Lenders don’t require a home inspection – only a home appraisal, so many homebuyers wonder if they need one, especially since it adds to the home’s closing costs.
It’s no secret that buying a home costs a lot of money. Anywhere you can save, you probably want to take advantage of, but don’t let it be the home inspection. Even though an inspection isn’t required, it is worth its weight in gold when you make one of the largest investments of your lifetime – a house.
What is a Home Inspection?
A home inspection is different than a home appraisal. The appraisal determines a home’s fair market value based on comparable sales in the area. An appraiser doesn’t determine a home’s condition beyond what anyone else can see. They look at the major areas and ensure it’s in good condition and worth the price you bid.
An inspection goes beyond the appraisal. The inspector isn’t determining the home’s value, but rather the home’s condition. He looks at all aspects of the home’s systems, such as electrical, plumbing, and water. Inspectors also look at the roof, foundation, windows, doors, stairs, and more. He writes a report on the home’s condition, anything that’s wrong with it, and even impending problems, such as a roof that may need replacing in a year or two.
Do Sellers Have to Fix Everything in the Home Inspection?
A home inspection isn’t a way to make the seller make repairs, though. You may use it as a bargaining tool, or even a way out of the contract if the inspector finds the home in poor condition, though.
Your real estate agent or attorney can help you decide the right move. If the issues in the inspection report are extensive, you may want the seller to fix them or you’ll back out of the contract. If it won’t affect your loan financing, though, you may be okay with a credit at the closing, which many sellers offer rather than doing the repairs.
When an Inspection Fails
Sometimes an inspection comes back with more problems than you anticipated or want to handle. You usually have two options.
- Talk to the seller and negotiate a new sales price and/or have him make the repairs/renovations
- Back out the contract, but only if you have an inspection contingency on your purchase contract
If neither of these are an option, you may still back out of the contract, but you may lose your earnest money, depending on the situation.
No matter what happens, the home inspection is important because it protects your investment. If a home has too many issues, it could cause you to have financial troubles right from the start. Since a home is one of the largest investments you’ll make in your lifetime, it’ important to know its condition before you close on the loan and it officially becomes yours.
