Home inspection: How it can save buyers thousands

A seller accepts your offer. In weeks, you could be the proud owner of a house. But do you really know what you're getting into? Expensive repairs might lurk throughout the home, costing you cash that you planned to spend on new paint or kitchen cabinets — or not at all.

A home inspection protects buyers from these unexpected expenses. Buyers should get one because it gives all the parties an unbiased view of the home's condition, said Scott Johnson, president of the board of directors at the American Society of Home Inspectors. "We work solely for the individual buying a home," he said. "Our motivation is their satisfaction."

A home inspection provides a professional, detailed evaluation of a property’s physical condition, individual systems and components, said Patrick Preslar, owner of Pillar to Post Inspectors for The Triton Team of Raleigh, North Carolina. "A licensed home inspector examines the home from top to bottom to identify defects, safety issues or needed repairs."

An inspection also gives you negotiating power to seek repairs or cash to compensate. A good home inspector will educate the buyer about the home and its systems. Here's what you should know about inspections.

Why you should go with the home inspector

Experts encourage buyers to accompany inspectors during their home visits. That way, they can learn about the home's condition and inner workings.

"Getting to know a home takes time, but having an inspection is like a mini boot-camp in what you need to know," said Danielle O'Brien of Parkway Real Estate in West Roxbury, Massachusetts. "Often an inspector will point out ideal maintenance schedules, where a water shut-off might be and how you can improve things over time even if it's not a repair that you need to discuss as part of your deal."

Sain Rhodes, a real estate educator at Clever Offers in Washington, D.C., where she guides first-time home buyers through the purchase, added, "You’ll get real-time answers from the home inspector, and you’ll actually learn something about what you’re purchasing."

First-time buyers often focus on the layout and finishes in a home rather than what's behind the surface, said Ramin Bassam, president and CEO of RANE Construction in Los Angeles.

"They do not see the slow leak under the sink, the patched roof, the bad drainage or the homeowner's electrical work in the attic," he said. "Spending a few hundred dollars upfront is nothing compared to a sewer line that collapses six months after you move in."

"I have watched inspections uncover problems that would have turned into five-figure surprises more times than I can count," Bassam added.

Sometimes buyers will waive an inspection, particularly if the market is competitive, Bassam said. "I do not think that is a smart idea for a first-time buyer. If you have to, shorten the inspection period, but do not skip it."

How to find a home inspector

There are several ways to find qualified home inspectors. Many buyers rely on their agents to suggest one, according to home services marketplace Angi.com. If they do, they should still verify the inspector's credentials, reviews, licensing/certification, insurance and experience.

Relying on your agent isn't a bad thing, said Johnson.

"The buy/sell industry has to do with relationships," he said. "If an agent trusts a good, certified inspector, you are in pretty good shape."

A buyer can locate an inspector on their own, Angi.com said. Word-of-mouth is one way, while an online search for top home inspectors in an area is another.

There are professional companies that match buyers with certified, insured inspectors, said Bassam.

Not all states license inspectors, Bassam noted. "In California, home inspectors are certified," he said. "So, I always tell buyers to look for someone who is certified through a respected group and carries both general liability and errors and omissions insurance."

Pro tip: If your state does not license inspectors, make sure to hire one who has been certified by a reputable trade association, said Johnson. The American Society of Home Inspectors requires inspectors to perform at least 250 paid inspections before they can be certified. Inspectors also have to take continuing education to keep it.

What occurs during a home inspection

Once an offer is accepted, buyers typically have seven to 10 days to request a home inspection, Rhodes said.

The cost of an inspection varies, said Bassam.

"Costs move around by market and house size, but what I usually see for a normal single-family home is somewhere in the $400 to $800 range for the main inspection," he said.

A buyer or agent will schedule the inspection, Preslar said. It typically takes two to three hours. What is actually inspected? A lot, said Preslar:

Roof: shingles, flashing, leaks
Foundation and structure: cracks, settlement, moisture
Electrical systems: wiring panels, outlets
Plumbing: pipes, water heater leaks, drainage
Heating and cooling systems
Attic and insulation
Crawlspaces or basement
Interior features: windows, doors, floors and appliances
Exterior features: siding, grading, drainage

Pro tip: Buyers can order specialized inspections, such as a termite report, an inspection using a sewer camera and mold or air quality tests.

"As a developer, the three things I personally worry about the most on older homes are roofs, drainage and sewers," said Bassam. "Those are the quiet problems that turn into very big bills later."

Electrical, mechanical, expensive maintenance, structural condition and water issues are the main concerns of home inspectors, Johnson said. "We don't look at cosmetics, color of paint or pink tile," he said. Water is especially important. "Mold needs it to grow."

What happens afterward

The inspector provides a written report after they finish, which is reviewed by the buyer and agent, Preslar said. If there are any issues, the buyer and agent will decide what they want to ask for in repairs or monetary compensation from the seller. They even may decide to exercise a contingency clause.

Contingency provisions in most buyers’ purchase contracts protect buyers by giving them time (usually five to seven days) to analyze the report generated from the inspection process, said Rhodes.

For example, if an inspection process indicates that the seller’s house requires repairs totaling $8,000, a contingency clause allows the buyer to request a $8,000 reduction in the purchase price or for the seller to conduct the repairs. Another option is for the buyer to contact contractors for repair estimates.

The buyer’s agent can negotiate the repairs or credits that will be given, Preslar said. The inspector is contacted again and does a reinspection after the work is complete, he said.

If the buyer and seller are unable to agree on terms of the repair work, the contingency allows the buyer to pull out of the sale.

After the inspection, almost every report looks worse than it really is, said Bassam.

Common mistake: Getting overwhelmed by an inspection report

"Even very nice homes generate long lists," he said. "The right way to use that report is to focus first on health and safety items and big-ticket systems, then get rough numbers from contractors so you know if you are dealing with a $2,000 problem or a $20,000 one," he said.

"Only after that do you decide, with your agent, whether to push for repairs, ask for a credit or walk away."

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