Buyer's Guide to Home Inspections
Buyer's Guide to Home Inspections:
Presented by Jewell Inspection Services LLC.
What is a home inspection?
A certified home inspector will take a close look at all functional aspects of the house to determine its safety as a dwelling. The home inspector will test the operational status of all major systems – plumbing, electrical, heating, and cooling – and check the roof, the foundation, and the home’s exterior. The inspector's job is not to fix or warn you about potential issues but to take note of the house’s current condition at that point in time and any safety or repair concerns.
When does a home inspection take place?
Home inspection generally takes place after an offer has been accepted and the buyer and seller have signed a contract, but before the closing of the sale that makes you the owner.
Are home inspectors code inspectors?
Short answer would be no. Code inspectors work for a local municipality ensuring work completed by contractors follow local building codes. Home inspectors are hired by the client (you) and work for the client. All findings are for you to use how you see fit.
Building code inspectors examine and enforce local building codes for the city or county where they are employed. Home inspectors are private contractors that provide a visual inspection of residential houses and provide a written professional opinion of the home's overall condition.
What will fail a home inspection?
A home inspection is not a pass or fail examination, a home inspector examines the overall condition of the property and the installed systems. The home inspector will also look for potential health and safety issues. Your lender will most likely require an appraisal in which the appraiser may note some major safety risks or liabilities to the property and your lender may require some things be fixed within a set amount of time.
Typically, the only thing a conventional mortgage lender requires is a home appraisal by a licensed real estate appraiser and a Wood Infestation Report (in certain parts of the US). The real estate appraisal helps the lender determine the house’s property value. The CL-100 wood destroying insect inspection is looking for damage caused to the structure from wood-destroying insects. Some exceptions do apply.
When the real estate appraiser visits the property, they may find a defect that prompts the lender to require an additional inspection. For example, when the appraisal report arrives and notes structural damage noted around the doors and windows, the underwriter may order a full or limited home inspection.
What is an appraisal?
An appraisal is used for the lender to ensure that the property they are lending for is worth the price of the loan amount.
A home appraiser uses current market data to help determine the current market value of the house. The appraiser uses recent comparable sales data in the local area to determine how much the home is worth today.
FHA does not require a home inspection, but they do strongly encourage it. FHA Appraisals act as both an appraisal and a minimal home inspection to verify that the house meets the minimum FHA standards. You can read more on the minimum FHA standards at the HUD.gov website.
An FHA appraisal and a home inspection are different in that a home inspector will perform a more thorough examination of the house. The FHA appraiser is looking to verify that the house meets the minimum FHA standards. FHA requires an FHA appraisal on all FHA loans.
VA Loans follow the same standards as FHA loads. VA encourages you to have a home inspection conducted but does not require it. The VA appraisal assesses the house’s value and condition by an independent VA appraiser. The VA appraiser will be looking to verify the home meets the minimum standards established by HUD.
Can a buyer walk away after a home inspection?
Yes, but depending on the situation, you may forfeit your earnest money deposit. After a home inspection, if a buyer decides to walk away from a home repair negotiation without allowing the seller to address items in the home inspection report, you risk forfeiting your earnest money.
The earnest money deposit promises that the buyer intends to purchase the property after all contingencies have cleared.
Can a seller back out after a home inspection?
Once the seller has agreed to the purchase offer, the buyer has a due diligence period to have the home inspected. The home inspector may note a defect in the inspection report that the client wants to be repaired. See our home inspection checklist for more details on what home inspectors look for and how you can do it yourself.
The seller can agree to either make repairs, offer the home “as-is” at a negotiated discount, or allow the buyers to exit the contract and refund the earnest money deposit.