What is a Home Inspection?
A home inspection is an examination of a home for any structural or mechanical defects. They are carried out by professionally-certified inspectors, typically after an offer is made on a house that has been put up for sale and before closing. Inspections are not always mandatory, but home buyers are highly encouraged to get one before taking possession of a house. When buyers use FHA or VA loans, inspections are mandatory.
The purpose of a home inspection is to check the condition of the home to determine if additional maintenance and repairs are needed so that the house is safe and sanitary for its residents. Plus, lenders only want to make loans on properties that are in good repair; investments are only as good the underlying assets that back them.
When obtaining the services of a licensed home inspector, check their reputation via recommender systems such as Yelp, Angie’s List or by word of mouth. This is the best way to get a trusted examination of the property.
Pre-Sale Inspection: Who Benefits?
Buyers and sellers don’t have to wait for a formal examination of the house to start thinking about issues that may arise during an inspection. Using the home inspection checklist below, home sellers can look for potential problems and fix them before putting their home on the market. This is the best way to avoid lowball offers or closing delays.
Similarly, home buyers or their buying agents can use an inspection checklist – for properties that make their short list – to take a proactive look at the home’s condition. Knowing what issues could come up can help inform how an offer is structured, for both terms (like the move-in date) and price.
Any properly formed offer includes contingencies (requirements that must be met for a transaction to happen), one of which would be the completion of a professional home inspection. The ensuing home inspection report will tell the buyer about any unseen physical shortcomings. At this point, the buyer and seller agents can negotiate to either a) have the seller make repairs, or b) reduce the home’s price to make up for the deficiencies (which would cover the buyer’s cost of making the home whole).
If a home inspector finds an issue with the property, don’t freak out; a few flaws are completely normal, even for new homes.
What’s the Difference Between an Appraisal and an Inspection?
Appraisals determine the market value of a home by comparing the subject property (the house up for sale) to comparable, recently sold properties, known as comps. Simply stated, appraisals determine what a home is worth on the open market.
By contrast, inspections are an audit of the condition of the home. What’s more, appraisals are uniformly required when a loan is taken out on a home, but inspections are typically not (unless financing is arranged via a government-insured loan program).
Sometimes inspections and appraisals happen at the same time, by the same person, which can lead to a little confusion. That’s because the words appraisal and inspection are often used in the same breath, especially when an FHA Loan is used in the transaction. When that is the case, FHA guidelines require an appraisal/inspection report from an HUD-approved appraiser. However, two separate reports are created.
What Should Home Inspections Include?
As mentioned, home inspections are included as part of the buyer’s contingency request. Depending upon the agreement, sellers are responsible for having the necessary inspection completed. However, the exact specifications will change based on several factors including relevant real estate law within the state where the transaction is taking place. Municipal and county building codes also apply. For example, home inspections in Los Angeles, California will differ from those carried out in Houston, Texas.
That said, home inspections, wherever they occur, cover common aspects of properties: the internal and external structure as well as the systems within.
While not an exhaustive list, these are the items of a home that come under scrutiny.
The Home’s External Structure
1. Grounds: check the structure of fences, general condition of the landscaping, and whether there are cracks in any pavement on the property – e.g. driveways, steps, etc.
2. Surfaces: review the outside of the house itself for cracks in external walls including the trim, the condition of any paint, stucco, or siding – making sure there is no sagging or stains – and whether external lighting is functioning
3. Structure: spot check for damage to the visible areas of the foundation, the condition of windows, the age and condition of the roof – e.g. missing shingles, decay, algae stains – in addition to the gutters, downspouts, chimneys, and skylights
The Home’s Internal Structure and Related Systems
4. Interior rooms: walls, floors, ceilings, doors, doorways, windows, railings, and stairways are all checked for cracks, sturdiness (or in the case of windows, ease of use), signs of rot, leakage, pest infestation and if there is adequate insulation
5. Kitchen: inspections concern the appliances attached to the house – stoves, built-in microwaves, dishwasher, etc. – and they are reviewed for damage or defect; the inspectors also check for plumbing leaks, water flow, ventilation flow, and the condition of the cabinetry
6. Bathrooms: proper water flow is analyzed, as is the condition of sinks, bathtubs, showers, toilets, floors, walls, tile, and whether there is a proper level of ventilation
7. Plumbing: review all visible pipes, the water heater, hot water temperature, and any possible water flow restrictions
8. Heating/Air Conditioning: check that the heating and air conditioning units have equal distribution throughout the house, no rust around the air or heating units, no clogged air filters, no asbestos, no gas odor, condition of ductwork, and no fireplace ventilation issues
9. Electrical: all visible wiring is inspected; the service panel is reviewed for possible capacity issues and to make sure the fuses or breakers are not overheating – e.g. ground fault circuit interrupters
10. Basement/Attic: examined for mold, stains, damage from insects, or sagging
Final Thoughts on Home Inspections
You can tell by the length of this list that home inspections are thorough. Some say they are best left to individuals who know exactly what they’re looking at and precisely what they’re looking for. But it never hurts for buyers and sellers to conduct a DIY inspection before a professional comes onto the scene.
Keep in mind that a home inspection is not a valuation assessment on the home – though it can be used as a factor in an appraisal. Neither is a home inspection meant to be an informal “to do list” between the buyer and seller.
Even new homes should undergo an inspection. You never know when a home might be missing something, was not built to code, or suffers from shoddy workmanship. After all, houses are one of the largest financial (and emotional) investments people make. Therefore, home inspections – while not always required to get a home loan – are fundamentally necessary. And it’s wise to have a well-regarded ASHI-certified professional do the job.