The Home Inspection Contingency
Your first clue that a home inspection is important is that it can be used as a contingency in your purchase offer. This contingency provides that if significant defects are revealed by a home inspection, you can back out of your offer, free of penalty, within a certain timeframe. The potential problems a home can have must be pretty serious if they could allow you to walk away from such a significant contract. (For more on closing on your home, read Understanding The Escrow Process.)
What a Home Inspection Examines
Inspectors vary in experience, ability and thoroughness, but a good inspector should examine certain components of the home you want to purchase and then produce a report covering his or her findings. The typical inspection lasts two to three hours and you should be present for the inspection to get a firsthand explanation of the inspector’s findings and, if necessary, ask questions. Also, any problems the inspector uncovers will make more sense if you see them in person instead of relying solely on the snapshot photos in the report.
The inspector should note:
- whether each problem is a safety issue, major defect, or minor defect
- which items need replacement and which should be repaired or serviced
- items that are suitable for now but that should be monitored closely
A really great inspector will even tell you about routine maintenance that should be performed, which can be a great help if you are a first-time homebuyer. (To learn more, read First-Time Homebuyer Guide.)
While it is impossible to list everything an inspector could possibly check for, the following list will give you a general idea of what to expect. (Home maintenance can cost you more than you bargained for. Read Four Overlooked Homeownership Costs to learn more.)
- Exterior walls – The inspector will check for damaged or missing siding, cracks and whether the soil is in excessively close contact with the bottom of the house, which can invite wood-destroying insects. However, the pest inspector, not the home inspector, will check for actual damage from these insects. The inspector will let you know which problems are cosmetic and which could be more serious.
- Foundation – If the foundation is not visible, and it usually is not, the inspector will not be able to examine it directly, but they can check for secondary evidence of foundation issues, like cracks or settling.
- Grading – The inspector will let you know whether the grading slopes away from the house as it should. If it doesn’t, water could get into the house and cause damage, and you will need to either change the slope of the yard or install a drainage system. (Read about managing the expense of a yard in Save Money On Summer Bills.)
- Garage or carport – The inspector will test the garage door for proper opening and closing, check the garage framing if it is visible and determine if the garage is properly ventilated (to prevent accidental carbon monoxide poisoning). If the water heater is in the garage, the inspector will make sure it is installed high enough off the ground to minimize the risk of explosion from gasoline fumes mingling with the heater’s flame.
- Roof – The inspector will check for areas where roof damage or poor installation could allow water to enter the home, such as loose, missing or improperly secured shingles and cracked or damaged mastic around vents. He or she will also check the condition of the gutters. (The roof offers opportunities for energy-conscious homeowners. Read Building Green For Your House And Wallet to learn more.)
- Plumbing – The home inspector will check all faucets and showers, look for visible leaks, such as under sinks and test the water pressure. He or she will also identify the kind of pipes the house has, if any pipes are visible. The inspector may recommend a secondary inspection if the pipes are old to determine if or when they might need to be replaced and how much the work would cost. The inspector will also identify the location of the home’s main water shutoff valve.
- Electrical – The inspector will identify the kind of wiring the home has, test all the outlets and make sure there are functional ground fault circuit interrupters (which can protect you from electrocution, electric shock and electrical burns) installed in areas like the bathrooms, kitchen, garage and outdoors. They will also check your electrical panel for any safety issues and check your electrical outlets to make sure they do not present a fire hazard.
- Heating, ventilation and air conditioning (HVAC) – The inspector will look at your HVAC system to estimate the age of the furnace and airconditioner, determine if they function properly and recommend repairs or maintenance. An inspector can also give you an idea of the age of the home’s ducting, whether it might have leaks, if your home has sufficient insulation to minimize your energy bills and whether there is any asbestos insulation.
- Water heater – The home inspector will identify the age of the heater and determine if it is properly installed and secured. The inspector will also let you know what kind of condition it is in and give you a general idea of how many years it has left.
- Kitchen appliances – The inspector will sometimes check kitchen appliances that come with the home to make sure they work, but these are not always part of the inspection. Be sure to ask the inspector which appliances are not included so that you can check them yourself. (Energy-efficient appliances can save you big bucks. Read Ten Ways To Save Energy And Money to learn more.)
- Laundry room – The inspector will make sure the laundry room is properly vented. A poorly maintained dryer-exhaust system can be a serious fire hazard.
- Fire safety – If the home has an attached garage, the inspector will make sure the wall has the proper fire rating and that it hasn’t been damaged in any way that would compromise its fire rating. They will also test the home’s smoke detectors. (Learn more about protecting your home from fire in Insurance Tips For Homeowners.)
- Bathrooms – The inspector will check for visible leaks, properly secured toilets, adequate ventilation and other issues. If the bathroom does not have a window and/or a ventilation fan, mold and mildew can become problems and moisture can warp wood cabinets over time.
Home Inspection Shortcomings
A home inspection can’t identify everything that might be wrong with the property – it only checks for visual cues to problems. For example, if the home’s doors do not close properly or the floors are slanted, the foundation might have a crack – but if the crack can’t be seen without pulling up all the flooring in the house, a home inspector can’t tell you for sure if it’s there.
Furthermore, most home inspectors are generalists – that is, they can tell you that the plumbing might have a problem, but then they will recommend that you hire an expert to verify the problem and give you an estimate of the cost to fix it. Of course, hiring additional inspectors will cost extra money. Home inspectors also do not check for issues like termite damage, site contamination, mold, engineering problems and other specialized issues. (Learn how to find qualified experts in The Better Business Bureau’s Tool Belt For Saving Cash.)
After the Inspection
Once you have the results of your home inspection, you have several options.
- If the problems are too significant or too expensive to fix, you can choose to walk away from the purchase, as long as the purchase contract has an inspection contingency.
- For problems large or small, you can ask the seller to fix them, reduce the purchase price, or to give you a cash credit at closing to fix the problems yourself – this is where a home inspection can pay for itself several times over. (Read 10 Tips For Getting A Fair Price On A Home.)
- If these options aren’t viable in your situation (for example, if the property is bank-owned and being sold as-is), you can get estimates to fix the problems yourself and come up with a plan for repairs in order of their importance and affordability once you own the property. (To learn more, read Do-It-Yourself Projects To Boost Home Value.)
A home inspection will cost you a little bit of time and money, but in the long run you’ll be glad you did it. The inspection can reveal problems that you may be able to get the current owners to fix before you move in, saving you time and money. If you are a first-time homebuyer, an inspection can give you a crash course in home maintenance and a checklist of items that need attention to make your home as safe and sound as possible. Don’t skip this important step in the home-buying process – it’s worth every penny.
Amy Fontinelle is a financial journalist and editor for a variety of websites, public policy organizations, and book publishers. She has written hundreds of published articles and blog posts on topics including budgeting, credit management, real estate and investing. Her articles have been featured on the homepage of Yahoo! and on Yahoo! Finance, Forbes.com, SFGate.com and numerous local news websites.