain limitations to what anyone can accurately predict.
 
But you should discuss the findings with the inspector and make sure you understand the implications of the issues they raise flags on. I personally feel that any material issues they find with the key mechanical systems in the home (heating/AC, electrical, plumbing, etc)  or foundational are real red flags, as they tend to cost the most to remedy. Other things, you should use your better judgment.
 
But you should always make sure your inspector is prepared to review and discuss it with you. Not just email it to you and move on to the next inspection.

Using the Inspection Report as a Negotiation Tool
Now we’ve looked at inspections from the Buyer’s side. What implications does the inspection have from the Sellers perspective?
 
Well, in short, after an inspection is completed, don’t be surprised if you are in for some additional negotiations. When your potential Buyer put in their offer, they had just so much information available to them in terms of your home. Now they have new information, and more often than not, it isn’t flattering.
 
If you think about it, an inspector will want to put ‘something’ in a report, if only to demonstrate to the Buyer that they added value for the money they charged. Now most homes you can find something to write about. But the frustrating part for Sellers is, some people will point at things found in an inspection report and act shocked and appalled to find, for example, that a 25 year old home has a 25 year old furnace that might require replacement soon.
 
Now under these circumstances, you need to keep your cool. You can expect a Buyer to throw everything at you. The key is to determine what your position on the issues raised is. You may be less sympathetic with a grievance about the 25 yr old furnace in the 25 yr old home. But if they raise legitimate issues that you were otherwise unaware of, you need to determine if you are willing to either address these issues before handing over the keys, or if you are willing to offer a discount to the selling price of the home to appease the Buyer.
 
If you choose to accommodate the Buyer in some manner or another, make sure you work closely with your Agent to ensure that the measures you are prepared to take are clearly detailed and accepted by the Buyer.
 
I say this because I have also heard of Sellers agreeing to remediate something raised by the Buyer, but then when the deal is about to close, the Buyers begin raising concerns because the remediation was not done to their satisfaction. If you agreed to re-paint a room, unless you plan to hire a professional to do so, make sure the language states only that you have agreed to ensure a fresh coat of paint is applied to the room. You want to avoid setting expectations beyond what you are prepared to do, and you want to avoid wide-open ‘Buyer Acceptance’. People can be funny when they are in a position where they can make others dance to their tune.
 
So in summary, inspections are a good thing. Maybe less so for the Seller, but most people are honest and want a potential Buyer to enjoy their new home. Not worry every night afterward that they have bought a money pit.
 
And homes never give up their secrets easily, so as a Buyer, make sure you get the inspection, and be diligent about being a part of the process.  
Greg Bennett - The Home Expert
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