Home Inspection Guide: What Buyers Should Know

Having a seller accept your offer can feel like reaching the finish line in the great home buying race. While it's worth celebrating each step, you're starting your next essential step: the home inspection. Negotiations under contract and walking away from a deal are only possible with a home inspection that tells you about every aspect of the house: the good, the bad and the ugly. 

Everyone wants the process to go smoothly so the sale and closing can proceed as planned, but inspections can throw a wrench in the works. Knowing what to do after reading an inspector's report can make the difference between the house of your dreams and escaping a potential disaster with your earnest money in hand. Here's how to handle the home inspection and your options after receiving the information you need.

What Is A Home Inspection? 

A home inspection is a thorough examination of a residential property's condition to provide the potential buyer with a detailed assessment of the property's quality. A qualified home inspector conducts this process and identifies issues with the home's structure and systems.

The potential buyer who pays for and receives the inspection receives a report on numerous aspects of the home, including the foundation, electrical system, plumbing, HVAC, roofing and more. The inspection aims to uncover any defects, safety concerns or maintenance issues that may affect the property's value or pose problems for the buyer in the future.

A home inspection differs from a home appraisal's focus and purpose. Specifically, a home appraisal is an assessment of the property's market value conducted to determine the appropriate loan amount for the home buyer. On the other hand, the home inspection addresses the property's condition and identifies potential issues.

An inspection is a vital part of buying a home because it occurs before closing. The buyer schedules a home inspection after the seller accepts their offer. Accepting an offer puts the buyer and seller under contract, meaning they agree on a set of terms for buying the house, including the price, earnest money deposit and contingencies. A contingency can make the home inspection a pivotal step in the home buying process, as you’ll see in the next section.

How A Home Inspection Works

A home inspection lets the potential buyer know the extent of the damage and wear the home has suffered and the repairs to increase the safety or comfort of the home. Here’s how the home inspection can serve the buyer and how to hire a qualified inspector.

Home Inspection Contingency

A home inspection contingency is a typical feature of many offers because it allows the buyer to renegotiate the offer or back out of the deal without losing any money if the inspector finds severe flaws in the home. In other words, the home inspection contingency protects the buyer if the home is in worse condition than initially thought. For example, if the inspection reveals a broken furnace, the buyer who included a contingency can lower their offering price or ask the seller to fix it before the closing date.

How To Find A Home Inspector

While a home appraisal is a requirement from lenders, an inspection isn’t mandatory to buy a home. As a result, finding a home inspector is the buyer’s responsibility. You can find an individual home inspector or a home inspection company in various ways.

Your real estate agent has connections and relationships throughout the industry, including home inspectors. In addition, your friends and family may recommend an inspector they found when buying a home. If these avenues fail, look for inspectors certified by reputable organizations, such as the American Society of Home Inspectors, the National Institute of Building Inspectors or the International Association of Certified Home Inspectors.

Once you find a company you want to work with, spend some time researching them online to see what kind of experience other customers have had. When you reach out to the inspector, here are some questions to ask: 

• What does your home inspection report cover?
• When will I receive the inspection report?
• How long have you been practicing?
• How long will your home inspection take?
• How much does your home inspection cost?
• What type of report do you provide?

Inspections usually take 2 – 3 hours. Inspectors often schedule 2 – 3 weeks in advance, so your appointment slot can be 10 days out or more. Additionally, inspectors typically send a final report 1 – 3 days after performing the inspection.

Understanding A Home Inspection Report

A home inspection report summarizes the inspector’s findings. It displays a checklist of items and facets of the home and provides a description next to each one, describing the condition and the inspector’s recommendations.

The inspector will also take photos as they go through the home and emphasize problematic areas. They’ll provide a key at the beginning of the report to help interpret it. Each facet of the home will be labeled Functional (F), Not Inspected (NI), Additional Evaluation Recommended (AE), Deferred Maintenance (DM), Safety Concern (S), General Repair (R) or Defect (D). The report can range from 15 to over 70 pages long, but reviewing it is crucial to understanding what you’re under contract to buy.

What Home Inspectors Look For

Home inspectors examine the interior, exterior and safety features of the home. These elements contribute to basic habitability of the house. Here are the specific aspects home inspectors check:

• Structure and foundation: The inspector examines walls and the foundation for cracks, settling and water damage. The integrity and stability of the building's structure and foundation are crucial for the property, and a problem can tank its value. While living with foundation issues temporarily is possible, fixing the problem before it worsens is highly recommended.
• Heating and cooling systems: Checking furnaces, air conditioning units, ductwork and thermostats informs you about the functionality and condition of the heating and cooling systems (HVAC). The HVAC system ensures proper climate control and identifies potential issues affecting energy efficiency. Replacing one can cost between $5,000 – $10,000.
• Plumbing and electrical systems: Water and electricity are essential systems in the home. They can also present safety concerns, cause damage if unchecked and must comply with local building codes. The inspection report will describe the pipes, fixtures, wiring, outlets and the electrical panel. Any leaks, faulty wiring or outdated systems are often safety hazards requiring immediate attention.
• Basement and attic: These areas can contain signs of water intrusion, weak insulation and worsening structural conditions. The inspector will look for dampness, leaks, drafts and signs of pests. Doing so prevents issues like mold, rot and infestations.
• Kitchen and bathrooms: Your inspector will also evaluate the sinks, faucets, toilets, showers and kitchen appliances for proper function.
• Ceilings and floors: These parts of the home can suffer from water damage, cracks, stains, unevenness and surface damage. They can also reveal structural concerns and leaks that may need addressing.
• Roof: The inspector examines shingles, flashing gutters and the overall roof structure for leaks, damage, and signs of aging.
• Grounds: The home's exterior features, grading and drainage around the property can experience damage if water isn't flowing away from the house.
• Safety Features: Ensures that safety features, such as smoke detectors, handrails and stairwell lighting, are present and functional. This promotes a safe living environment and compliance with safety regulations.

Remember, the above is a sample list, and inspectors may examine other features of the home and property according to the situation. Additional inspections may also be necessary for specialized features of the home, such as a pest inspection or septic inspection. Although these extra inspections may cost money, they can avert disasters costing thousands of dollars and gigantic headaches.

Common Home Inspection Failures 

Unfortunately, houses can and do fail the basic requirements of a home inspection. Common causes for failure include foundation problems and roofing damage. In addition, plumbing and electrical systems are obstacles when wiring is faulty or pipes need replacing. HVAC problems are also a concern because they affect the temperature and quality of the air in the house. Lastly, environmental and safety hazards, including mold, termites, and other pests, are common culprits for inspection failure. You can learn more about common home inspection failures to walk into a negotiation prepared to advocate for the necessary repairs.

How Much Does A Home Inspection Cost?

HomeAdvisor’s data shows that a typical home inspection costs an average of $342. Your location, home size and inspector can influence this figure, and costs range from $281 – $402 nationwide.

Who Pays For The Home Inspection: The Buyer Or Seller?

The buyer pays for the home inspection in most cases. While it’s possible to negotiate for the seller to pay, markets with high demand contain a multitude of buyers who gladly pay the inspection fee to outcompete others. As a result, only the most buyer-friendly markets (high supply, low demand) would see the potential for the seller to pay for the inspection as a concession.

What To Do After A Home Inspection

After a home inspection, the first step is to read the inspection report to understand the identified issues and their severity. Categorize them into concerns that require immediate attention and minor ones you don't need to address. Then, discuss the inspection findings with your real estate agent. They can provide insights into which issues are common and what repairs are typical.

Your agent will also advise you on how to proceed in light of your offer (specifically, whether your contingencies allow you to change or withdraw your offer). From there, you can devise an action plan to take the home as is, change your offer based on your contingencies, or back out.

Remember, walking away is possible even if you didn't include the necessary contingencies, but you'll lose your earnest money by doing so. As a result, it's crucial to weigh the costs of buying a home with several issues versus losing your deposit.

If your contract allows negotiations based on the inspection, communicate with the seller about them. Prioritize necessary repairs based on safety, structural concerns and issues that could impact the home's functionality or your ability to live in it comfortably. Clearly communicate the identified issues and proposed repairs to the seller. If the seller disputes the necessity for repairs, provide a copy of the inspection report.

If the seller is amenable to conducting repairs, the next step is to decide how and who performs them. For example, the seller might drop the price by the amount estimated to finish the repairs. On the other hand, you might require the seller to complete the repairs before closing on the house.

Discovering issues can be disheartening and frustrating, but it's crucial to be open to negotiation and consider compromises. The seller may agree to handle certain repairs, provide a credit for the repairs or adjust the selling price to accommodate the needed fixes. Ultimately, it's best to keep your eyes on the prize: A home you can live and flourish in that doesn't have serious safety or structural concerns.

Home Inspection FAQs

Here are the answers to some frequently asked questions about home inspections to clarify uncertainty and give you confidence to make an offer.

Are home inspections required?

Home inspections aren’t a requirement to buy a house. However, they’re recommended for buyers because they inform you about the house’s condition and any necessary repairs. They’re also valuable negotiation tools, allowing you to approach the seller for a lower purchase price or repairs to the home.

How long does a home inspection take?

Home inspections take around 2 – 3 hours to complete. The time will vary based on a property’s condition, size, age, location and the type of home. Some inspectors return the inspection report the same day, while others may take 1 – 2 days to finalize it.

What’s not included in a home inspection?

Although home inspections are comprehensive, they don't check for absolutely everything. Special inspections for specific aspects of the home will increase the cost of buying the home but can be well worth it for the following issues: 

• Asbestos
• Chimney
• Mold
• Well
• Septic
• Termites or pests
• Radon

What if a house fails a home inspection?

Buyers have several options if a house fails the inspection. They can walk away, renegotiate or decide the issues aren't serious enough to change the offer. Renegotiating the contract may be unsuccessful if you don't have contingencies allowing you to walk away from the deal without losing money.

Should I attend the house inspection?

It's best to attend the inspection while it happens to gather as much information as possible about the house. You can talk with the inspector as they go through each aspect of the home and ask them questions about any issues they see. While you'll receive the report after the inspection regardless, being present for it can give you more context and details to help inform your decisions afterward.

What’s a Seller’s Disclosure?

A Seller’s Disclosure is a document that a home seller provides to potential buyers, detailing information about the condition of the property and any known issues. The purpose of a seller's disclosure is to make buyers aware of the property's history, potential defects and any repairs or renovations undertaken. This document is a crucial part of the real estate transaction process and is required by law to identify problems the seller is aware of when they put the home up for sale.

What’s the difference between a home inspection and a home appraisal? 

The home inspection and home appraisal emphasize different aspects of the home for separate purposes.  A home inspection involves an inspector who assesses the home's current condition for the buyer’s benefit. Conversely, a home appraisal means an appraiser assesses the home's current market value for the lender to know how large of a loan they should provide the buyer. An appraisal focuses on the safety and habitability of the home, while the appraiser compares it to other homes in the neighborhood to help determine its value.

The Bottom Line

A home inspection is a crucial step in the home buying journey because it helps the buyer understand the home’s condition before they close. Although the inspection can reveal problems that hinder the process, it allows you to negotiate with the seller or walk away from the deal if the issues are too severe. As a result, it’s a vital safeguard and tool for the buyer.

By equipping yourself with the information you need, you can approach buying a home with confidence. Start on a mortgage application today to take one step closer to finding your dream home.