PETER MILLER

The Mortgage Reports Contributor

Home inspection: important systems to check

A home inspection may well be one of the best bargains in real estate. For a few hundred dollars you can have a trained professional go through a home. You don’t want expensive surprises in these important areas:

1 Roof and foundation

2 Heating and air conditioning (HVAC)

3 Plumbing and electrical systems

There are a number of ways to include a home inspection clause in a real estate purchase agreement. Unfortunately, not all inspection clauses give equal protection for purchasers.

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Home defects: major vs minor

When it comes to home condition the understanding is very simple. No home is perfect. The big question is whether the imperfections are major or minor.

And just because your purchase agreement gives you the right to order a home inspection doesn’t mean you can get out of the transaction if the home has problems. It depends on the findings, and on your contract with the seller.

Home inspection clauses

One home inspection clause might say that the purchaser can have a home inspection, but that the owner is only responsible for the first $1,000 in repairs. The problem here is that repair costs may be very much higher.

In one recent case, a home inspection found that the property used aluminum wiring. The use of aluminum wiring is a significant problem because homeowner insurance policies may not be available for such properties.

If you can’t get homeowners insurance, then you also can’t get a mortgage. All of a sudden aluminum wiring is a very big deal. In this case, it cost more than $6,000 to change the wiring.

Should I bail after a really bad home inspection?

Some inspection clauses give the buyer the right to have a professional inspection. If the inspector finds problems,  the seller must fix them — up to a certain dollar amount. If the seller does not want to make the repairs, or the repairs exceed the agreed dollar amount, the parties involved can kill the deal without penalty.

Another approach is that the inspection must be “satisfactory” to the buyers. It is purely up to the buyers to determine what is or is not satisfactory. If the property is not satisfactory, the buyers can get back their deposit and the transaction is done.

Home inspection questions

What are the questions you need to ask a home inspector before hiring?

Are home inspectors licensed in this state? Do you have a current license? Most states now have websites where you can look up licensing information and see if an individual is licensed.

What does a home inspector do?

For details regarding home inspection language speak with local real estate brokers and attorneys.

Are you insured or bonded? The inspector – and the consumer – need such protection in case there’s an accident at the property.

Are you a member of a professional association? Perhaps the American Society of Home Inspectors (ASHI) or the National Association of Home Inspectors (NAHI)? What are your professional credentials? Do you have a background in construction or are you a licensed engineer?

What type of inspection report do you use? There are different form reports available. Many of them make repair needs easy to understand. Be aware that the inspector’s scope of engagement may exclude certain activities. For example, an inspection agreement may state that the inspector is not a pest controller or a chimney sweep.

Real estate brokers

Should you get a home inspector recommended by a real estate broker? It can be argued that the real estate broker has experience in the community and can identify a good inspector. On the other, brokers may give you a list of inspectors to avoid potential liability and claims of favoritism.

Some borrowers worry that they may ultimately not buy the property. Hiring a home inspector will then be a waste of money. The better way to look at this is to say that the purpose of a home inspection is to help you make a purchase decision. Sometimes that decision is yes and sometimes it’s no. In either case, you had the advantage of an independent inspector.

Home inspections: a must for every buyer

You probably need a home inspector even with new construction. According to ASHI, even new homes can have defects. It suggests getting inspections prior to foundation pour, before the insulation and drywall are in place, and at the final walk-through.

Lastly, in addition to a home inspection, it can be worthwhile to have a home warranty. And that goes double if you can get the seller to throw it in with the house.