What's a Home Inspection and Why is it Important?
12.02.2021 | Category: Homebuying
In today's competitive housing market, there's no question that homebuyers need to look for every opportunity to find the competitive edge when placing an offer.
To help an offer stand out, some prospective home buyers are considering waving their home inspection, which can be a risky move for many reasons.
However, most real estate agents will recommend against waiving a home inspection since buying a home is likely to be the biggest purchase someone will make in their lifetime and costly repairs may put a buyer in a real financial bind later on..
While waiving a home inspection may win you a bidding war, it can backfire in a big way. If you later learn that there are structural or foundation issues, for example, it will be very difficult to back out of the deal.
Home inspections can reveal anything from a poorly repaired leak, improvements made not up to code, and faulty plumbing or electricity work. If you're not a seasoned homeowner or contractor, you will want to know how much money you may need to spend repairing your home before you can live in it.
To understand more about a home inspection and why it's important to the home buying process, learn more below.
What is a home inspection?
A home inspection is a professional examination of the physical structure of your home including the foundation, walls, roof, plumbing and electricity. The inspection typically takes place soon after the seller accepts an offer from a buyer and before the appraisal takes place.
Normally, the homebuyer is responsible for choosing and paying for the home inspection since it's usually part of the buyer's offer that protects them from purchasing a home with massive or unknown issues. It’s generally not too costly and can be one of the easier steps in the homebuying process.
Selecting a home inspector may seem intimidating, but it's likely your realtor or loan officer may know a reputable home inspector to refer you to. When it's time to make an appointment, it might be a good idea to ask what the full inspection includes and go over any issues you’d like pointed out if they arise.
As the potential homebuyer, you will want to be present when the home inspection takes place to discuss any findings the inspector might have. Having these discussions with the inspector in real time will give you specific insights into the home that you may not find in the inspection report.
As you’re going through your home inspection, avoid getting fixated on cosmetic repairs such as broken door knobs or stained carpet. Instead be sure important elements of the home are in good working order such as plumbing, electricity, roofing and heating.
Once you receive your home inspection report, your home inspector will likely take the time to discuss their findings. This may include any repairs that should be done and whether or not the issue is a hazard or danger. Inspectors typically point out areas where there may have been a leak, for example or termite damage.
If your home inspection report includes significant issues, you may be in a position to negotiate a lower purchase price or for the buyers to make the repairs before the home closes escrow. Understand that you shouldn't expect the seller to fix every minor issue, however if the repairs are major or structural it may be an opportunity to reconsider the deal.
Why is a home inspection important?
A home inspection is an important part of the home buying process because it allows home buyers to back out or renegotiate the offer based on the results of the inspection. One of the last things you want as a new homeowner are unforeseen and costly expenses.
Unlike a home appraisal, which is required of most loan products including VA loans, FHA loans and conventional loans, a home inspection report isn't usually required but highly recommended by most real estate professionals. Exceptions to this include observations made by the appraiser that are of major safety and/or health concerns such as mold, rotting boards, cracked structures or evidence of active pest infestation.
Many inspection reports will come back with normal wear and tear that won't impede on your purchase going through. However, if there are hidden issues with the home such as additions not to code or evidence of major water damage, you may want to work with your real estate agent to renegotiate.
It's important to note, however, that even if a home inspector or property appraiser does not make note of an issue, a major issue may be cause for concern once the loan is in underwriting. It isn't always likely but this can be especially true if the offer is contingent upon a physical inspection of the home in which case the underwriter may want to review the inspection report.
Whether you're a first time homeowner or looking for an investment property, an inspection report is an important document you will want completed by a professional to ensure you have a full picture of the property you're purchasing.
Looking to learn more about the homebuying process? Click here to visit Mutual of Omaha Mortgage's full list of purchase loan offerings and get started today!