When you're buying a house, there are a huge number of things you have to coordinate. Before you even start the process, you may spend months looking for the perfect place to live, driving through countless neighborhoods with real estate agents. Once you pin down a good prospect, you have to figure out what offer to make that will balance your desire for that particular house, and your chances of successfully buying it, against prudent financial behavior. After your offer gets accepted, then you have to find financing, which may introduce even more technical matters to the mix, including an appraisal of the property, obtaining a title insurance policy, arranging for legal documents for the sale, and setting up a time for closing. In the rush to get everything done, it's easy to feel overwhelmed.
Even with all the things that have to happen before you can buy your house, one of the most useful parts of the buying process is the buyer's house inspection. Although you'll have to pay to have a qualified inspector look at the house you're planning to buy, the peace of mind you'll get from knowing exactly what you're getting into with your purchase is often compensation enough for the cost. In addition, depending on the results of the inspection, you can often get your seller to make additional concessions, even after you've agreed on a contract price.
Inspections and contract contingencies
When you make an offer to buy a house, the form contract that most real estate agents use includes certain provisions about the conditions under which you're willing to go through with the purchase. By including these provisions, you make your offer contingent on a number of items. For instance, a typical offer may include contingencies for obtaining financing; the contract may specify a time period during which you must look for a mortgage. If you're unable to find financing that meets the terms of the contingency, then you have the right to back out of the agreement and get back any deposit or earnest money you've paid.
The other common contingency that buyers include in their offers is the right to have an inspection of the property. Although you may have formed an opinion of the house based on a walkthrough with your real estate agent, you'll want to have an expert check more thoroughly, to alert you to any unnoticed conditions that could demand costly repairs later. While many buyers base their decisions largely on subjective and emotional factors, inspections provide an objective analysis of the property's condition, and an estimate of any near-term work it may require.
What inspectors inspect
A good house inspection will give you information about every facet of the property's condition. A close look at the foundation and support structure of the house will alert you to any problems that threaten the stability of the house. A thorough check of all heating and cooling systems will give you a good idea of how old your house's equipment is, and warn you of any problems. Similarly, looking at the plumbing will help you anticipate costly repairs before they become necessary.
In addition to checking the interior, your inspector should also spend a lot of time outside the house. An examination of the exterior walls and foundation can warn you of potential problems before they make their way inside. A close look at the roof will tell you its age and where any leaks may be likely to occur. Some inspectors even look at landscaping issues, especially items like overhanging trees or overgrown shrubs that can pose a danger to the house itself. Make sure the inspector takes a look at the garage and any other outside buildings as well.
Finally, if the seller is including any additional items with the house, such as appliances or specialty fixtures, your inspector should make sure that they work. Depending on whether or not the seller is still living in the home, you may need to arrange to have some appliances, such as refrigerators, turned on before the inspection to give them enough time to start working.
When you find a problem
What if the inspection turns up something unexpected? Your actions will depend on your contract's terms and your personal reaction. In some cases, you may have the right to cancel the contract entirely if the inspection doesn't satisfy you. However, if you still want the house despite any inspection issues, you may want to either to have the seller fix any problems, or negotiate to lower the sales price, leaving you extra money to handle repairs after closing. Taking your inspection report to a local Home Depot, Lowe's, or other home-improvement store can help you come up with estimates of how much certain repairs may cost.
The success of your negotiations will depend on the housing market in your area. When the market was booming, buyers who tried to use inspections to get bargaining leverage risked flat refusals from sellers, who often had multiple offers above their listing price. Now, with housing starting to slow down, buyers may be in a better position to get concessions from anxious sellers who want to keep a deal at all costs.
During the process of buying a house, it's hard to keep track of everything you need to get done. Making the most of your house inspection, however, is a vital part of making sure that you're getting the house you've always wanted. It can also save you thousands of dollars in repairs and renovations.
Related articles:
For more information about buying a home, check out the Fool's Home Center.
Fool contributor Dan Caplinger just saved a lot of money by getting his soon-to-be new house inspected. He doesn't own shares of the companies mentioned in this article. The Fool's disclosure policy lets you inspect for yourself.
