General Question – Real Estate Inspector Myths
“So, Phyllis, when is the real estate industry going to do something about these unqualified home inspectors that won’t reject homes that are about to collapse?” This question came from a networking friend and another person in the group followed it with, “I know someone whose house was rejected by an inspector because there was a little bit of peeling paint on one side of the house.” They were coming at me from both sides of the fence. I stammered, “Well, home inspectors don’t reject homes, and yes, there are some poor ones, but a Realtors® can steer you to a good one.”
Home inspectors do not reject homes
Both of these guys had big misconceptions about what a home inspector is paid to do. Home inspectors are clients of buyers and get paid by the buyer to identify problematic areas and help them be in a better position to make a good buying decision.
When buyer and seller have agreed to price and terms, the next step in most cases is an inspection. A seasoned Realtor® should be able to recommend several inspectors or the buyer may have someone in mind. The most common inspection is a whole-house inspection plus a termite inspection. In recent years the frequency of buyers also wanting radon inspections has increased. The average inspection takes between two and four hours, and the agent should be present, and it’s smart for the buyer to be there as well. When the inspection is complete, the inspector points out the most serious findings and will then send the buyer a written report with pictures, generally within 24 hours. Now, it is up to the agent and the buyer to collaborate and decide whether to continue with the transaction.
In Kansas City, the buyer’s agent sends a form called an Inspection Notice to the seller’s agent. It has four basic options:
- The buyer decided not to do inspections.
- The buyer did inspections, and everything was fine, and they agree to accept the home in its present condition.
- The buyer did inspections and would like to renegotiate the contract.
- The buyer found something unacceptable during inspections and wants to cancel the original agreement.
A Resolution of Unacceptable Conditions form describes the buyer’s request for renegotiation. It will state that the buyer would like the seller to:
- make repairs based on the inspection report, or
- reduce the agreed upon price for the property, or
- pay a portion of their closing costs.
The negotiation could be a combination of all three. If the buyer decided not to do inspections, they can still ask to renegotiate, but cannot ask for repairs.
At this point, the buyer can still get out of the deal, with one exception. The default length of time for all this to happen is ten days, unless there was an extension designated in the original agreement. If the buyer does not report back to the seller within the signified timeframe, the buyer has no recourse to get out of the contract.
The one thing that many buyer’s agents forget to tell their clients is that when they ask for anything to be fixed or to adjust the purchase price, the first round of negotiations is null and void. The seller can cancel the agreement for any reason, and the buyer would lose the house. Cancellation is a remote possibility, but it could happen, and a client should be informed. If the seller does offer to renegotiate that still does not guarantee that there will be a consensus and there still may be a parting of the ways. I’ll be covering good negotiating tactics in another article.
The inspection process
So, inspectors do not accept or reject homes. It would be unethical of them to be giving advice other than what is in their report. So, what’s in the report? An inspector’s job is to go over the property with a fine-toothed comb and report their findings.
I have been working with Doug Cook, from House2Home Inspection Services for some years. He follows the American Society of Home Inspectors (ASHI®) Standards of Practice. His system covers external conditions and surfaces, roof, attic, insulation, ventilation, plumbing and electrical systems, appliances remaining with the house, heating and cooling systems, foundations (slabs and floors), walls & ceilings, garage, driveways (sidewalks). Many times he will check more than 400 items. Included will be major and minor deficiencies, major expenditures that may come up, potential safety hazards and items that do not meet current city or county building code. The result is a 40-50 page report.
The document begins with an overview of the whole property and the conditions under which he did his inspection. Next is a summary of what was found broken into five categories:
- Items Not Operating
- Major Concerns
- Potential Safety Hazards
- Deferred Cost Items
- Items Recommended for Repair, Improvement or to be Monitored
Next is a photo summary and then specifics of each area of the house. Sometimes I have cringed when Doug has mentioned something as small as a missing electrical face plate in the garage or that the stove doesn’t have an anti-tip bracket. Many of the items noted are things that most homeowners live with for twenty years and may only fix when they decide to sell, but I also appreciate his thoroughness; without it, he could be putting all of us in jeopardy.
How do you know if you have a good inspector?
So, back to my party friends’ questions. A home buyer that ends up with a property that is about to collapse can probably point fingers in several directions. If the inspection report omits the conditions, the buyer has recourse. If the report included the conditions, but they were missed or ignored by the buyer or the buyer’s agent, the situation becomes sticky. I’m sure there will be two completely different stories as to what occurred. If the buyer signed the Inspection Notice and Resolution they don’t have many options, and it is a sad situation, but the inspector is not to blame. With the peeling paint issue, it was probably because of the type of loan the buyer was going after and was probably caught by the lender’s appraiser. FHA, VA, and some other loan types have strict requirements.
Missouri is one of roughly twenty states that doesn’t require home inspectors to be licensed. Kansas dropped the requirement on July 1, 2013. But, most good inspectors in Kansas and Missouri will still take it upon themselves to get certified with organizations like ASHI® and American Home Inspector Training (AHIT). Look for a home inspector with these accreditations. And, still one of the best ways to get a good inspector is to listen to the recommendations of your professional Realtor® who most likely has a lengthy history with several home inspection companies. Good luck.
The opinions expressed in these articles are not necessarily those of Executive Life Magazine or the ACA Business Club. Answers are general in nature and do not apply to particular cases.