Why You Need a House Inspection Before You Buy, and How to Find the Right House Inspector

Occasionally you hear the sad story of a new homeowner who finds him/herself the owner of a money pit. In some states, including California, sellers are required by law to disclose to buyers any known problems with the house. California’s disclosure law is particularly stringent, requiring disclosure of not just such things as a leaky roof, or faulty plumbing, but also any deaths that have occurred in the home within the last three years, and neighborhood nuisances like a habitually barking dog. In addition, California requires sellers to fill out Natural Hazard disclosure statements for conditions which are known to occur in the area, such as floods, earthquakes, and fires. You can access the required disclosure forms by going to the California Department of Real Estate Web site (dre-ca.gov and type “real estate disclosure” into the search window). Also, sellers must inform buyers of sex offender databases maintained by local law enforcement.

Whether or not the home seller discloses any defects, you still need to do two things to protect yourself:

One, do your own house inspection before you make a written offer. There are several good do-it-yourself books available instructing you what to watch for. Buy a book, study it, and be informed before you go house hunting.

Next, hire a professional house inspector. This is done after you make a formal offer, but the offer should be contingent on the results of the house inspection. You need a general contractor to conduct a top to bottom evaluation, including the roof, the foundations, the plumbing and heating systems, and the drainage.

Home inspectors usually follow one of two methods. Some are checking to be sure a house meets the minimum industry standards, while others want to discover as many defects as possible, to give the buyer a truer picture. Those who stick to the minimum may do so because of the litigious nature of our society. By limiting the scope of their inspections, they limit their liability. If you want a more reliable idea of what you’re getting, ask ahead of time what the report will include.

A professional house inspection should take two or three hours for the job to be done right. Depending on where the house is located, it’ll cost you $200-$500, but could save you tens of thousands of dollars in the end. Accompany the inspector as much as possible so you can ask questions and learn details about the house. You may want to arrange special inspections as well, such as for pest damage, mold, asbestos, and other health or environmental hazards. Be sure to ask for the reports in writing.

If the inspections turn up problems, you can negotiate with the seller and possibly have the price adjusted to compensate for the repairs, or arrange for the seller to initiate and pay for the work.

Finding a Reliable Inspector

The common wisdom seems to be that the best way to find a good inspector is to ask friends for recommendations. Or you can ask a realtor that has no connection with your purchase. Do not ask your own agent or an agent representing the seller for a recommendation. Though the agents are probably good people, they have financial interests in closing the deal. Too often homebuyers have relied on the advice of realtors who may be influenced by the prospect of a quick sale, and instead of being happy homeowners, they have horror stories to tell.

It’s a good idea to get a few bids from inspectors who have been recommended as reliable. Check their references, including consulting your state’s consumer protection agency to see if complaints have been filed against them.

A great source of referrals and information is the American Society of Home Inspectors (ASHI). To be members of ASHI, these inspectors must pass exams, meet practice standards, and as a condition of membership, they are prohibited from doing contracting in order to prevent a conflict of interest. Their Web site is ashi.org. Once you are on the Web site you can enter your zip code to find a list of local ASHI home inspectors.

Finally, before you hire, ask the inspector to see proof that he/she carries E&O insurance (errors and omissions) or malpractice insurance.
If an inspector’s contract limits his liability, for example, to a percentage of his fee, it’s probably better to look elsewhere.

Here’s what can happen when you hire an inspector who does not have adequate insurance:

One California couple hired a house inspector to evaluate the home they were hoping to purchase. The agreement stipulated that the inspector’s liability was limited to 50 percent of the inspection fee of $385. When the report was done, it stated that there were no problems. But once the couple moved in, they discovered a leaky roof. The roofer they called to fix the problem said the leak happened because the roof had no flashing, a problem that should’ve been caught in the inspection. The repair would cost $8,000 to $10,000. When the couple sued the inspector for fraud, negligence, and breach of contract, he pointed out that his liability was limited to half of the inspection fee, or $192.50. The court agreed. The couple appealed, and the decision was reversed, based on several issues, including the fact that the inspector was a professional and therefore could be held to industry standards. (Lucier v. Williams, 2004 WL 257036, App.Div., N.J., 2004)