Common Financial Mistakes: Foregoing the Home Inspection

Common Financial Mistakes: Foregoing the Home Inspection

The young couple seemed confused. They bought their home with the help of a realtor, who had assured them that waiving their rights to a home inspection would help them clinch the purchase during a bidding war. The realtor was right; the strategy won them the home. But a few months after moving in, the couple learned that winning the home because they did not pursue a home inspection came at a huge cost; the home's basic structures were faulty, and it needed to be taken down to the studs for a complete rebuild of the plumbing and electricity. (Synopsis of a "Holmes on Homes" episode, HGTV).

Sounds terrible, right? Well, this situation is all-too-common, although the repairs on this home were extreme. Most often, people may forego a home inspection to save a few hundred dollars, only to run into expensive repairs at a later date. For this reason, if you're not a trained home inspector, hiring one when you put in an offer on a home can save you time, money and headaches. Let's look at home inspections in depth.

Home Inspections 101

Before we go too far, let's look at exactly what a home inspection is. Basically, a home inspection is a service that can be completed on a home or building that you have offered to purchase. During the inspection, a certified and trained home inspector will look your potential home over from top to bottom to give you an opinion on the quality of the structure, including the plumbing, ventilation, heating and cooling systems, roof quality and electricity. In addition, he or she will be on the lookout for any problems or issues that you may have to repair immediately or within a few years for safety reasons.

A home inspector is completely different from an appraiser, and it's important to make the distinction here. Because the appraiser may spend a fair amount of time looking over some of the same things to determine the value of your home, many people tend to confuse the two – which can sometimes lead people to believe that they will not need to hire a home inspector. However, it's dangerous to forego the home inspection; the appraiser is not fully trained to identify the issues that may pop up, and you could be left buying a lemon.

Choosing the Right Inspector

Even if you hire a certified home inspector, there is no guarantee that he or she will catch every improvement that may need to be completed. Just like hiring any professional, there are good inspectors and there are poor inspectors. One of the best ways to weed them out is to get a few recommendations. Often, realty companies and banks will be able to direct you to favorites. Additionally, asking friends and family who they used can help you narrow down your choices.

Follow Your Gut

During the inspection, you should expect to spend one to two hours with your inspector going over the home. He or she will look into nooks and crannies; spend time in your basement, attic and crawl spaces looking over the furnace, water heater and some structural work; test outlets, air flow and plumbing; look at peeling paint; check out the roof; and possibly more. If your inspector does not spend a little time on each of these tasks, you may not have found the right man for the job. At this point, ask some questions, complain or get a new inspector; it's better to shell out a few hundred more dollars than to be stuck with a home that will need some major repairs.

That's the basics to home inspections; join us for more home purchasing tips and tricks in the weeks to come!

Photo Source

AverageJoe's picture

AverageJoe wrote:

Wed, 03/07/2012 - 17:46 Comment #: 1

Before I begin, I just have to say: awesome choice of pictures, but did I allow you on my property to snap a few shots of my "rustic east-Texas chalet?"

I'd like to re-emphasize something you wrote, but I found people often shortcut (and shouldn't).

Many people hire an inspector, then wait for the report. You'll learn some things from this, but it's a far better education to go with the person. He or she will point out many areas that aren't in the report and you'll also get a feeling about the piriorities they'd recommend you follow in applying whatever treatment is necessary.

Christa Palm's picture

Christa Palm wrote:

Wed, 03/07/2012 - 22:43 Comment #: 2

Average Joe, I like your rustic sensabilities, but I must ask: did you get a home inspection for your chalet? ;-)

Great point about going with the home inspector. It's definitely a point worth emphasizing!

Joe @ Retire By 40's picture

Joe @ Retire By 40 wrote:

Thu, 03/08/2012 - 04:52 Comment #: 3

Great tips. I'll have to do that next time I buy a property.

MoneyCone's picture

MoneyCone wrote:

Thu, 03/08/2012 - 17:54 Comment #: 4

Woah! That's a bad move! Even with a home inspection people find all kinds of problems. Never ever skip on home inspections!

Christa Palm's picture

Christa Palm wrote:

Thu, 03/08/2012 - 21:32 Comment #: 5

Joe, sounds like a plan!

MoneyCone, very true. My house came with some issues we weren't aware of. Thankfully, they were pretty minor, but it was great to know what we were getting into, thanks to our inspector.

Alex | Perfecting Parenthood's picture

Alex | Perfecting Parenthood wrote:

Thu, 03/08/2012 - 22:44 Comment #: 6

Great tips -- never skip a home inspection. Appraisers look around but often end up doing nothing more than averaging a list of comparables, which the realtor can do for you anyway. Home inspectors provide a real service, but your advice is good: Pick a competent one!

Bryan's picture

Bryan wrote:

Fri, 03/09/2012 - 21:29 Comment #: 7

We did get a home inspection when we bought our condo, and we were present for it. During the inspection, the inspector mentioned that he thought our air conditioner was all right, but he didn't check out the unit on the roof. Oh, and in his written report, he was a lot more pessimistic about what he thought about the A/C.

Needless to say, days after we purchased the condo and moved in, the a/c stopped working. The warranty company, Fidelity National, (who had accepted our payment for the a warranty on the a/c unit) refused to purchase or repair the a/c because they considered the damage a pre-existing condition.

I don't know about you, but it seems at least crooked if not out and out criminal for Fidelity National to accept payment and then claim to be blameless when we try to collect our warranty.

If only we'd made the inspector check out the roof unit!

SeattleInspector's picture

SeattleInspector wrote:

Sun, 03/11/2012 - 20:53 Comment #: 8

More importantly is finding a qualified inspector. Don't just rely on the fact the belong to a national organization, check if they carry insurance and are performing inspections full time and not as a side job. A lot of inspectors work out of their cars and do not carry ladders long enough to reach 2 story homes! Do you research prior to hiring an inspector and do not use one base on a cheap price!

Christa Palm's picture

Christa Palm wrote:

Mon, 03/12/2012 - 15:27 Comment #: 9

Alex, very true -- competency is key!

Bryan, that's rough that Fidelity wouldn't cover the AC and that the inspector didn't check out the roof AC! I find that really rotten of Fidelity, too!

SeattleInspector, great point about checking to see if the inspector carries insurance and are committed to inspecting full time. The experience shows in a properly prepared inspector.

Anonymous's picture

Anonymous wrote:

Mon, 04/09/2012 - 02:40 Comment #: 10

Indeed, Home inspection and home repair knowledge is a must to have when investing in rental property. It helps to know the basics of what is involved with many repairs for you can save a lot by doing so.

Christa Palm's picture

Christa Palm wrote:

Mon, 04/09/2012 - 17:38 Comment #: 11

Definitely true on the investment home front, too!

gary wickham's picture

gary wickham wrote:

Mon, 08/06/2012 - 20:11 Comment #: 12

I very much like the article and the comments. However, it is a bit too basic. There are a few more things that should be said.
I am a home inspector in California, and I believe a good one. But I am one of many really good and competent inspectors. In California, we have a problems. There are so many bank owned or foreclosure properties. The problem also extends to short sale homes.
The banks, and the realtor at times, will covertly, never overtly, discourage the buyer from having a home inspection. The biggest method for doing this is discretely telling the buyer that it is an as is sale and they really don't need a home inspection. IN THE FIRST PLACE, THE PHRASE 'AS IS' IS A REASON BY ITSELF TO HAVE THE INSPECTION. This could very well indicate that the bank or the seller knows something.
Finding a problem on an 'as is sale' does not mean that it is written in stone that the seller or the bank will not make repairs that are costly and could lose them a sale.
In California, a realtor can actually be penalized for discouraging a home inspection. The fact of the matter is, the California Association of Realtors requires that agents recommend
a home inspection and get a waiver signed if they decline it. The waiver clearly denotes that they are waiving the inspection against the advise of the realton.

Christa Palm's picture

Christa Palm wrote:

Mon, 09/03/2012 - 17:48 Comment #: 13

Gary, thanks for the insight from a great inspector! Very true that the term 'as is' could be a huge red flag that an inspection is necessary!