Buying or selling a home is the biggest transaction most of us ever face. With such high stakes, you’ll want to vet your investment as a buyer and protect or enhance the value of your asset as a seller. A home inspection is a vital means to those ends. But it has other benefits – revealing major and minor defects that can affect your safety, health and comfort as well as your pocket book.
What an inspection should cost and cover
Here in Oregon a licensed professional can do the job in 2-4 hours for no more than about $350 – unless the property is unusually large, old or in a remote location. Your inspector should assess:
- The home’s structure or skeleton, including its foundation (and crawlspace or basement), frame and roof
- Major mechanical systems – electrical, plumbing and heating/cooling/ventilation
- The exterior including windows, doors, siding, trim, surface drainage, steps, sidewalks and driveways
- The interior including walls, ceilings and floors; steps, stairways and railings; countertops and cabinets; and the garage
- Attic insulation and ventilation
- Any fireplaces
Your inspector can tailor investigations somewhat based on the home’s age, whether you have children, and so on. And he or she may advise follow-up testing, such as for mold, asbestos or radon. Environmental testing is usually performed by specialists at an added cost.
Sewer scopes are a recommended add-on to basic home inspections. A mini-video camera is inserted into the sewer line to look for blockages, cracks, holes, pooling or pipe separation. A sewer scope takes about an hour and costs around $125. Discounts may be offered if the sewer scope is “bundled” with the home inspection
Inspect before you sell and before you buy
Paid for by the seller before a house is put on the market, a pre-inspection is money well spent – unless the property was built just a few years ago and has been well-maintained. Significant defects that turn up in the pre-inspection can be repaired to get the best possible price for the property. Or the cost of repairs can be factored into the list price. If your home passes inspection with flying colors, your realtor should let potential buyers know in marketing materials.
A buyer should always inspect a property he or she plans to buy. Even if the seller has had a pre-inspection, defects can be missed or concealed. By default in Oregon, the buyer has 10 days to complete an inspection once an offer is accepted. Longer or shorter periods can be negotiated.
Whether you’re a buyer or seller, your realtor should offer a list of reputable licensed inspectors but leave the choice to you. When the client chooses, the potential for conflict of interest is avoided. Your realtor should then take the lead in scheduling the inspection and be on hand when it’s carried out.
If possible, you should be present too. At a minimum, attend the last half-hour to hear the summary of findings, pay the inspector’s fee and ask questions. If you’re a buyer, for example, you’ll want to learn where and how to access different areas and systems of the home and get maintenance tips.
The benefits outweigh the costs
Sellers may be reluctant to have a pre-inspection because they want to minimize their costs. Or they may think it’s best not to go “looking for trouble.” By law in Oregon a seller must disclose any known defects to a buyer after accepting his or her offer.
But opting out of a pre-inspection will only postpone the inevitable. Defects will come to light in the buyer’s inspection. If the defects are serious, there are usually delays or breakdowns at the negotiating table. And even if the seller agrees to make repairs or offer credits to the buyer, there will be very little time for finding a contractor to do the work or estimate costs.
When a sale fails due to inspection results, the seller is at a big disadvantage. A property that is back on the market is often viewed with suspicion. And the golden window for marketing a home – the first 3-4 weeks after it’s listed when interest peaks – will be shortened or lost. Research shows that homes fetch the best prices during this window.
In short, a pre-inspection strengthens the seller’s position in the market. It enables the seller to identify defects, shop around to control or accurately assess the cost of repairing them, and set a fair list price with confidence – the single most important step in marketing a home effectively.
Sometimes buyers are reluctant to have an inspection. They may worry about spending a few hundred dollars, only for the sale to fall through. True, no one can predict the outcome of an inspection or a transaction. But you can be sure of the protection an inspection provides. If you’re dissatisfied with the results for any reason, you can exit the sale with your earnest money deposit.
Given the average price of a home and the average cost of an inspection, it’s penny wise and pound foolish for a buyer to opt out of the chance to find defects that can put a whole new light on a property’s value.
What buyers should look for before and after an inspection
It may surprise you to know that a buyer should start looking for defects even before making an offer on a home. You can spot obvious red flags that may help you to rule out a property with this simple checklist. If you decide to make an offer on a house after touring it with checklist in hand, you’ll still need a thorough professional inspection, of course.
Once the professional inspection report is in, you should read and discuss it with your realtor. Structural and mechanical defects are costliest to repair and have the biggest impact on the safety, health and comfort of those who live there. Everything else – known as cosmetic repairs – are of less concern. How you and the seller act on the results will depend on factors explained in the next section. Your realtor should help you weigh these factors as you make decisions.
How to act on inspection results
The bargaining power of seller and buyer post-inspection is influenced by three key factors:
- The severity of the defects
- How motivated each party is to close the sale
- Overall conditions in the market
If serious structural or mechanical defects are identified in the buyer’s inspection, the seller’s position is weakened. Sale of the home is unlikely unless the seller is prepared to make repairs, offer credits to the buyer or document convincingly that the list price has taken the defects into account. Cosmetic repairs have much less impact on the seller’s position.
A highly motivated seller – for example, one who must relocate for a new job – may be willing to offer credits or lower the sale price for cosmetic repairs. On the other hand, a highly motivated buyer – for example, one who is in the market for a fixer and has skills or contacts for renovating at a low cost – may happily take on a house with major defects if the price is right.
Finally, the market shapes negotiations. In a seller’s market – when demand to buy outstrips the supply of homes for sale – buyers are wise to seek repairs or credits only for major defects. In a buyer’s market, sellers are wise either to get their homes in top condition before going to market or to price accordingly and/or be open to offering credits for cosmetic repairs.
Do you have other questions about home inspections? Let me know in the comments section below or contact me.