Before You Buy a Home, Inspect to Protect

A home inspection may cost a few hundred bucks upfront, but it could help save you thousands of dollars in the long run and identify problem areas.

While giving a new $900,000 home a thorough going-over, Salt Lake City home inspector Kurt Salomon found a problem under the wooden deck. The builder had cut corners, jury-rigging the wrong kind of fasteners to secure the structure. And yet the municipal building official had given the work a thumbs-up.

What to Expect?
A home inspection covers:

  • Roof, attic and visible insulation
  • Foundation, basement and other structural components
  • Heating and air-conditioning systems
  • Plumbing and electrical systems
  • Structural condition of walls, ceilings, floors, windows and doors
  • Fixed appliances, which usually include the dishwasher and range

A home inspection does not cover:

  • Appliances that could go with the seller, often the refrigerator, washer and dryer
  • Cosmetic problems (chipping interior paint, missing doorknobs, crooked cabinet doors)
  • Signs of termite infestation
  • Environmental issues (mold, radon, lead-based paint, asbestos)
  • Low-voltage wiring for phones or computers
  • Water treatment systems, such as water softeners
  • Humidifiers

Home buyers can arrange a separate inspection for some of the items not typically covered, such as termites, water softeners and radon.

“In some cases, a building inspector is not going to crawl underneath the deck looking at the hardware. A good home inspector will,” says Salomon, also president of the American Society of Home Inspectors.

To inspect a home may not be mandated by law when you purchase a house, but it’s required by some municipalities and mortgage lenders — and it’s considered a must by experts.

“You want surprises that come with homeownership to be happy surprises, not bad ones,” says J.J. Montanaro, CERTIFIED FINANCIAL PLANNER™ practitioner with USAA. “A thorough home inspection by a certified professional can help ensure that’s the case.”

A Smart Spend

To inspect the house you want to buy helps identify:

  • Safety concerns, such as a faulty deck.
  • Failing structural elements, such as a rotting foundation.
  • Faulty mechanical systems, such as an old furnace.
  • Areas that soon may need maintenance, such as an air-conditioning system.

You’ll pay around $300 for an inspection, which can take two to three hours. Prices can vary.

“An inspection is money and time well-spent,” says Montanaro. “It could help you save thousands of dollars. If your inspector finds things that should be repaired, you can use his report as leverage to have them fixed or negotiate a lower price.”

6 Steps to a Home Inspection

1. Look for the Inspection Clause

Before you sign a sales contract for a home, make sure it includes a clause that makes your purchase contingent on the findings of a professional home inspection with an inspector you choose. This gives you a way out of the contract if the inspector finds a major problem the homeowner won’t address, says Salomon.

Make sure the clause is there even if the contract specifies an as-is sale (meaning the seller does not agree to make repairs). “If a seller’s not willing to let you inspect the house, that’s a big red flag,” says Montanaro.

2. Plan Ahead

Most contracts include a home-inspection deadline, so start shopping for a home inspector when you qualify for a mortgage, suggests Salomon. This gives you time to find a qualified, professional inspector.

Selling? Consider an Inspection
Home inspections are essential for buyers, but there are advantages for sellers as well.”An inspection will help you avoid any surprises during the buyer’s inspection,” says Richard Novak, USAA assistant vice president of home event management. Knowing the condition of your house will help you set a fair and firm price.And in today’s tight real estate market, an inspection can give you the opportunity to make repairs that will put your home in better selling condition, making it more competitive.

3. Hire a Pro

Shop around. Ask friends, neighbors and real estate agents for recommendations. The American Society of Home Inspectors has an online database of its certified inspectors. For a list of 10 questions to ask potential hires, visit the U.S. Department of Housing and Urban Development website.

4. Ask to See a Sample Report

Home inspectors fill out written reports, following checklists for different areas of a house, including the roof, attic and basement. Before you hire an inspector, ask for a copy of a sample report. It should be clear and informative. Reports longer than 25 pages filled with lots of legal print (usually meant to protect the inspector against liabilities) raise a red flag, says Salomon. By the same token, he adds, a few pages aren’t enough. Look for a 15- to 20-page report.

5. Accompany the Inspector

Take notes and ask about maintenance issues you’ll need to tend to, such as waterproofing the deck, caulking the siding, changing air filters and other routine maintenance. “Good inspectors will bring labels with them to label things like the main water shut-off,” says Richard Novak, USAA assistant vice president of home event management. “The first time you have a leak, you’ll be grateful for those big tags.”

6. Review the Report

The inspector will send you a written report detailing his or her findings. Read it closely and ask questions to make sure you understand the condition of all areas of the home. “A good inspector will also include photos to help you identify the problem areas and ensure that they are repaired properly,” notes Novak. “Use the report to prioritize the work and determine what items you want fixed before you finalize the contract to buy the home.”

If your inspector finds a leaky roof, a faulty water heater or some other problem, you have the right to ask the seller to correct it to your satisfaction or to lower the price. If the seller refuses, you can typically break the contract without penalty, says Salomon.

One word of advice from Scott Halliwell (USAA CFP): “If a seller lowers the price or offers you money to make the repairs yourself, take the money and make the repairs. Don’t use it to buy new drapes. Otherwise, that small leak in the roof might turn into a much bigger problem later.”

Certified Financial Planner Board of Standards, Inc., owns the certification marks CFP® and CERTIFIED FINANCIAL PLANNER™ in the U.S., which it awards to individuals who successfully complete CFP Board’s initial and ongoing certification requirements.

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