Since the late 1980’s, disclosure of property defects has become the primary focus of most residential real estate transactions after first emerging as a service during the mid-1970′s. Gaining gradual recognition over the past decades, home inspectors attained prominent acceptance as a distinct and essential profession providing the service of inspecting and disclosing property defects.
To those who approach real estate with the old “as-is” mind-set, the advantages of home inspection are not immediately apparent. But make no mistake a thorough inspection can shield you from costly discoveries after the close of escrow. It’s one of the best consumer protection services available.
Every home, regardless of age or quality, harbors a small, medium, or large list of defective conditions; some obvious; some only apparent to those who know how and where to look. When you hire an experienced, qualified home inspector, there is no question as to whether unknown defects will be found; but rather what, where, and how serious, dangerous, or expensive the defects will turn out to be.
Most homebuyers spend fifteen minutes to an hour walking through a home prior to making an offer. At best, this provides a general impression of the overall physical condition. But what about foundations and structural framing, attic construction, insulation, ventilation, and roof conditions. These are just a few of the hundreds of considerations included in a home inspection.
Above all, let’s not forget building safety. An inspector can alert you to red flag issues involving the electrical wiring and fixtures, fireplaces and chimneys, gas fixtures such as furnaces, water heaters, cooktops, and ovens, railings at staircases and decks, tempered safety glass in required locations, and automatic reverse of garage door openers.
Furthermore, an inspector can forewarn you of problems involving faulty ground drainage, defective plumbing, substandard construction, firewall compliance, building settlement, leakage, general deterioration, inoperative fixtures, and so much more.
Clearly, your agent understands this process and the importance of equipping you to make an informed purchase decision. Be thankful that she’s working to protect your financial interests. With a detailed home inspection, you will know what you are buying, before you buy it. And that could save you thousands of dollars and years of regret.
Do New Homes Need Inspection
The belief that a new home is flawless, simply because it is new, is an unfortunate piece of popular mythology. Since when is a brand new product exempt from possible defects? We often hear of brand new cars recalled by Detroit; experienced sailors can tell you of brand new boats that have leaked; and even brand new parachutes have been known to fail when the ripcord was pulled. As for new homes, anyone who has worked in building construction knows that contractors and trades people, as typical members of the human family, are prone to occasional or not-so-occasional errors and oversights.
Inspectors polled from across the US on new home defects, unanimously agree that most, if not all new homes are totally free of defects. None have ever discovered a perfect specimen, regardless of the quality of construction or the integrity of the builder.
Even when the builder warrants the work for one full year, such guaranties are of no benefit unless inherent defects are discovered. Unfortunately, many types of building problems and safety violations do not become apparent for many years. A faulty wiring condition might not be revealed until it damages your computer or causes a fire. Other defects might only be discovered when you finally resell the property, and the buyer decides to hire a home inspector.
The list of faulty conditions that have been found in new homes is extensive and includes such items as, defective roof installation, improper fireplace construction, errors in electrical wiring, excessive water pressure, fire safety violations, unsafe venting of heater exhaust, leaking drains, faulty site drainage, hot water piping connected to the toilet (can you imagine a steaming bowl?), etc, etc. In one infamous case, a new home was built and approved on a concrete slab without a perimeter foundation. Obviously, we’re not likely to find a major list like this in any particular new home, but every new structure contains a few undisclosed defects, sometimes minor, sometimes not.
New homes are often presumed to be exempt from human error, and consequently many close escrow without the benefit of a final examination. For buyers preparing to make such a large investment, assumptions about quality of workmanship can be financially fatal.
Your best advice is to take nothing for granted. The cost of an inspection is incidental when compared to the price of a new home. A qualified home inspector will most assuredly find items that need repair. Better to discover them now than after the close of escrow.
Inspection Report is Not a Repair List For Seller
So, you’ve hired a home inspector to make a complete repair list for the home you’re buying. The inspector did a thorough job and disclosed some serious problems with the property. Maybe it was in the plumbing. Or the electric wiring. Perhaps it was the roof. But the seller refuses to fix anything. Is the seller responsible to make these repairs? Were you under the impression that the sellers must repair the problems discovered by home inspectors?
This can be all very disillusioning. This is a common misunderstanding about the purpose of a home inspection. People often view an inspection report as a mandatory repair list for the seller. The fact is sellers are not required to produce a flawless house. They have no such obligation by law or by contract.
With a termite report, requirements are different: Real estate contracts usually obligate a seller to repair conditions classified as “section one” in the termite inspector. Section one includes instances of active infestation — termites, fungus, dryrot, etc. Other faulty conditions, such as earth to wood contact, generally do not require action on the part of the seller, unless infestation is found.
With a home inspection, most repairs are subject to negotiation between the parties of a sale. Typically, buyers will request that various conditions be repaired before the close of escrow, and sellers will usually acquiesce to some of these demands. But with most building defects, sellers make repairs as a matter of choice, not obligation; to foster good will or to facilitate consummation of the sale. There are, of course, those few rigid sellers who will flatly refuse to fix anything, even at the risk of losing the sale. Fortunately, this response is the exception, rather than the rule.
Sellers maintain the legal right to refuse repair demands, except where requirements are set forth by state law, local ordinance, or the real estate purchase contract. Legal obligations include earthquake straps for water heaters and smoke detectors in specified locations. Contracts usually stipulate that fixtures be in working condition at the close of escrow, that windows not be broken, and that there be no existing leaks in the roof or plumbing.
Before you make any demands of the seller, try to evaluate the inspection report with an eye toward problems of greatest significance. Look for conditions which compromise health and safety or involve active leakage. Most sellers will address problems affecting sensitive areas such as the roof, fireplace, gas burning fixtures, or electrical wiring.
Routine maintenance items warrant a lesser degree of concern and should not be pressed upon the seller. If the house is not brand new, it is unreasonable to boldly insist upon correction of all defects. Such demands can alienate the seller and kill the sale. Your willingness to accept minor problems may persuade a seller to correct conditions of greater substance.
The purpose of a home inspection is not to corner the seller with a repair list. The primary objective is to know what you are buying before you buy it. All homes have defects; it’s not possible to acquire one that is perfect. What you want is a working knowledge of significant defects before you close escrow. As the old sea captain once told me, “It doesn’t matter if your boat has a leak, as long as you know it’s leaking.”
Home Inspection Limited To What Is Visible
ASHI (The American Society of Home Inspectors) has established accepted standards of practice and codes of ethics, which define the general scope of a home inspection. These guidelines have come to be the acknowledged standards by which qualified home inspectors perform their services.
According to these criteria, a home inspection is limited to conditions that are visually discernible. Specifically excluded from an inspection are conditions which are concealed from view, such as items contained within walls, ceilings, and floors, or which are buried beneath the ground. According to ASHI standards, inspectors are not required to perform dismantling of construction or excavation of ground surfaces to discover conditions that are not normally visible.
For clarification of the standards by which your inspector performed his services, I recommend that you review the inspection report. Most inspectors are careful to define the scope and limitations of their inspections. These parameters are generally outlined in either the contract or the report or both. Nearly all home inspection contracts clearly specify that concealed items are outside the scope of the inspection. Additionally, most inspection reports specifically identify ASHI standards as the basis upon which the inspection is to be performed.
HOW TO NEGOTIATE AFTER HOME INSPECTION
When you get the inspection report, how do you know which problems the seller should fix and which ones to accept as is? Are there some rules or guidelines to determine how this works?
In most cases, a residential sale is contingent upon the buyers’ acceptance of the home inspector’s report. This means that you, as buyer, have a specified number of days to accept or decline the property in “as is” condition. If you decline acceptance, you have four basic choices: 1) Ask the sellers to make a few repairs;
2) Ask the sellers to make many repairs;
3) Ask the sellers to reduce the sales price;
4) Decline to purchase the property.
If you request repairs or a price adjustment, based upon the home inspection report, the sellers also have choices. They can: 1) Agree to all of your requests;
2) Agree to some of your requests;
3) Agree to none of your requests;
4) Decline to sell you the property.
The sellers’ only obligation is to address defects that are named in the purchase contact or required by state and local laws. If the contract specifies an “as is” sale, the sellers may refuse to make repairs of any kind or to adjust the price in any way. Lawful exceptions may include strapping water heaters for earthquake safety, providing smoke alarms at specified locations, or upgrading plumbing fixtures for water conservation. Aside from such requirements, completion of the sale hinges upon whatever is agreeable between you and the sellers.
