Why
Even
Have
a H
ome I
nspection?
A common and excellent question!
Most people do not have the experience to evaluate the structure and systems that make up a home. That is why prospective buyers and sellers hire a professional home inspector!
Many people have knowledge about some house systems, but few have the broad knowledge, experience and diagnostic skills of a professional home inspector.
Even if you are knowledgeable about all aspects of a house, it is recommended, because of the emotional attachment, to have a professional that can offer an unbiased and objective opinion, do the inspection for you.
Beacon Home Inspections can help you protect your interests with a professional home inspection before buying, selling or when building!
The following article is short but very informative and recently appeared in the California Association of Realtors magazine. Even though it was written with a California slant it is still very germane to our area, the Twin Cities. I would invite you to read it for an even deeper understanding of why one needs to have their home professionally inspected. Note the "Median" price of home in California today!
Because No Home Is Perfect
What every client should know about
home inspections and warranties By Judi Connor
Most homeowners understand the importance of getting a thorough
home inspection prior to purchase; with the median price of a
single-family home in California having surpassed $400,000, buyers
don't want any unexpected surprises after the close of escrow.
Despite these facts, there remains a lot of confusion over what
is involved with a home inspection and what home warranties actually
cover. Use this article as a primer to educate your clients about
what's covered, what's not, and which party typically is responsible
for covering repair costs.
The Inspection Process
According to estimates from the California Real Estate Inspection
Association (CREIA), about 70 percent of California home sales
involve a general home inspection, although it isn't mandatory.
However, it is mandatory that home sellers disclose anything
that's wrong with the home prior to selling.
"There's no affirmative obligation for the seller to sell
a 'perfect' house; there's only an obligation to give the buyer
what is being represented," says June Barlow, general counsel
for C.A.R. "The home is sold in its present physical condition,
warts and all, but a seller can't conceal the warts and the home
has to be maintained so it's in the same condition as it was
on the date of acceptance.
"Our model is really that of 'disclose and negotiate,"'
Barlow continues. "There's a 17-day inspection period and
the buyer is supposed to investigate. If there are problems,
buyers negotiate that with sellers or they exercise the right
to get out of the contract." A standard home inspection
involves a visual, non invasive examination of the home from
top to bottom. The inspector evaluates and reports the condition
of the structure, roof, foundation, drainage, plumbing, heating
system, central cooling system, visible insulation, electrical
systems, fireplaces and chimneys, walls, windows, doors, and
so forth. Only those items that are visible and accessible by
normal means are included in the report. An average home inspection
in California typically takes two to three hours and costs about
$300 to $350.
Notes Joe Nernberg, a home inspector in Simi Valley, "The
cost to hire a plumber, a heating contractor, a roofing person,
an electrician, a structural engineer, etc.-they'd spend about
$30,000 to do that type of inspection. A general inspection is
one that flags things that are obvious and visual and then refers
a client to get other inspections afterward if advisable."
Jerry McCarthy, a construction consultant and spokesman for CREIA
in Northern California, concurs, adding, "If you go to a
general practitioner for a physical, they'll look at everything
and if they find something unusual, they'll refer you to a specialist.
It's the same thing with home inspections; if the inspector finds
something not right, whether it's electrical, structural, or
in the plumbing, he or she is going to recommend further evaluation
by a specialist in that area."
According to McCarthy, most homeowners should plan on at least
one problem that will require further inspection. He says, "No
house is perfect, even a new home." Steve Fife, a home inspector
with Spyglass Inspections in Ladera Ranch, says many buyers may
"think the home inspection is a repair list that the seller
is required to fix, which isn't the case at all. The home is
sold 'as is' and that's written in the California residential
purchase agreement."
After inspecting a home that needs repairs, Fife says he advises
clients to go out and get a few estimates for repair costs, average
them, and then ask for a credit toward the home purchase for
that amount. "That's easier for a seller to stomach. It's
usually not a good idea to have a seller fix something, anyway-it's
much better for the buyer to do it and ensure they get it done
properly."
Because inspections typically are limited to a visual check of
the premises, buyers may not realize that some aspects of a home
don't get a review. "Sometimes people think we can see through
walls, or see things underground," explains Nernberg. "I
had clients that were unhappy that a gas leak went undetected.
It was buried a few feet underground, and they thought a home
inspection should have covered that. I explained to them politely
that a home inspection is not an exhaustive inspection."
REALTORS@ and their clients should note that home inspectors
currently aren't licensed by the state, which means anyone can
claim to be an inspector (Also true in Minnesota). With that
in mind, it's wise for buyers, sellers and REAL TORS@ to interview
inspectors they're considering using. Topics to cover during
the interview include the inspector's qualifications, the training
the person has had, how long the person has been inspecting homes
and how many homes that person has inspected, whether the person
is insured, how long it takes the person to complete an inspection
(note: a 2,000-square-foot house should require at least two
hours; anything less could mean a lot will be missed), whether
you can see a copy of a completed inspection report, and whether
the inspector belongs to a professional organization such as
CREIA, which requires passing an exam and taking continuing education
credits to obtain and maintain membership.
Because a Warranty Isn't a Guarantee
Nine out of 10 existing home sales today include a home warranty,
according to the Home Warranty Association of California (HWAC).
Basic coverage for a home warranty means the warranty company
will repair or replace an existing home's covered mechanical
systems and major built-in appliances that break down due to
normal wear and tear. The typical warranty contract lasts for
one year (but is renewable) and includes the home's heating,
plumbing, electrical system, water heater and major appliances.
That said, a home warranty doesn't act as a catch-all for home-repair
costs. "One of the biggest misconceptions about a home warranty
is that it covers everything," says Ray Adams, a board member
for HWAC. "But normally, we don't cover 'consequential damages':
if a water heater bursts and the carpet or floor gets damaged,
the warranty company is not responsible for that-just the water
heater itself. We also don't cover pre-existing conditions, and
sprinkler systems outside aren't covered. Our coverage is limited
to the perimeter of the house and the garage."
The average premium for a standard home warranty policy is $315
a year, according to HWAC, which consists of nine member companies
that account for 95 percent of California's home warranty sales.
However, some premiums may be higher if the house is very large
and has duplicate systems or extra coverage is selected to cover
such things as pools and spas. Also, most policies have a $50
to $100 deductible. Adams says that the number of consumer complaints
is few, although they are typically due to homeowners not understanding
their policy and coverage.
According to HWAC statistics, warranty companies sell about 800,000
home warranties annually through a combination of renewals and
new contracts, and approximately 90 percent of all resold homes
in the state carry a home warranty. Betty Carter, regional manager
for American Home Shield in Santa Rosa, says, "Home warranties
in California are more of a competitive-sell-almost everyone
here has one. In the rest of the nation, for instance in states
like Montana where the percentage of home warranties is about
20 to 30 percent, it's more of a concept-sell."
According to Adams, one of the biggest problems warranty companies
have is when a buyer closes escrow and is simply told by the
seller or broker that the home has a warranty. However, the new
owner usually doesn't receive the warranty contract until five
to 10 days after close, due to paperwork and payment processing.
Then, if the homeowner has a problem during that first week-HWAC
reports 15 to 20 percent of its claims occur in the first 30
days-the owner will go out and get the problem fixed, mistakenly
assuming that reimbursement is due from the warranty company.
"Our policies explain that homeowners must call us when
they need a repair, not their own contractors," says Adams.
"They often don't get the best price. Whereas we can put
a water heater in for $300, some contractors will charge $1,000.
We recommend that the REAL TOR@ gives the buyer a sample of a
contract prior to closing so the new owner knows exactly what's
covered and who to call if anything happens."
Judi Connor is a writer based in Northern California
