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Home Inspection

Updated on January 5, 2024
Article byKumar Rahul
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

What is a Home Inspection?

In real estate, a home inspection is a procedure where a qualified inspector evaluates the condition of a property.  Its purpose is to provide the buyer with a detailed report on the property’s condition, including defects that may affect the value or safety of the premise.

Home Inspection

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The home inspection report is a negotiating tool. It has become a part of the buying and selling process. It allows the buyer to request that the seller make repairs or offer a lower price based on the property’s condition. Additionally, a home inspection can be helpful for the seller as well.

Key Takeaways

  • Home inspections typically occur after signing a purchase agreement before the finalization of the sale of the property. The review covers a wide range of areas. It includes the exterior and interior of the premise and effective systems such as plumbing, electrical, and HVAC.
  • A pillar-to-post home inspection can uncover potential issues the buyer may not have noticed.
  • The inspection report gives the buyer an understanding of the premise’s condition, including any defects or issues. The buyer can use the inspection report to negotiate repairs with the seller.

Home Inspection Explained

The practice of home inspections in real estate has been for decades. It originated in the United States in the late 1970s. This was in response to the increasing demand for quality control in the construction industry.

The significance of home inspection services in real estate is not an overstatement. For buyers, the review provides a detailed assessment of the premise’s condition, which can help them decide whether to proceed with the purchase. In addition, buyers may be aware of potentially costly or hazardous issues with the property.

For sellers, it can also be beneficial. By identifying issues before listing the property, the seller can make necessary repairs and avoid surprises during negotiation. Additionally, providing a pre-listing inspection report to potential buyers can demonstrate transparency and honesty, which can help build trust and increase the possibility of a successful sale.

Checklist

The checklist guides the inspector, ensuring that all critical components of the premise are after careful examination and evaluation. Here are some of the typical items that might be a part of home inspection checklist:

  1. Roofing – The inspector will examine the roof’s condition, including shingles, flashing, and chimney or vent pipes.
  2. Exterior – The inspector will evaluate the state of the siding, foundation, windows, doors, and any outdoor structures such as decks or patios.
  3. Plumbing – the inspector will check for leaks, damage, and proper functioning of fixtures and pipes, including water supply and drainage systems.
  4. Electrical – The inspector will examine the electrical system’s condition, including the main panel, circuit breakers, outlets, and switches.
  5. HVAC – The inspector will check the conditions like ventilation, heating, and air conditioning systems, including air filters and ductwork.
  6. Interior – The inspector will examine the condition of walls, ceilings, floors, doors, windows, and stairs, looking for signs of damage or wear.
  7. Appliances – The inspector will evaluate the condition and proper functioning of major appliances such as the stove, refrigerator, and dishwasher.
  8. Attic and crawl spaces – The inspector will examine these areas for insulation, ventilation, and signs of damage or pests.
  9. Garage – The inspector will check the condition of the garage door, the garage floor, and any electrical or plumbing systems in the garage.
  10. Safety features – The inspector will evaluate the condition and proper functioning of smoke detectors, carbon monoxide detectors, and any other safety features in the home.
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Types

Some of the most common types of home inspections are:

  1. Buyer’s Inspection – A buyer’s inspection aims to identify any significant defects or issues with the property. In addition, the inspector will evaluate the condition of the premise’s essential systems, such as the roof, foundation, plumbing, and electrical.
  2. Seller’s Inspection – The seller conducts this inspection before listing the property for sale. A seller’s review aims to identify any issues with the property before putting the property on the market. By fixing any problems before listing the property, the seller can increase its value and make it more attractive to potential buyers.
  3. New Construction Inspection – A new construction inspection aims to identify any defects or issues with the construction that may need attention. In addition, the inspector will evaluate the condition of the premise’s systems, such as the foundation, electrical, plumbing, etc.
  4. Maintenance Inspection – This type of inspection periodically identifies any issues with the property that may need to be addressed for routine maintenance purposes. The inspector evaluates the condition of the premise’s major systems, such as the HVAC, plumbing, and electrical, to identify any problems that may require attention.
  5. Specialty Inspection – This type of inspection is conducted by a specialist with expertise in a specific area, such as a termite or mold inspector. A specialty inspection aims to identify any issues related to that area that may not be apparent during a general review.

Examples

Let us examine some of the examples for a better understanding.

Example #1

Let’s say that John is interested in buying a house built in the 1950s. He hires a home inspector to conduct a buyer’s inspection before finalizing the purchase. During the examination, the inspector discovers that the house has outdated wiring that poses a significant fire hazard. Based on the inspector’s report, John decided to negotiate with the seller to either replace the wiring or lower the house’s sale price to account for the cost of repairs.

Example #2

In January 2021, a home inspector in Seattle discovered a hidden room in a house that was being sold. The room was hidden behind a false wall in the basement and contained an extensive collection of knives, swords, and other weapons. The inspector immediately reported the discovery to the police, who investigated the matter and found that the guns had been stolen from a nearby martial arts studio. Thanks to the inspector’s vigilance and quick thinking, the guns were returned to their rightful owner, and the suspect was arrested.

Pros & Cons

Some of the advantages and disadvantages of home inspections in real estate are:

Pros 

  1. Helps buyers make informed decisions: It can provide buyers with a detailed report on the condition of the premise they are considering purchasing, allowing them to decide whether to proceed.
  2. Identifies potential issues: It can identify potential issues with the property, such as water damage or faulty electrical systems, which the buyer can use to negotiate repairs or a lower price with the seller.
  3. Provides transparency: It can clarify the transaction, allowing the buyer to see the property’s condition without relying solely on the seller’s representations.
  4. Can help sellers prepare for sale: A pre-listing inspection can help sellers identify any issues with the property before listing the property for sale.
  5. Can increase property value: By identifying and fixing issues before listing the property, sellers can increase its value and make it more attractive to potential buyers.

Cons

  1. Cost: It can be expensive, with prices typically ranging from a hundred to thousand dollars, depending on the size and condition of the premise.
  2. Can cause delays: The buyer may need to negotiate a lower price with the seller, which can cause delays in the transaction in case of any discrepancy.
  3. May uncover minor issues: It may reveal minor problems with the property that the buyer may not have noticed, which can cause undue stress and worry.
  4. Limited scope: It is typically limited to visible and accessible property components and cannot identify concealed or inaccessible issues.
  5. May lead to negotiations: The discovery of issues during an inspection may lead to negotiations between the buyer and seller, which can be stressful and time-consuming.

Home inspection vs Appraisal vs A 4-point inspection

While home inspections, appraisals, and 4-point inspections are all critical aspects of the real estate industry, they serve different purposes. People prefer it at times during the buying and selling process. Here’s a comparison of a home inspection, appraisal, and 4-point inspection on a different basis:

#1 – Purpose

  • The home inspection identifies any issues or defects with the property that could affect its safety.
  • On the other hand, appraisal determines the market value of the premise.
  • At the same time, a 4-point inspection evaluates the condition of four specific areas of the premise: the roof, electrical, plumbing, and HVAC systems.

#2 – Timing

  • Home inspection occurs after signing a purchase agreement before finalizing the property sale.
  • At the same time, appraisal leads after the buyer offers on the property and before the deal’s closing.
  • In contrast, a 4-point inspection runs during the underwriting process for insurance policies.

#3 – Scope

  • Home inspection thoroughly evaluates the property’s condition, including significant components.
  • At the same time, the appraisal determines the property’s market value based on factors like location, size, and shape.
  • On the contrary, a 4-point inspection evaluates the condition of four specific areas of the premise: the plumbing, roof, electrical, and HVAC systems.

#4 – Report

  • A home inspection is a detailed report outlining the condition of the premise and any issues or defects found during the inspection.
  • At the same time, the appraisal is a report outlining the appraiser’s determination of the premise’s market value.
  • At the same time, a 4-point inspection is a report outlining the condition of the four specific areas evaluated during the inspection.

#5 – Cost

  • The cost of a home inspection certification ranges from a hundred to a thousand dollars, depending on the size and condition of the premise.
  • At the same time, appraisal ranges from hundred to several thousand dollars, depending on the location and complexity of the premise.
  • Therefore, a 4-point inspection is less expensive than a complete inspection.

Frequently Asked Questions (FAQs)

1. Can a home inspection be waived?

While a home inspection is not typically required by law, it is highly recommended for anyone considering purchasing a property. However, waiving it can be risky, as it may result in costly or hazardous issues with the property being missed.

2. What happens if the home inspection finds problems?

If the inspection identifies issues or defects with the property, the buyer can share this information with the seller. Alternatively, the buyer may choose to walk away from the purchase altogether.

3. Who pays for the home inspection?

Generally, the buyer pays for the inspection. However, this can vary depending on the terms of the purchase agreement.

4. How long does a home inspection take?

The length of an inspection can vary depending on the size and complexity of the premise. On average, a review takes two to three hours. However, larger or more complex properties may require additional time.

This article has been a guide to what is Home Inspection. Here we explain it in detail, such as its checklist, types, examples, vs 4 point inspection and appraisal. You may also find some helpful articles here:

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