Maximizing Home Inspection Value
Eleven tips from an
experienced inspector.
By Greg Peterson
Home
inspections are critical to the buying process.
The
word is out, from the immensely popular consumer advice expert Clark Howard, to
the U.S. Government Department of Housing and Urban Development—one crucial
element in the home buying process is a professional home inspection.
Here’s
what Clark Howard has to say:
“ Buying
a used house means taking on an added risk of breakdowns and repair costs. Just
make sure the purchase is contingent on an inspection, and don't buy a house
with major structural problems.” Clark also recommends a professional home
inspection when buying new homes and investment property.
The
American Society of Home Inspectors web site provides the following statistics:
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“A recent study completed by the American Society of Home
Inspectors (ASHI) and the National Association of Realtors (NAR) estimates that
nearly 4.9 million home inspections were completed in the U.S. in 2000.
Conducted on more than 77% of all homes sales, home inspections have become an
integral part of the real estate transaction process.”
Since this study
was made, the percentage of home inspections performed on all home sales has
risen dramatically.
With the current
trend toward home inspections, and with professional organizations, such as the
American Society of Home Inspectors, overseeing inspection standards and ethics,
it may appear that the problem is nearly solved—simply find a qualified
inspector with a good reputation, have your home inspected, and sign on the
dotted line.
Not
exactly.
Home
inspections can be ineffective if not managed properly.
When
homebuyers pay a professional inspector to evaluate their future home, they
often fail to capitalize on the opportunity. A good home inspection is critical
toward sound, well-considered decision making; effective use of the inspection
report will provide extensive knowledge about the structure and its systems,
enabling wise choices in home buying. However, much too often the inspection is
not wisely utilized, leading to poor, ill-considered purchase agreements. The
result of a wrong decision during this critical phase can lead to a loss of many
thousands of dollars, and possibly years of aggravation.
Why
then, are so many homebuyers so eager to take their home inspection report
lightly, or ignore it all together? Often, serious defects are excluded and less
consequential items are mentioned during the negotiation process. Some new
homebuyers will unreasonably ask for every single item in the report to be
fixed, leading to a failed transaction and a lose-lose situation. Others will
accept the house and all its problems with little or no request for repairs or
price reduction, even though there may be several serious items or safety issues
in the report that could very likely be fixed by the seller, if only the report
were properly employed. Probably the most common mistake dealing with the home
inspection report involves the buyer’s lack of knowledge and inability to
properly evaluate the report. During the past six years, and after hundreds of
home inspections, I have found that only occasionally do my clients handle the
inspection process in a way that allows full value from the inspector’s
capabilities, or the home inspection report.
In
some cases my clients are too busy to show up for the inspection, or are out of
state. When I offer to discuss the report and explain the findings over the
phone, there is often limited interest, and sometimes my clients don’t even
want an explanation of the findings; they simply accept the report, say thank
you, and proceed to buy the house. On other occasions, buyers may be present
during the inspection and rather than listen to an explanation of the problems
identified in the report, and of the possible repercussions, they talk about
other, non-related things, tying up valuable inspection time and missing out on
important findings. During those times, I get the feeling that the decision to
purchase the property has already been made, and the inspection is merely a
formality.
I
believe there are several reasons that account for this enigma. We all have
different personalities that come into play. Certainly, everyone has varied
experiences in buying homes and other large ticket items, and some people may be
ignorant as to what questions to ask, and how to ask them. Some of my clients
seem to let their egos interfere with their ability to accept advice; we all
know this type of person, and no one knows as much as he or she, especially a
lowly home inspector. And still others fail to gain from the inspection because
they just don’t believe anything bad can exist with the lovely property
they’ve picked out and will soon be moving into.
In
many of the homes I inspect, my clients fail to utilize the information in their
report effectively, and in some cases they blindly leap into a high priced
agreement that is doomed from the start, ignoring all red flags raised by the
inspection.
It’s not enough
to spend the money and have the inspection performed; this will not provide a
guarantee or warranty, and in itself will not provide adequate information to
make a knowledgeable decision. You, the homebuyer, are responsible for
protecting your investment, and for utilizing the inspector you paid for in a
way that will result in the most effective use of his or her knowledge and
talent. It is impossible for the inspection to provide full value if it is not
scrutinized, and if the inspector’s knowledge is not explored. Before the
inspection is even scheduled, there should be a good understanding of exactly
what to expect, what the experience should entail, and what devices are
available to maximize the results. An ill-prepared homebuyer is similar to the
golfer who tees off without visiting the practice range and who does not have a
driver or putter in the bag. If you enter the game without the proper
preparation, and without the necessary equipment, don’t expect a low score.
The
following suggestions provide some ways the inspection can be maximized while
minimizing the chances of making a poor decision. These are the clubs that
should be in your bag before you start to play.
1.
Ensure that your inspector is knowledgeable:
The inspection you receive will be of little value if your inspector is a
non-professional. Remember, most states currently have little or no requirements
for setting up a home inspection business. The inspector you choose may have
absolutely zero experience in the building/construction industry and often is
not certified by a recognized code enforcement agency. If he or she is
certified, be careful, as it is quite easy to receive inspector certifications
that are not typically recognized with credibility. One very popular
certification only requires an on-line test that can easily be passed by an
individual other than the person submitting the application. A small fee is
applied and, wha-la, instant certification. A good inspector will be a member of
ASHI (The American Society of Home Inspectors) or an organization with similar
qualification requirements, proctored testing, and technical and ethical
standards, and should possess ICC code certification. Your inspector should have
no problem describing his or her certifications, special training, and
experience.
2.
Before selecting an inspector, identify the type of report: Request
specifics. Ask your inspector about the type of report that you will receive:
how lengthy is the report, will there be photographs to help present a clear
picture of the defects found, and will there be a verbal discussion of the
findings after the inspection? How long will the inspection take, are you
encouraged to attend the inspection, and who specifically will conduct the
inspection? Are there additional features of the inspection such as, information
sheets on typical problems, follow up for future questions, supporting
documentation of problems found including references to code sections,
manufacturer installation sheets, or excerpts from other reputable experts or
reference books?
3.
Confirm the inspector’s credentials: This is normally very easy to do on
the Internet. If he or she is certified or a member of a professional
organization, you should be able to easily check or confirm membership, current
status, and certifications held by visiting the organization’s web site.
Additionally, on these web sites, membership or certification requirements are
detailed; make sure that membership in, or certification by, each organization
requires more than filling out an application and sending in a fee. In other
words, make sure your inspector has earned his or her credentials and not bought
them. Your inspector should be able to provide you with feedback from prior
clients; these may be provided by a testimonial link on a web site, hard copy
letters that can be mailed or faxed, or you may be able to obtain phone numbers
from past clients who will provide recommendations. Other ways to help
legitimatize your inspector is to find his or her name in the yellow pages and
on Internet directories for home inspection businesses. Ask the inspector what
makes him or her more qualified than other inspectors in the area.
4. Make sure that you can communicate well with the inspector
you choose: When interviewing
inspectors on the telephone, spend at least twenty minutes. Let the inspector do
as much talking as possible so you can get a feel for his or her demeanor,
communication ability, and sincerity. Obviously, phone conversations can be
misleading, but the more time spent during this initial discussion, the better
you will be able to speculate about how well the two of you will interact. It is
important that you feel comfortable asking questions of your inspector, and that
he is confident, correct, and precise in his answers. If the inspector has
difficulty explaining his qualifications and inspection philosophy over the
phone, you may likely not get clear and precise descriptions in your report. A
good inspector will always treat you with respect, and should never make you
feel uncomfortable or as though you are taking too much of his or her time. This
is the time when you need to be convinced that the inspector will be acting
solely in your best interest, and has no indebtedness to the property owner or
to the real estate agents in the area.
5.
Explain your wants and needs to the inspector: Some inspectors may not be
accustomed to having clients who want detailed explanations of the inspection
findings, and may be in the habit of quickly brushing over the report. If you
make it clear that you are interested in everything, and if you allow him or her
to explain those things to you, then most inspectors will go a great distance to
make sure their message meets your ears with clear and comprehensive
understanding. It is important to show interest in what your inspector tells
you, and to ask pertinent questions. If the inspector has a feeling that you
really want to learn about the problems he has identified, there will be more
complete and detailed explanations. If you follow your expert through the
inspection, and talk about other issues or how much you already know about the
house, then you may not receive an enthusiastic and itemized verbal report. How
much you learn from your hired professional hinges more on your actions, than on
the inspector’s.
6. Accept any help the inspector is willing to provide: A
good inspector will offer to follow up and answer any future questions that
develop. This is something that should have been confirmed back in tip #5. If
ongoing communication is understood to be included in the inspection, then take
advantage of this valuable opportunity. Generally, the initial report is
extensive, and consuming it all with good understanding during the inspection is
unlikely. Following the inspection, review the report thoroughly. Read it again
the next morning and this time take notes on comments in the report that you do
not fully understand. Then, call your inspector back and ask him to clarify, or
elaborate on the items that are not entirely clear to you. It is appropriate to
ask the inspector to put some of the issues in context, or explain the
seriousness of the defect. This is a good time to have the inspector provide his
opinion regarding the more serious items, and what the future consequences may
be; you may be able to obtain an estimate, in general terms, of what it would
take to remedy some of the major findings. If you are still unsure about the
validity of any of the reported defects, and whether they were properly
identified and explained, then ask your inspector for additional information,
possibly written documents from other sources, regarding that issue. If you fail
to become convinced about anything described in your inspection report, you
should conduct personal research until you are satisfied that you understand the
problem and the consequences thoroughly.
7. Do not expect total assurance, or insurance:
Bear in mind that your inspection does not generally come with any kind
of warranty. The majority of home inspectors are very conscientious, and will
work hard to try and find every item of interest possible—within reason; the
inspector is well aware that by providing a thorough report you will be happier
and there becomes more probability of future referrals, and less chance of
negative feedback, or worse, a formal complaint because something was
overlooked. Should something be missed during the inspection, there is likely no
provision for having it fixed; your inspector is not an insurance provider, and
there is usually an understanding, generally in the form of a written agreement,
that there could be hidden or latent defects that are not identified, and which
you may uncover at a later date. The inspector will work hard within a
reasonable time frame to identify every notable problem and will be as complete
as can be expected for the conditions and for the time allotted—at some point,
extending the inspection can be cost prohibitive, and the odds of finding
consequential defects becomes negligible. This approach makes it affordable and
efficient, however, some defects may still remain unreported. You should,
however, leave the inspection with a much greater understanding of the condition
of the house and with a feeling that your money was well spent. The extent of
your new understanding is largely dependent upon how you manage the inspection
process.
8. Educate yourself: Although your home inspector is your
personal expert for several hours, most of his or her time is dedicated to
inspecting, report writing, and a to the verbal review afterwards. Your
inspector will explain items noted in the report and he or she will elaborate
when necessary, and occasionally, if there is benefit, there will be discussion
of how things work, what can lead to problems, and techniques that will help
mitigate future problems. The inspector’s knowledge of construction methods,
unique and conventional installation, component and process design, common and
atypical home related maintenance concerns, regulatory code and manufacturer
guidelines, and miscellaneous issues such as environmental hazards and product
recall notices have been acquired over many years of training and experience;
all this knowledge can not be passed along to your during the course of the
inspection. The inspector is not aware of your background, or about your level
of understanding; it is up to you to ask for specifics when necessary. It is
also not part of the inspector’s job to provide training and instruction on
the various systems in the home, or on residential construction and accepted
standards. Anything you can do on your own to educate yourself can be useful
toward understanding the report.
The
advent of the information age offers an interminable source of easily accessed
information about anything and everything. The Internet is the door to this
world and it should be opened often. If you are not Internet savvy, it’s time
to learn. Find a friend or relative for help if necessary, and put it to use.
For example, your inspector may say to you, “The electrical system has been
upgraded to include a new circuit breaker panel and some new wiring, but most of
the original two wire circuits are still in place. GFI receptacles are
recommended in typical locations.” You understand that this is your
inspector’s recommendation and he or she has explained the reasoning, but how
do other experts feel, and why? It’s easy to gain a deeper understanding of
issues such as this, and to get opinions from other experts, simply by
performing a “search” in your Internet browser.
9. Utilize your real estate agent: Your real estate agent
works for you. The agent is well compensated as part of the sale agreement, and
is responsible for representing you and protecting your interests. You should
keep in mind that the agent has a monetary interest in the sale, and would like
to see as little conflict as possible. Some agents are more ethical, and have
more integrity than other’s; be careful and thoughtfully weigh any advice you
receive from your agent. Many agents are honest professionals who are sincerely
interested in your well-being. Ask your agent for input and advice. A good agent
who is not working for both parties, and who is a seasoned professional, will be
able to put some of the reported defects in perspective—how unusual or unique
are they, and how likely can they get fixed as part of the negotiation. Your
agent should be able to help develop a list of reasonable conditions as part of
the purchase agreement. If the agent has a concern or opposing view of anything
in your report, make sure that you discuss it with your inspector until things
are clear.
10. Consult system experts: Very often there are concerns
raised from the inspection that are best evaluated by system experts or
qualified trade specialists. An example may be a ten-year-old heating and air
conditioning system that works, but doesn’t cool the air as effectively as
expected or desired. In such a case, an inspector will often advise an annual
type heating and air conditioning check by a specialist. It is generally best to
have this done before proceeding with the purchase. Typically, these specialists
are easily found in the yellow pages and will provide free estimates for the
work. Obtain two or three quotes with a detailed explanation of what is included
for the fee. Another typical example is an old house that has the original
wiring system with numerous electrical related problems; the inspector may
advise seeking an expert evaluation and subsequent repair. Again, electrical
specialists will usually provide a free quote for doing the evaluation and
needed upgrade. Make sure you receive an itemized list of all work and materials
that will be provided from at least three sources. Many agents will suggest that
you get these quotes and get the work done after the purchase and after you move
in. Other agents may suggest that you ask for a nominal reduction in the sales
price to help pay for the work that can be done at a later date. The best course
of action, when there are fairly serious issues involved, is to put the closing
on hold until you obtain all of your estimates. Once you know exactly how much
it will cost, then a decision can be made to either ask for the sales price to
be lowered, have the defects corrected at the seller’s expense prior to
closing, or to terminate the purchase. Any of these three courses of action can
be prudent, depending on your feelings at the time.
11.
Don’t get caught up in the moment: One of the most common causes of
failing to fully consider the home inspector’s findings is loss of focus. When
buying a new or used home, it is important not to get caught up in the moment.
Often, after weeks or possibly months, of searching for a new home, and after
living in temporary quarters, there becomes an almost desperate need to make a
decision. If a home is found that appears to meet all the requirements, then
it’s easy to rush blindly into the contract. The tendency is to want the
property to work out so badly that logic and good judgment gets set aside.
Buyers suffer from tunnel vision, and rather than think about the possibility of
there being structural or other major issues, it’s easier to assume that
everything is okay. It’s too difficult to think that something may be wrong
with the house and the search will have to begin anew. It has often been my
experience that clients are so excited about the home they’ve found, they
don’t want to hear about the defects, or don’t want to believe they exist.
On some occasions, report findings that should be considered serious concerns
are met with little interest by the excited buyers, even to the extent that they
happily pay the full asking price—as if the owner may decide against selling
the house if deficiencies are mentioned. A very important thing to remember,
especially once a likely prospect has been located, is to slow down, establish
priorities, and avoid jumping to final conclusions until the house and all the
systems have been professionally checked out and carefully considered.
Use
your home inspection wisely.
A
professional pre-purchase home inspection, if properly managed by you,
will result in a vastly improved understanding of the structure and its systems.
Remember, you will be handing out the paycheck at the end of the day. So, take
charge…and learn!
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