A Buyer s Guide to the Home Inspection By
13277 N. Illinois Street, Suite 120 Carmel, IN 46032 Indianapolis/Carmel - (317) 848-1744 Toll Free - (800) 878-1744 Lafayette (765) 420-7200 Fax (317) 573-2089 Visit us on the web at: www.securityhomeinspection.com 3/5/10 by Phillip B. Thornberry. All rights reserved. No part of this book may be reproduced, stored in a retrieval system, or transcribed, in any form or by any means, without the prior written permission of the author.
INDEX I. Key Players II. Licensing, Certifications, and Memberships III. Selecting a Home Inspection Company IV. What May Be Covered by The Home Inspection V. What to Order from Your Home Inspection Company VI. Attendance and What to Wear/Bring to The Home Inspection VII. What To Expect from The Home Inspector VIII. New Construction Homes IX. After the Home Inspection X. Re-inspections XI. After the Closing XII. Summation
Introduction It used to be that you could sell your house on a handshake, trade homes with your neighbor or better yet, pass the home down through the generations. Those were the good old days. In fact, most of us can t even remember or even fathom that as a reality. But it was. Today, we know that the process buying and selling real estate should be left up to the professionals. Transferring or acquiring real estate is so complex; it should not be done without the education and knowledge of professionals in the industry. This booklet is designed to address the home inspection process, as it relates to you, the Buyer. It focuses on time lines, what happens and when, what to expect from the professionals, and how to make the most of the information you obtain. We hope that you find this booklet informative and helpful as you embark on the road of your real estate purchase. We welcome any comments and sincerely wish you the best in locating the home that is just right for you and your family. ~ Phil Thornberry President
Key Players I. The key players in a real estate transaction are the Buyer, Seller, the Investor, REALTOR, Appraiser, Mortgage Lender, Title Company, Home Inspector, and Home Warranty Provider. Below are definitions to help you understand their part in a real estate transaction. 1. Buyer A person who is in the market and ready to purchase real estate. 2. Seller A person who currently owns property and has made it known they are ready to sell. 3. REALTOR - A real estate agent who is a member of the National Association of REALTORS (NAR). 4. Appraiser An independent person trained to provide an unbiased estimate of property value. 5. Mortgage Company The lender in a mortgage loan transaction. 6. Mortgage Broker An agent of a lender who brings the lender and borrower together. 7. Title Company - A company that specializes in examining and insuring titles to real estate. 8. Home Inspector - An independent, state licensed person trained to evaluate the structural and mechanical components of a property. 9. Home Warranty Provider A company that provides a policy to the Buyer or Seller as protection against unexpected mechanical breakdowns.
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II. Licensing, Certifications, and Memberships When interviewing a home inspection company, you may ask about any licenses, certifications, or designations that the Inspector may have. These credentials inform you about the Inspector s commitment to continuing education and what services he is able to provide. Below are some examples of different licenses which your home Inspector should/may have. Home Inspector - Any person performing home inspections for hire in Indiana must be licensed. You can learn more about Indiana licensing requirements at www.in.gov/pla. Wood Destroying Insect (WDI) To perform what is known as a wood destroying organism report, the Inspector must be licensed by the State Chemist office. Primary Radon Tester Testing companies must be certified by the state of Indiana. Testing companies can only be certified by Indiana after they have become a member of the National Environmental Health Association (NEHA). Mold Testing/Sampling Each inspection company has certified inspectors in different categories for mold inspection/sampling. It is best to contact the inspection firm to find out which certifications they have. The home Inspector may also be a member of one or more organizations regarding home inspections. The American Society of Home Inspectors (ASHI) and The National Association of Home Inspections (NAHI) are the two leading organizations in the home inspection industry. Members are required to complete continuing education and work under a strict code of ethics and standards of practice. Below are other notable memberships to look for in your home inspection company: Better Business Bureau (BBB) You can learn more about the BBB at www.bbb.com. Builder s Association of Greater Indianapolis (BAGI) You can learn more about BAGI at www.bagi.com. Indoor Air Quality Association (IAQA) You can learn more about IAQA at www.iaqa.com
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Selecting a Home Inspection Company III. Choosing the right inspection company is an important first step. The company should be qualified in a technical sense, not biased in any way, and have the proper equipment to perform a thorough inspection. The Inspector should also be licensed and/or certified in the appropriate fields. The following are questions that you, the buyer, might ask when interviewing a home inspection company: Q. Is the Inspector licensed? A. As of July 1 st, 2005 all home Inspectors in Indiana must be licensed. Q. Are you a member of a professional organization? A. Yes is a sign that the Inspector is committed to continuing education as well as professionalism. A code of ethics is part of the ASHI, NAHI, and NACHI programs. Q. How long have you been in the business? A. While there is no right or wrong answer, an Inspector who has experience is what you are looking for. Q. How many inspections have you performed? A. See same answer as above. Some states require a certain amount of inspections be performed or State board approved courses/exams be taken. Go to www.in.gov and look up more information under the professional licensing agency. Q. Are you licensed or certified to do termite, radon, and mold inspections? A. If the answer is yes, this eliminates the need to set up additional appointments. Also, this indicates the Inspector s commitment to full service. Q. Do you perform repairs? A. No. If an Inspector also performs repairs, he or she may not be considered objective. This may be a conflict of interest. Q. May I attend the inspection? A. Yes. A true professional should encourage your attendance. Q. Do you walk on the roof to inspect it? A. Yes, when possible. Realize that some roofs cannot be walked on due to material, pitch, or safety hazards such as the weather. Q. What does your inspection include? A. Please see What is covered by an Inspection section of this booklet.
Q. What types of radon tests do you offer? A. Since many types exist, it is important to know what you are buying. After this brief interview, most buyers will be able to narrow the list down to one or two companies. Since most Buyers are unfamiliar with home Inspectors, a REALTOR is a good source for a list of reputable companies.
What May Be Covered by the Home Inspection IV. The structural and mechanical inspection covers the following: (These are by no means complete lists but are designed to give a general understanding of coverage.) Please note that all inspections are visual. v Basement Structure Water penetration, water damage, structural integrity of walls, structural integrity of support system for first floor, window condition, floor condition, finished wall, and ceiling condition. v Crawl Space Structure Water penetration, water damage, ventilation, structural integrity of walls, insect damage, structural integrity of support system for first floor, insulation (location and condition). v Slab Structure Water seepage into ducts (under slab), settlement, and cracks. v Furnace Heat exchanger, burners/elements, blower fan, ducts, air flow, filter, flue pipe, humidifier, and thermostat. v Electrical System Amp rating, volts, breakers, fuses, main panel, sub panel(s), main service wire, branch wire, switches and receptacles, light fixtures, doorbell, and smoke detectors. v Plumbing System Water lines, waste pipes, vent pipes, fixtures and faucets, caulking and grouting, drainage, sump pump, water pressure, water heater, and gas pipes. v Interior Walls, ceilings, floors, steps/stairs, railings, fireplace, doors, and windows. v Attic Structure, roof decking, insulation, water penetration, and ventilation. v Appliances (Not all companies inspect appliances.) Range, oven, exhaust fan, refrigerator, dishwasher, disposal, and trash compactor. v Exterior Walls, soffits and fascia, gutters, roof, flashing, skylights, and chimney(s). v Grounds Walkways/steps, driveway, patio, porch, retaining walls, railings, balconies, and grading and drainage.
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V. What to Order from your Home Inspection Company Every inspection company offers a variety of services. What each Buyer orders, depends upon the house purchased. Below is a typical menu of a full service home inspection company: v Full Structural and Mechanical Inspections v Certified Termite Inspections (wood destroying insects) v Well and Septic Inspections v Water Analysis (bacteria, nitrates, nitrites, and lead) v Radon Testing (E-perm and continuous radon monitors) v Roof Inspections v Partial Inspections v Mold Inspections/Testing v FHA/VA Certifications v Winterizations and De-winterizations v Special Consultation Inspection v Expert Witness Testimony To start with, a full structural and mechanical inspection should be ordered. Items included are the crawl space, basement, heating system, cooling system, electrical components, plumbing, interior structure, attic, doors, windows, appliances, exterior, and roof. In addition to the full structural and mechanical inspection, houses in Indiana should be inspected for wood destroying insects. This is commonly called a termite inspection (or WDI ) and should report any active infestations and/or visible damage as a result of wood destroying insects. This type of inspection is required by most lenders and a state license is required to perform. Radon testing, although not required by most lenders, is a possible health risk, and therefore, should be considered. Most relocation companies and buyers request this test. Several types of testing devices are available (E-perm, continuous radon monitor, and charcoal canisters). Testing companies must be certified by the state of Indiana. Testing companies can only be certified by the state of Indiana after the testing company has become a member with the National Environmental Health Association (NEHA). www.neha.org For more information on radon, please visit www.epa.gov. In many areas, water is supplied by a private well. In these cases, the well should be inspected and a water sample analyzed for the presence of bacteria (total count of E- coli and Coliform). Most inspection companies offer this service and many lenders
require these reports before closing. Some mortgages may require lead water testing, and in some cases, nitrate/nitrite testing. Make sure to ask your lender which tests are required. The sewage disposal system, if not municipal, will be some type of septic system. An inspection of the septic system (which should include the use of septic dyes and probing) may be a condition of your loan. The above items should be ordered if they apply to the home. Some optional services that may be considered are: v Hot Tub and Pool Inspections v Sprinkler System Inspection v Lead Based Paint Inspection (for homes built in, or prior to, 1978) v Asbestos Inspection If asbestos is present in the home, an inspection should be considered. The Inspector should tell you the following: 1. If sampling should be considered. 2. If it is in a friable condition. 3. Give recommendations or options as to what should be done. The following items are excluded from the general structural and mechanical inspection: (please note that most of these items may be inspected for an additional fee) v Radon v Water Testing v Well and Septic v Security Systems v Water Softeners v Insect Infestation v Sprinkler Systems v Pools and Spas v Asbestos v Lead Based Paint v Mold Since many variables exist between inspection companies, the Buyer should discuss specific coverage and exclusions with any prospective inspection company.
VI. Attendance and What to Wear/Bring to the Home Inspection During the initial interview with the inspection company, the question should have been asked if the Buyer would like to attend the inspection. Hopefully, this was encouraged, and the date and time were set with this in mind. The inspection company will normally set the appointment, gain access, and will ask that all utilities be on. v Who should attend the inspection? Remember, this inspection is not a showing. Only the Buyer(s) and/or their spouse should attend. Please keep in mind that this is part of a business transaction that requires your undivided attention. v What does the Buyer need to bring to an inspection? This is up to the individual. The Inspector should have all of the necessary tools to perform the inspection. At the very least, bring a note pad and pen to write down major concerns, measurements, and maintenance tips that most inspectors provide. Although not necessary, some Buyers want to follow the Inspector into attics and crawl spaces (for safety reasons, most Inspectors will not allow the Buyer on the roof and possibly not in the attic). It is recommended to wear jeans and a sensible shirt.
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VII. What Should Be Expected From the Home Inspector Upon arrival, the Inspector will briefly go over what he will and will not inspect. The Inspector will also ask the Buyer to read and sign a pre-inspection agreement. The agreement will clarify exclusions, limits of liability, etc. Most inspections take between two to three hours to complete on a home that is less than 3000 square feet. The Buyer should feel free to follow the Inspector throughout the house and ask questions. The Inspector should also inform the Buyer of routine maintenance items such as cleaning or changing the furnace filter, humidifier and water heater settings, and location of the main water and gas shut off valves. A hand written or computer printed report should include digital photographs of the house. Payment is expected before or at time of the inspection. Acceptable forms of payment include major credit cards and/or check. Make sure to ask your inspection company what forms of payment they accept.
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New Construction Homes VIII. The Three Phase process There are phases in building a new home. Each phase represents the level of completion in the construction process and an inspection at each phase is recommended. The first phase would be the foundation inspection. A foundation inspection is a complete inspection of the footings, foundations, and concrete floors. This should be scheduled to occur after these items have been poured, but before backfill (where dirt is pushed back into place) has taken place. The second phase would be the pre-drywall inspection or otherwise known as a rough-in inspection. A pre-drywall inspection covers the items that are normally inaccessible due to drywall. The Inspector will examine and report on electrical, plumbing, framing, and heating runs that will not be visible once the drywall is in place. This should be scheduled to occur immediately after all mechanicals have been installed and prior to insulation. The third phase would be the final inspection. The final inspection is the full mechanical and structural inspection. This should be done prior to signing off with the builder. Why should I have my brand new home inspected? While most Builders carry a one to three year warranty, it is advisable to have an independent home Inspector inspect and render his/her professional opinion. Even though a Code Inspector from the city/county looks at the home, it is not a thorough inspection, it is merely a walk through that allows the Builder to progress to the next phase.
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After the Home Inspection IX. Inspection report turn around time Some companies will generate the inspection report on site at the end of the inspection. In most cases, the report will be computer generated. Some companies will generate the inspection report and present it to the Buyer within twenty-four hours of the home inspection. Ask your home inspection company when you can expect to receive the inspection report so you can meet any deadlines you may have. Sometimes the home Inspector will retain the inspection report so that he can do some research. Fax numbers and e-mail addresses should be given to the Inspector or inspection company so that the report can be issued expeditiously. Consulting your Home Inspector After you receive your home inspection report and before you respond to the Seller, you may want to ask questions of your Inspector. The Inspector should have given you a business card with his contact information. If the Inspector has not given you his contact information, a phone call to the main office may otherwise take place. The office staff will be able to help you get in contact with the Inspector. Consulting your REALTOR What defects are the responsibilities of the Seller? This is a question that the Inspector does not answer. The Inspector s job is to point out visible defects. Once the inspection has been performed and a report generated, the Buyer meets with his/her REALTOR and creates a Buyer s Response to the inspection report. The Buyer s Agent will then present the Buyer s Response to the Seller s Agent. Once the Seller has signed the Buyer s Response and repairs have been made, the Buyer will want to see receipts of repairs made and then order a reinspection. Write an effective response The key to the Buyer s Response is that it should be drafted with the end result in mind. Be specific about what you expect the final outcome to be. This is an area where the Buyer will want to utilize the knowledge of the home Inspector and Buyer s REALTOR. Make sure that any items that were not inspected due to weather related issues, such as snow cover or cold temperatures, or any inaccessible areas are left open in the Buyer s Response to be inspected at a later date but prior to closing.
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Re-Inspections X. Do I really need a re-inspection of the home? A re-inspection should be considered when you have asked that repairs be performed. There are several options when looking at repairs: 1. The Buyer could take a cash settlement. This works on items that have clear cut costs with little to no chance of anything else coming up. 2. The Seller makes repairs himself. This typically is not a good idea unless the Seller is licensed in the specific field of the repair. However, quite often, there are repairs that require only minor attention. 3. Utilizing an outside repair company. The Buyer should always get a receipt even though the Seller typically pays for the services rendered. Re-inspections are highly recommended for any and all repairs, regardless of who does the repair. Should I have the same home Inspector perform the re-inspection? Having the same Inspector is beneficial. The initial Inspector is familiar with the home and has first hand knowledge of any defects that were found. However, sometimes due to scheduling and tight deadlines, the initial Inspector is not available. If this is the case, another Inspector may be scheduled. He should have a copy of the inspection report and may have spoken to the initial Inspector. Prior to the re-inspection, a faxed or e-mailed copy of the Buyer s Response should be sent to the Inspector. After the re-inspection You will obtain a written or computer generated report with updated information detailing the repairs made. While most repairs are satisfactory, there are occasions when the Inspector does not approve a repair. If that is the case, another trip to the property may be needed to meet with the contractor.
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After the Closing XI. Remember, even a house can change Once the Buyer has moved into the home, will he/she find things that the Inspector did not note? Absolutely. Remember, the home inspection is intended to be an overall, visual, and general condition of the home, not an exhaustive list of defects. Therefore, now that the Seller has moved from the home, removed their personal items, utilities have been turned off, or simply if an appliance stops working or a leaks starts, the inspection was not a guarantee of future conditions happening. An inspection is not a warranty. Home warranties It is recommended to protect yourself against future breakdowns of mechanical systems by placing a home warranty on the property. Some warranties will also include roofs, sump pumps, wells, pools, appliances, and more. Each home warranty provider has their own policy and coverages. You should read them carefully.
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Summation XII. We hope that we have been able to be of service to you by giving you insight to the process of home inspections. We are here to answer any additional questions you may have or to be of further assistance. Please feel free to call Security Home Inspections anytime, we would welcome the opportunity to be a part of your team. Providing continuous, professional service. Every call. Every inspection. Every time.
13277 N. Illinois Street, Suite 120 Carmel, IN 46032 www.securityhomeinspection.com 317.848.1744 800.878.1744 317.573.2089 fax Lafayette: 765.420.7200