Real Estate Inspections

You’ve finally found the real estate property you want, negotiated a contract and struck a deal. Now it’s time to have it inspected. An inspection will allow a qualified professional to take an objective look at the current condition of the property and prepare a report.

Why have the property inspected? You are about to engage in a significant financial transaction, an investment most likely. You want to make sure the merchandise is in good condition. Think of the cost of a home inspection as an insurance policy against hidden money pits.

If you have made an offer on a property, you should have included a clause in the purchase agreement that allows you to void the offer if the inspection turns up a major problem. This is called an “inspection contingency” clause. You may find it necessary to submit a new offer based on the information received from the inspection.

Finding a Real Estate Inspector

The inspector you are looking for is a professional who knows old homes and new homes inside and out. One who crawls around the property looking for structural and equipment flaws, and who will give his customer a written report that will take some of the gamble out of buying the property.

Hire an independent inspector who has no vested interest in the transaction and who is a member of a trade association, such as the American Society of Home Inspectors. These members have agreed to abide by a written code of ethics and prescribed standards of practice designed to protect prospective buyers.

What Do Real Estate Inspectors Do?

An inspector can save a future homeowner a lot of grief and expense by identifying potential problems.

Inspectors check the condition of the structural, electrical, and mechanical elements of a house. While they won’t recommend whether or not you should buy the house, they can tell you about defects they find and the estimated cost of repairing or replacing the defect. Inspectors usually look for significant defects only.

Inspectors, unless contracted to do otherwise, do not routinely check for termites, asbestos, or radon. They do not report on coldness of refrigerators, accuracy of oven temperatures, carpet stains or loose door knobs.

An inspection may not include anything outside the house, such as pools, garages, sheds or water flow from an outside well.

Inspectors are not required to check the adequacy of the heat supply to individual rooms, examine carpet or drapes, or even make sure that the roofing materials comply with local codes.

They do not have to test every single door and window or electrical outlet in the house, only a representative sample.

A basic package may include inspection of the following: central heating systems; central cooling systems; interior plumbing systems and components; the roof’s structural soundness; walls, ceilings and floors; foundations and basements; the operation of built-in appliances.

Make sure the service you hire has adequate liability insurance. Especially important is Errors & Omissions Insurance. This insurance protects the inspector, and indirectly you, against any post-inspection legal problems.

The Inspection Report

Your goal is to obtain a written report detailing the condition of the structural and operational functions of the house.

The report should assess the quality of the following parts of the house: grading, drainage, landscaping, fencing, paved areas, garage, exterior walls, doors, windows, porches, decks, roofing materials, chimneys, gutters, skylights, basements, crawl spaces, attics, construction, structural stability, water penetration, ventilation, insulation, plumbing systems pipes, drainage, faucets, water heater, water pressure, laundry appliances, traps, electrical system fuses, circuit breakers, wires, outlets, switches, heating and cooling systems, kitchen and bathroom fixtures, appliances, plumbing and flooring.

You may want to hire a specialist if you want a swimming pool, tennis court, well or septic system inspected.

The report may be presented as a set of worksheets or checklists covering the structure inspected, from roof to basement. Brief remarks may be added as necessary. The inspector may write a report regarding the overall condition of the property, along with suggested repairs or improvements.

The report should include information regarding current problems and those that may be pending. Whatever form the report takes, it should give you a realistic idea of what the condition of the house is.

Never accept a verbal report. You want a written record of the inspection.

The Contract

Shop around. Find out exactly what the inspector will evaluate. Find out what the fee is for the basic inspection and for additional services like radon testing or water testing.

Ask how long the inspection will last. A good home inspection should take about three hours or more.

Be skeptical if the inspector does not want you to accompany him during the inspection. You can learn a lot by tagging along. Most likely he will go slower with you around.

Some of the larger home inspection services may offer “inspection warranties.” These are usually good for one year. They can add credibility to the service’s report.

Ask to see the warranty before you pay for it. An inspection warranty can be useful if you are selling a home. It could be a comforting sales tool.

The Purchase Agreement

Assuming that you sign a purchase agreement before an inspection, make certain that a clause is inserted that states that the sale of the property is contingent upon an inspection report indicating that no repair or replacement above $500 is needed. You can adjust this number as you see fit.

A typical contingency clause may read as follows:

“This sale is contingent upon receipt of a structural, mechanical, and electrical inspection of the house and a condition report by (ABC Inspection Company). The cost of the inspection will be assumed by the buyer and the inspection will be performed within seven (7) days of the signing of this agreement. If the condition report reveals any structural, mechanical or electrical defect(s) for which the cost of correcting any such defect will exceed ($500), the seller will have the following options. A) Effect the necessary correction of the defect(s). B) Negotiate the cost of correcting the defect(s) with the buyer. C) Declare the agreement null and void.

In the event that the seller does not exercise any of these options, or cannot negotiate the cost of repairing the defect(s) with the buyer, and if the buyer does not choose to ignore the defect, the buyer will have the right to declare the agreement null and void. Should either party to this agreement make such a declaration, any deposit made by the buyer shall be refunded in full. All options must be exercised within seven (7) days of the inspection date.”

Some contracts state that the seller has to make repairs up to a specified dollar amount. If the seller does not comply, the buyer can go ahead anyway, or back out of the deal. If neither want to make the repairs at that price, either can nullify the agreement.

Courtesy of The Real Estate Library.

No Comments Yet