1. Do I need to have a home inspection?

No, it’s up to you whether to have an inspection.  But a good agent will never tell you don’t need an inspection.  You can actually sue an agent if you take their advice to forego an inspection and then have an expensive problem that an inspector would undoubtedly have found.  The agent may suggest in a competitive bidding situation that you may want to forego an inspection contingency to increase the attractiveness of your offer to the seller…but that is a strategic decision with definite risks and benefits.  It is very different than not needing an inspection.

2. What is an inspection contingency?

It’s an addendum to your offer form.  It says that your offer is contingent on your getting inspection results that are satisfactory to you.  If the results are not satisfactory, you have the right to withdraw the offer and get back your deposit.  In many cases, the contingency clause in the offer addendum has a place to insert a dollar amount for the cost of repairing the problems uncovered by an inspection.  Only if repairs discovered in the inspection are above that amount, do you have the right to exercise the clause, withdraw, and get your money back.  Without that addendum, your deposit is not refundable if you find physical problems with the property.  Many listing agents and sellers will not allow you to do an inspection at all if you leave out the contingency.  Some will let you do one for informational purposes.  And some will let you do one for informational purposes, but only after the Purchase and Sales contract is signed and they have the associated larger deposit that will not be refunded if you find a problem.

3. What dollar amount do people usually put in the home inspection contingency?

Most good agents in the Boston area suggest $1000 in keeping with the local tradition.  But, only if the offer situation is not competitive.  Compared to the value of a home, $1000 is not material…it is just a way of saying you are not going to nitpick on trivial items e.g. a broken knob on the stove.  However, if you want to strengthen your offer, you can put $2k, $5k, $10k or more. This is sometimes done in competitive situations to strengthen your offer without completely foregoing the mortgage inspection. It is appropriate if you are willing to absorb some non-trivial repairs, but don’t want your deposit at stake if you find major issues, for example structural problems that can run much higher than $10k.

4. Why do some people put $0.00 as the amount in the home inspection contingency?

Hard to say why, because it doesn’t make sense.  It means you can back out and get your deposit back if there is a knob missing or a chip in the front step.  For all practical purposes that clause makes your offer meaningless.  It’s very possible that some buyers and brokers do that when they misunderstand the clause.

5. Who pays for the home inspection?

You, the buyer!  And the inspector works just for you to get you information about all the physical aspects of the house so that you can make an informed decision about how/whether to proceed with the purchase.

6. What makes a home inspector good?

It’s obvious that a good inspector is someone who knows houses well, does the work to uncover problems, and explains what he finds in a clear and helpful way.  What’s not obvious, is that all the above is not enough.  There are inspectors who are afraid they won’t get future referrals from the agent if the inspection leads to the termination of the deal.  So, those inspectors minimize problems that should be taken seriously. At the other extreme, are inspectors who exaggerate problems in order to scare buyers, so the buyers will back out of the deal, and pay for a second inspection for their second choice property.  A good inspector won’t protect you from a basically good property any more than he will fail to protect you from a problematic one.

7. So, how do I find a good home inspector?

A very good buyer’s agent will recommend a good inspector or give you a choice of 2 – 3 good inspectors.  On-line reviews can be helpful, but you have to read many of them very closely to avoid the two extremes mentioned above.  Referrals can also be helpful, but only if your referral source knows enough to distinguish a good inspector. Some buyers recommend an inspector because they are very impressed with an extra long inspection report, or a lot of pictures in the report.  These things are helpful, but they do not ensure that the inspector will do a good job for you on the issues that matter.

8. What happens if there are issues in the home inspection report?

One approach is to price the repairs and ask the seller to fix everything in excess of the amount you put into the contingency clause.  Another is to ask them to credit you for that dollar amount, so you can do the repairs yourself after closing. The third option is a combination of the two…certain items repaired, others credited. A credit is the simplest as it precludes the possibility of disagreements right before the closing because of repairs that weren’t completed or weren’t done satisfactorily.

A second approach is to withdraw from the purchase and get your deposit back. There are people who have hot buttons that make them withdraw. For example, if a property has mold, some people don’t want to buy that property at any price even if the mold could be completely removed before closing. Sometimes problems are so big, e.g. some structural problems, that buyers don’t want to deal with the problem, or don’t feel they can count on the problem being properly remedied.

Another approach is to accept all or part of the problems. This usually happens if seller is adamant about “take it or leave it” and the buyer really wants the house.

9. How do I determine which approach to take to home inspection issues?

You work with your agent on developing an approach.  The agent has the resources to help you get costs for repairs, to help you understand the impact of the problems on you, given your needs and objectives.  And, the agent negotiates any requests you may have with the seller.  The inspector is there to provide data about the condition of the property…not suggestions about how to deal with it.   Of course, inspectors are human, and sometimes can’t restrain themselves from giving advice about what you should do.  But that’s like having your physician give investment advice…it isn’t appropriate because it’s not his field of expertise.  In addition, inspectors are not allowed to recommend tradespeople to do the work, and typically don’t quote repair costs.

10. How much does a home inspection cost?

Most inspectors have web sites that list fees, or a phone number you can call to ask for the inspection fee.  It typically varies depending on whether it is a house or a condo, the number of rooms, whether it has a garage, basement, attic, etc.  If you get a recommendation from your buyer’s agent, the agent may be able to give you a pretty good idea of what that inspector is likely to charge for the type/size property you are buying.

11. How is a home inspection for a condo different than one for a house?

A house inspection includes every part of the physical structure and the grounds of the property.  A condo inspection is restricted to the unit that you are buying and to the common areas that belong to all the owners in the condo association collectively, such as hallways, basement, roof, and overall electrical and plumbing systems in the building.  It does not include the interior of other units, nor does it include outdoor areas that belong to other unit owners such as a private patio.

12. Do I need a home inspection for new construction?

The short answer is “yes”.  Although the municipality inspects new construction for compliance with building codes, you probably want to know about things that are important to you, the buyer, even if they are not in violation of code. You also may not want to rely on the municipality’s inspectors…they may be influenced by their relationships with builders.  Although by law there is a two year “builders’ warrantee”, you probably should not count on being able to enforce it, or you may not want the aggravation of trying.  So, it makes a lot of sense to get your own inspection.  Remember, your inspector works only for you!

 

 

Do you have any more general questions about home inspections that you want addressed in future posts?  Do you have specific questions about home inspectors?  Call Chris at 857- 829-0282 or email him at Chris@Isellmass.com.

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