Home Inspection Questions Answered
What are the requirements for becoming a home inspector?
To do home inspections in many states you have to have a home inspector’s license. Here in Indiana, for example, we have a sixty hour pre-licensing course that you have to take and pass, and then there’s an exam that you have to pass as well. After that, you have to provide the state with proof of liability insurance. Then there’s a continuing education requirement here that licenses renew every other year, and they’re required to do thirty-two hours of continuing education every two years. These requirements vary by state, but these are one example of the requirements for home inspectors in our state.
Also, it may not be required to be bonded, but it is recommended. Errors and Omissions Insurance (E&O) is also strongly recommended for home inspectors to protect you and your clients if you were to leave something out or miss something on a home.
Other than educating the homeowner or potential homeowner, what do you do on a home inspection?
On a general home inspection, we go through the entire home and look at all the major components. We look at heating, air conditioning, plumbing, electrical, the structure of the home, the roof, and the foundation.
We do a visual inspection, so we are inspecting what we can see. Pipes inside the walls and wiring inside the walls are usually concealed. But a lot of times, there will be a symptom like a slow drain at a sink, and we can recommend further evaluation to determine the cause of that.
If the power’s not on, or the water’s not running, we can still do a visual inspection, but it does limit our abilities. It’s much preferred that the utilities be on before having a house inspected. But if they’re not, we can take a look, and if a fitting has been leaking usually there are water stains under it, so we can just point that out, and then when the water is on you can go back and check it yourself at that location for leaks.
What types of home inspections are available to investors and the normal homebuyer?
The general home inspection is what most home buyers are going to want, and it covers all those major components we talked about earlier.
For investors, we also offer a ten point inspection. It’s essentially the same thing, but we don’t go into a lot of detail on the cosmetics. A landlord knows he or she’s going to put new paint and carpet in when the tenants move out, and a flipper is going to replace those cosmetic things before they try to sell it. So they don’t need us to spend a lot of time on those areas.
How do you let the potential buyer know what you find?
We go through the home and take pictures of everything we find, and that all goes into a report which we email to the client. If there’s a real estate agent involved, we’ll email it to them as well. Typically we try to get that to you the same day as the inspection, but our company policy is by the end of the next business day.
This document is divided up into different categories that we can report on. We’re looking for safety concerns, for example something such as not having GFCIs near a water source would be a safety concern. A GFCI is a ground fault circuit interrupt, and it’s a special type of outlet that has a test and reset button in the middle. Nowadays with new construction GFCIs are being placed on all kitchens, bathrooms, garages, exteriors, unfinished basements, and anywhere else where the potential for electricity and water to mix exists. We definitely recommend having those installed in any such locations.
What about other types of safety issues that the potential buyer really needs to be aware of—for example is a foundation issue always a big deal?
We don’t run into a lot of foundation issues, but the problem with foundation issues is that they can be so expensive to repair when you do find an issue. So we do want to try to identify those right away, and then we recommend having someone who’s experienced with those types of repairs come out and give you an estimate before you go through with the property transaction.
Our job is to look at what’s there in the property, and also to educate you on the condition of the home. Then once you have that information, you can go figure out what the costs are and whether or not you want to move forward.
Not all home inspectors are licensed to do radon testing, but in our case we are licensed and we use a forty-eight hour continuous monitor. So the way that works is we leave this monitor inside the property for two days, and then we go back in and read the results to tell you the radon levels.
We also do wood destroying organism tests, which most people just call termite testing, but that also includes carpenter ants, carpenter bees, and powder post beetles.
Then for mold, it’s hard to say if it’s harmful or not just by seeing it. You really have to take samples, send those off to a lab to determine what type of mold it is, and if it’s a dangerous variety, then we recommend that you get a remediation quote before going forward with your purchase of the home. Often these quotes are not as bad as you might expect to remove the mold, and so mold doesn’t have to always be a deal breaker. You would want to find the source of the mold, however, and make sure that’s also fixed so that it doesn’t come back after remediation, because living with certain types of mold can be extremely harmful to your health. It’s always best to get it tested if you’re not sure what kind of mold is present.
If I’m buying an older home, what will you be looking for that is different than a newer home?
In an older home, you won’t expect things to be a air or water tight the way they typically are in new construction, and so a little wood rot or some signs of old but not active termite damage is not uncommon.
Also, prior to 1978 or so, properties may have some lead paint. Older homes may also have knob and tube wiring, and the homes built in the fifties and sixties often had some aluminum wiring which is a dangerous fire hazard and should be replaced.
If you are a real estate investor who flips older homes and you find knob and tube wiring, this can also be a fire hazard, and should be capped off and replaced with current code requirements making sure no extra wiring is left that will be a problem for the next homeowner or cause an issue with an inspection and halt the sale.
When you’re buying and selling older homes you should be aware of the possibility that these issues might exist even if you can’t easily see them.
Should investors get the property inspected before a sale?
Some investors choose to inspect every house before they buy it, but not all investors choose to do this. Some investors who have a lot of experience flipping homes and know they are going to do a full renovation down to the studs may not hire a home inspector before making a purchase. However, if you are not experienced at identifying major issues that would be costly to fix, it’s highly recommended that you hire a home inspector. The cost for a walk-through inspection is minimal to save yourself bigger problems.
Sometimes depending on the contractor and the problems that are encountered during the rehab, sellers may want to have it inspected again even before listing it. Then of course most home buyers also have it inspected.
There is a tremendous advantage for investors, or even regular home sellers, to have a pre-inspection done before the property is listed. We can go through and basically give you a punch list of everything you need to address before a potential buyer sets foot in the property. It’s best to find out on your own terms that these issues exist, because you’re going to either be faced with them now or when the buyer has their inspection. If you address them now, you can do the work yourself, or you can hire the contractor you want, but if you wait until the buyer sends you an inspection response, you may be stuck using a contractor of their choice or something where it costs you more time and money than necessary to remedy the problem.
INVESTOR TIP: Having your property inspected before listing allows you to be in a much better position to negotiate with a buyer and eliminates any surprises that may lead you to have to lower your asking price.
If you’re getting a mortgage, do the lenders always require an inspection?
Different mortgage companies have different requirements.
For example, in some states a VA loan will have a stricter requirement to inspect for wood destroying insects than some other types of loans. These VA loans are provided by or backed by the Department of Veterans Affairs, and may require that you have this type of inspection on every home they provide a loan for, but in other states, it’s only required if the home is located in areas with a high probability of wood destroying insects. Although this varies a bit by state, their guidelines are a little different than say FHA loans, which are mortgages that are insured by the Federal Housing Administration, so this requirement depends entirely on your loan type.
We always tell people to talk to their mortgage broker and find out what exactly their specific loan and requires them to have during an inspection. Since FHA also has specific guidelines when they are making a loan on a property, if you can get a copy of those guidelines ahead of time to be sure your home inspection checks all of those items off it will make your transaction go that much smoother.
INVESTOR TIP: If you’re selling a property that you think will be able to be sold to someone with an FHA or VA loan, you’ll want to make sure that when you finish your rehab work on it that it will meet all of those requirements.
Who decides who’s going to do the inspections—is that the seller or the buyer?
Typically for us, most of our inspections are for clients buying a property, and the buyer is free to choose whoever they want to hire to perform the inspection. In most cases, they may not know an inspector, so their real estate broker will recommend someone or provide a list of people they’ve worked with for the buyer to choose whoever they want to hire.
NOTE: Often real estate brokerages have relationships with specific home inspections, mortgage, title, and other services companies, and are required to disclose if they will receive any compensation for recommending any of them. Although this compensation may go to the brokerage and not the agent, it’s still important to know the full story of why they are recommending that company. However, even if the brokerage does have a referral program with the recommended company, that doesn’t mean they are not highly qualified or shouldn’t be hired, just factor it into your research and decision making.
Does the inspection affect the appraisal?
The inspection should not affect the appraisal because the two are generally unrelated. However, the appraisal will look at if a house is really run down and has a lot of items that need to be addressed, and that will definitely affect the appraisal. But on the typical finished home that’s in reasonably good condition, an inspector is going to come in and look for anything that needs to be fixed on their list of items they check. The appraiser is going to look more at what amenities does the home have, what are the other houses in the neighborhood like, and what have other similar nearby houses sold for recently to determine the value they assign to it. So we are not directly related, but we do cross paths occasionally.
What is the typical cost of an inspection?
Most inspection companies are going to have a base price, and then they’ll adjust it by the size and age of the home. In the Indianapolis market for example, the average home inspection in 2017 is going to run about $300 to $350.
Will you do a walk-through style informal inspection for an investor instead of a written report?
We understand the reasons why an investor might want to pay a bit less and hire us for a walk-through inspection instead of a formal written report. But from our perspective, we feel like there’s a lot of liability to just giving you an oral statement, and then later on if an issue were to come up we’d have a lot of he said she said. Many home inspectors will agree to walk-through inspections, but our preference is to do a full written report, and have everything in writing to protect ourselves and our clients. From a liability standpoint, it’s just better for all parties to have an official inspection done and put everything in writing.
What is the worst problem to find during a home inspection?
This is kind of a two part question. The worst thing from a monetary standpoint is probably going to be foundation issues. Those are probably going to eat into your budget the most. But then also there are some safety issues like GFCIs that are only $10 or $15 for one of those outlets, but could be life threatening if not addressed. So from a safety standpoint you get sort of a different list than from a monetary standpoint.
What is the most interesting thing you’ve seen while inspecting houses?
The most interesting thing I’ve personally come across was in a house built in the 1800s. We were in the last bedroom, and I noticed that the interior of the closet was trimmed out with fancy trim work, and it had a gap on the baseboard trim. I thought, first of all why would you trim out the inside of a closet that way just in one closet of the entire house, and second, who was the horrible person who installed it that left this gap. Then the more I thought about it, the more I suspected and finally I just put my fingers under the baseboard, and it lifted the entire wall up it! It was a secret door, and there was a staircase leading up to the attic! The look on the buyer’s face when I found a secret door on the home she was buying was priceless!
It was built in the 1880s, and the wall had a rope going over a pulley, and there was a tree trunk that was cut to weigh the exact amount of the wall. So wherever I put the moving wall, it was perfectly balanced and stayed there. I thought that was the coolest thing…That’s one thing I love about this job—every day’s different! You just never know what you’re going to find. It’s almost like CSI for houses. I go out and gather all the evidence, and try to solve the mysteries.
What is the turn around time for inspections?
All companies vary, but at our company, we prefer 1-2 days notice. However, if you have a time crunch, we may be able to get there sooner.
Does a home inspection address code or permit issues?
No, we are not code inspectors.
The building codes can vary so much just from town to town, and we are covering pretty much the whole state, so it would be impossible for us to keep up to date on all the codes. So we are following ASHI, the guidelines set by the American Society of Home Inspectors. They’ve developed a standard operating procedure, so we’ve used that as the basis for our industry. But really these guidelines just set the minimum that inspectors are supposed to do. Our company has further developed that and made it more intensive in some areas where they want to see us look at things a little closer. But code enforcement is not part of the home inspection.
Likewise it’s not our job to check if permits were pulled properly. You can check the county recorder’s office at the courthouse, and they should have all of the permits from the home recorded there. So that should be something that a buyer or investor would do on their own.
Advice to Investors from an Experienced Home Inspector:
The best advice for anyone is to do your due diligence. Have your inspection done so you know exactly what the problems are with the house.
Research the documents available at the local court house, and find out what liens are on the property, if the taxes paid, and all of that sort of thing.
Investing doesn’t have to be hard or scary if you’re doing all of your homework and getting all of your information up front. Then it just becomes a numbers game. You add everything up, and if you can make money on the deal go for it, but if not, go find a different deal.
The above information was paraphrased from a 2017 interview courtesy of Jason Thompson, a licensed home inspector in Indianapolis.