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What to look for in a home inspection: Recognizing the deal breakers

Peter Warden
Peter WardenThe Mortgage Reports Contributor

In this article:
While most home inspections go off without a hitch, no home is perfect. What you do with the results depends on the findings and how you structure your home purchase agreement. Here’s what to look for in a home inspection.

  1. Minor items can be fixed or ignored
  2. Major problems can require the seller to drop the price or make repairs before closing
  3. Extreme problems may kill the deal. The seller either can’t afford or is unwilling to fix the problem

Cosmetic issues may not matter much, but a crooked foundation, bad roof or toxic mold can ruin your homeownership experience and possibly your health and finances.

Verify your new rate (Oct 23rd, 2018)

Home inspections: When the results are “iffy”

How do you know what to look for in a home inspection report? Unless you work in construction, you may well not understand the jargon used in your report. Of course, you can research the terminology online. However, even then you may not be able to differentiate between minor issues and serious threats to your new home.

Discover the things that are typically most worrying, below. These are the potential dealbreakers that should concern you most.

Related: How a home inspection can put money in your pocket

Whether they actually break the deal will depend on your seller’s willingness to fix the problem or compensate you for the cost of repairs. It might also depend on how much you love the home and how high your personal tolerance for risk is.

About the report

Before worrying about what to look for in a home inspection report, you need to know more about these inspections. The American Society of Home Inspectors (ASHI) says they should cover:

  1. Heating system
  2. Central air conditioning system (temperature permitting)
  3. Interior plumbing and electrical systems
  4. Roof
  5. Attic, including visible insulation
  6. Walls
  7. Ceilings
  8. Floors
  9. Windows and doors
  10. Foundation
  11. Basement
  12. Structural components

However, inspectors can only check things they can readily access. They won’t, for example, hack a way through drywall to get to an electrical panel.

If you have particular concerns about some aspect of the home, you should ask the agent or seller to make sure the inspector can get to everything she needs to see. You can get a copy of ASHI’s Standard of Practice from its website.

In a very limited sense, you can see inspectors as a being a bit like family doctors. If either spot something that bothers him or her, you’re probably going to be referred to a specialist. And that means more fees.

What to look for in a home inspection: The possible dealbreakers

The issues below are ones that can often result in eye-watering repair bills. However, it’s important to recognize that each home is unique. To return to our medical analogy: something that sounds really bad and potentially expensive can turn out to be nothing or easily fixed.

Related: Should I bail after a really bad home inspection?

Meanwhile, something else that’s rarely serious can occasionally be the start of something much bigger. So the following list is neither exhaustive nor definitive.

Foundations

Issues with foundations are the ones that strike the most fear in home buyers’ hearts. Of course, a minor issue caught early can be fixed quickly and inexpensively. But, more often, repair bills quickly run to four and maybe five figures — possibly even more for big homes with big problems.

That’s why many walk away from a purchase the moment the integrity of a home’s foundation is questioned. That’s probably a smart move, certainly if you don’t have significant financial resources.

But suppose you really love the home. It’s still not worth the gamble. But you could call in a structural engineer who specializes in foundations. That way you will understand the problem more completely and have more ammunition to negotiate with the seller.

Termites

You may be grossed out by cockroaches but it’s relatively cheap and easy to get rid of them. Termites are a whole different thing.

They are “detritivores,” meaning they feast on decaying vegetation. And, as the name suggests, Drywood Termites love nothing more than chowing down on all the wood that holds up a home.

Although it’s possible in most areas to eliminate a current infestation and then protect against future ones, that’s not the whole story. You may need a specialist to assess the structural damage they’ve already done.

Electrical

Rewiring a home can be disruptive and expensive. But the safety issues that come with old wiring are too scary to live with.

Be especially wary if the home you want to buy has aluminum (as opposed to copper) wiring. There was a period in the 1960s and ’70s when many homes were wired this way because it was cheaper. But we now know aluminum in electrical wiring is demonstrably less safe than copper.

Mold

Related: How to avoid new construction home problems

It’s a myth that all molds are harmful to humans. Most aren’t and the chances are any your inspector sees can be easily and safely removed by you or the seller with some specialist spray and elbow grease.

However, some molds are very definitely a health hazard. Indeed, they can kill. If your inspector reports mold but lacks the expertise to identify it, get in a specialist company to assess its danger — before anyone attempts a do-it-yourself solution.

Lack of permits

If a previous owner upgraded the home without the necessary permits, that issue can come back to bite you. To start with, you can’t be sure about the quality of the work.

But, more importantly, your homeowner’s insurance likely excludes any damage that arises from permitless work. In other words, if your home burns down because the work was shoddy, your insurer might walk away.

Other potentially costly threats

In some parts of the country, people used to bury oil tanks in their yards to supply heating furnaces. If there’s one in your new home’s yard, and oil starts leaching into the soil, you could face big removal and clean-up costs.

Another potential issue is plumbing that employs polybutylene pipes. From 1978 until 1995, these were seen as “the pipes of the future” because they were cheap, light and easy to work with. Then it emerged that chlorine in most water supplies could react with the plastic and undermine it.

When dealbreakers don’t break deals

Assuming your purchase agreement/sales contract has a home inspection contingency, you can walk away from your deal if significant defects appear in your report. The problem is the homeowner’s, not yours.

Related: How to get out of a real estate contract

However, providing you like the home enough, you may prefer to negotiate with the seller rather than back out completely. You may be able to reach an agreement whereby she has all the necessary repairs done. Or you may be able to get a price reduction that covers the costs.

Of course, if you opt for the price reduction, you’ll bear all the risk if the issue turns out even worse than predicted. But you’ll also reap the rewards if it’s less so. Only you can decide on the level of risk with which you’re comfortable.

Verify your new rate (Oct 23rd, 2018)