In a typical home inspection, an inspector goes through the house looking for obvious problems and checking integral parts of the home like the foundation, exterior, electrical, plumbing and roof, structure, heating, garage, etc. While the home inspector will tell you whether items like the heater or stove work and if the plumbing is draining properly, this isn’t even close to what you should be doing as a part of the home inspection process to really protect yourself and make a smart real estatepurchase.
The most important reason to have a home inspection not to see what works or doesn’t work so you can ask the seller to credit you some monies to fix items – although that is an important issue. It is not so you can see if your furniture will fit in the living room, or what color to paint the walls.
The most important reason to have a home inspection…
… is so that you can add up the costs of all the repairs, replacements, upgrades, and rehab items that you will want to do in the near future and determine if the house is selling at a fair price after deducting all those estimated costs. The inspector’s report will help you figure out what needs to be repaired, but it is your responsibility to go through the property in detail and get realistic estimates and costs to fix, or bring everything up to your standards.
Here are some items the inspector’s report won’t note: the costs if you are going to paint the interior or exterior of the house, landscape the back yard, or put in new energy efficient double-pane windows. That is at least $10,000 right there. The report might note that the A/C is 20 years old, but not that it will cost $5,000 to replace in the next few years. And what if you want to do new flooring, countertops, a new refrigerator, or redo the bathroom? Are you adding up all these costs? They won’t be in the report, but you need to know those estimates.
Adding up all the costs is your responsibility
Once you have a total, you go to a home improvement store or talk to a contractor, then you can make a decision if the property price is fair, or if you need to renegotiate the price, or if you should cancel the purchase.
When obtaining your cost estimates, don’t just select the least expensive flooring, bathroom cabinets or refrigerator. After you close escrow and you go back to actually purchase the items, it’s likely you may buy the higher quality or more expensive items.
Other things to check
There are other things the home inspector does not typically do: radon tests, mold tests, termite inspections, soil tests, and checking if the house additions are properly permitted. If you ask, an inspector can probably give you some general guidance on the course of action you should take for each item of concern. Then you need to decide how much you want to spend to do any further investigation.
Is your inspector insured or licensed?
Home inspectors are not required to have insurance in most states and are not required to be licensed or certified in most states, but that doesn’t mean you shouldn’t make sure your home inspector is at least insured and get some references.
Some people don’t even go to the inspection and just let their real estate agent handle it. This is not a smart move. You need to be there during the inspection to look, listen and ask questions.
Buying a home is the largest and riskiest purchase you will ever make
For your own benefit, please ensure that you do the hard work to gain a full understanding of the costs involved with repairing or upgrading the property you are buying. You’ll be glad you did.
Leonard Baron, MBA, CPA, is a San Diego State University Lecturer, a Zillow Blogger, the author of several books including “Real Estate Ownership, Investment and Due Diligence 101” and loves kicking the tires of a good piece of dirt! See more at ProfessorBaron.com.
