When you're buying a home and it comes time to arrange a home inspection, you're probably better off not using one referred by a traditional agent, as the agent is aligned with the seller of the house. If you're using a buyer broker, it can be fine to go with a referral from him. But, also get references from the inspector. (If he's reluctant to provide them, say sayonara.)

Check out whomever you plan to use with the American Society of Home Inspectors (ASHI) (gesundheit!) to make sure he's got sufficient training and experience. Find out what will be covered in the inspection -- in detail.

Make sure that you can accompany him on the inspection, and do accompany him, observing what he does. In addition, you want him to carry "errors and omissions" insurance, which will cover you in the event that he goofs and misses something costly.

Today, often for just a few dollars, you can purchase or ask the seller to provide a "home warranty" -- insurance that covers unforeseen repairs for the first year or so after you buy the house. Most of these policies are contingent on a home inspection being performed by an inspector the insurance company trusts, but they offer great peace of mind. Many real estate agents and sellers are offering these policies as part of the sale to reduce liability for missed problems and to entice buyers. If they don't mention this, ask about it.

You can learn more about home buying in our Home Center -- we've even got some good deals on mortgage rates for you there.

Also, below is a response we received after we ran this article a previous time. It offers some additional valuable perspectives.


On home inspectors
I thought your article was very misleading and could cause some homebuyers some huge headaches if they followed your advice.

First, what is a traditional agent? I have been a Realtor for 9 1/2 years and I have never heard of a traditional agent. When I first started selling real estate, there was an agency agreement called subagency. This was where both agents listing and selling represented the seller. This can still be found in small brokerages with fewer than five agents.

However, the majority of real estate companies work with what is called limited agency, where in the office you can have a listing agent that represents the seller and the selling agent represents the buyer. The agent working for the seller is careful to take care of his or her seller but they have to disclose any material facts about the house. The selling agent represents the buyer and tries to get his buyer the very best deal and to make sure everything is known and understood. This also pertains to home inspections.

We have home inspectors in my area that belong to ASHI and I wouldn't use them if they were the only inspection company left in the entire state. They found radon in a house that another company that wasn't a licensed radon repair company didn't find. They also found some plumbing problems that they gave a bid of $6,000 to fix. We called a plumber and his bid was less that $1,000. I don't know a single realtor in my area that would use this company.

If the buyers didn't take our referral of a very good inspector that has no ulterior motives, they would have been taken to the cleaners. This same company also missed a bad furnace that almost suffocated the buyers after they moved in. I would always take the recommendation of a real estate agent because they work this business every day and they know who is reputable and who isn't. Just because someone is a member of ASHI doesn't mean he is honest or even good at what he does.

We had another home inspection company come up from a much larger city. They did their inspection and gave a 300-page report. They disclosed all kinds of ticky-tack little things that were easy to fix, but they failed to pick up the fact that the home had had a fire in it. It had been disclosed and they had a copy of the seller's disclosure, but they obviously failed to look up at the black wood in the furnace room or to read the owner's disclosure. I will never use this company again.

Also I would never recommend a home warranty to a buyer. They are nothing but a waste of money. In my 9 1/2 years, I have never heard of anyone getting a claim paid or getting anything covered by the home warranty. I bought my home five years ago and it had a warranty. My swamp cooler leaked and caved in my bathroom ceiling. We had lived here four months. I called the warranty company. That wasn't covered because they only cover central air units.

I have friends who bought a home that had a warranty. Their central air unit didn't work, and the company said the central air unit was too old, so it wasn't covered. I know of numerous stories where people wasted their money on a home warranty and then had to turn around and spend more money to fix a problem because the warranty company didn't stand behind its warranty. -- Amy Greenhalgh

If you found the above interesting, then read InTheMood's rebuttal , on our Fool discussion boards. (A painless free trial is available.)