A home inspection is your chance to know as much as possible about a property before a purchase. All homes should be inspected, whether new construction or 120-year-olds.
In the case of a new home, you are not buying the home “as-is.” You are buying a new home. It should be 100% new. A competent home inspector familiar with present building codes in El Paso County should complete a secondary code-compliance inspection. The inspection should also include potential cosmetic defects such as missed paint, items out of plumb, proper installation of fixtures, etc. This will help you objectively negotiate with the builder.
Most builders will be resistant to doing a new home inspection, citing Regional Building, their own quality control procedures or their home warranty. But most new home inspections we’ve seen have revealed one or more several-hundred-dollar fixes.
For resale homes, the contract states it is an “as-is” sale as a way of differentiating between new and old—that there will be wear and tear on the used home. A resale inspection identifies functional defects, which includes health and safety hazards as well as forecasting future replacement of major systems (roofs, furnaces, electrical panels).
Regarding future life expectancy of components, understand that inspectors will write a report that makes their trade organization or liability insurer happy. A term like “fair” might mean that a system has a year of life left, or it might mean 10 years of life. When in doubt, please ask for clarification from the inspector.
While a buyer technically has the right to object to cosmetic issues, these items should be considered in preparing the offer, which should reflect the market value (or lack thereof) of a specific property. Asking for their remedy in an inspection is not considered “good form.”
When viewing homes, buyers should be open and honest about their personal abilities to make improvements because it affects how they view individual real estate listings. Recently, we sold a 95-year-old home in the Old North End. After several negotiations, we reached an agreement in price for a home that we knew would require a lot of work, but had obtained a price that made it “worth it.” That is, until the home inspection.
The inspection revealed that the property would need a new electrical panel, mast and ground to be remodeled and likely rewired (the re-wiring alone was $10,000). The newer drain lines were not pitched correctly and would need to be re-hung. The garage roof was shot. There were bad unions at galvanized-to-copper plumbing connections everywhere. The mold test revealed elevated levels in two bedrooms, a $4500 repair after $3500 in required re-grading and new landscaping outside. Radon levels were elevated, and the basement bedroom had no heat source. A certain HVAC installer had signed his name to a non-permitted water heater in the basement that was illegally ducted out an unlined chimney.
We already knew going into the inspection that there would be issues; the baths and kitchen were last remodeled forty years prior, and there were smoke trails coming off several outlets (this, alas, is no joke). But when the buyer tabulated the cost of just getting the home to function properly, he was $40,000 into the home before he could begin any fun cosmetic remodeling.
A home that is “cheaper in price” may be more expensive to own due to ongoing repairs, overall construction quality, utility costs, landscaping maintenance, fire mitigation, or general obsolescence. In this case, that cheaper price would have purchased an electrical system that could start a fire in every room in the house.
Additionally, some repairs and improvements that are widely considered valuable and cost-effective can be marginal at best. New windows are nice, easier to operate, and considered more valuable by more buyers; but old single panes with an outside storm window have an increased insulating capacity (heat rises after all) and may not warrant replacement. A new 96% efficient furnace should reduce your utility rates, but not as much as a new programmable thermostat and a few hundred dollars worth of blown insulation.
We personally believe it is wise for all buyers to “self-escrow” the equivalent of one month’s mortgage payments for repairs and improvements each year (at least). For older homes, this may be as much as two to four month’s worth of payments. These wise costs of ownership help mitigate expectations around what a home inspection will accomplish.
We recommend several inspectors whom we know and trust. In some cases, a home may only require a general home inspection that is just over $300. Other homes may require several specialists to inspect items such as roofs, radon, mold, meth, sewer, well, septic, radiant heat and electrical systems.
If this sounds excessive, consider that every home has several thousand variables associated with it. A home is a historical structure. The land it is built on may have seen other improvements as well. Inspections can reveal items a seller may illegally choose to conceal or not disclose, or chronic elements that a seller may not be aware of.
More often, inspections reveal items that are a good example of “back then”—lower ceiling heights, insufficient number of outlets, steeper stairs and most often, overly flat yards that create present-day drainage problems.
No inspector is perfect—even the best inspectors will miss items. Their job is to find $500 and up items, not every $20 problem. But they should also be deductive and inquisitive. While we have a loyalty to good inspectors, we know that none are infallible. We say this not to lower the bar, but to recommend that you get an inspection that is as complete and thorough as you feel you require.
In the end, there’s no such thing as over-inspecting.