The Role of the Home Inspection in Your Purchase

Home Inspections are rapidly becoming a standard part of Real Estate transactions.  The buyer hires the Home Inspector to help protect them from buying a home with major problems that may be unsafe or that require a significant outlay of money to rectify.  The ironic thing is that if the purchaser has an inappropriate focus on the Home Inspection he/she may walk away from a good deal.  

The buyer must consider many things.  First they should consider the home they are purchasing as a living environment not just a house. Second, they must maintain proper perspective, which will help them make relative comparisons within the market place.  Finally, buyers must be able to reasonably differentiate between what items revealed during a home inspection should or should not effect their buying decision.

THE HOME AS A LIVING ENVIRONMENT

Many first time buyers, and even those experienced with the process, set their mental focus on the physical house rather than on the "living environment", which includes the price, terms, location, neighborhood, amenities, etc.  Proper focus in home hunting allows one to see beneath the veneers and more at the whole suitability of the home.  Buyers who focus on the total living environment tend to be happier with the homes they purchase.

PERSPECTIVE IN CHOOSING A HOME

Accurate perspective is based on realistic expectations, reasonable compromises and a comparison of houses to their peers within a specific marketplace.

Perspective is lost when people compare resale homes to mythical perfect homes, brand new homes, homes outside the market area, or homes the purchaser has previous experience with.  Maintaining perspective requires realistic and reasonable comparative philosophy by all parties if expectations are to be met within the existing market.

Several factors lead buyers to false expectations with resale homes.  No matter what the age, a resale home is "new" to the buyer.  When buyers don't understand or accept that location, not condition, is the strongest and truest influence on resale home prices, they will often try to force a "new home" standard on a resale home.  This is unrealistic and accounts for many frustrations in sales transactions.

Resale homes always have a mix of strong and weak points, needed repairs, and deferred maintenance.  They all require the acceptance of some risk, will require maintenance in the future, and almost always come with some environmental/health considerations.
 
Experienced and enlightened homebuyers realize they must make  "purchase deals" which most often contain a house with flaws or some weak points they would rather not have.  It becomes clear that the various elements can balance one another.  A very flawed house (at a bargain price) might be a great deal while a near perfect house in a poor location might be a terrible deal.  To understand the total deal one has to know how significantly flawed the house is.  The astute buyer must be readily able to compare the house under consideration to other peer homes on the market.  This relative perspective becomes critically important when home buyers wrestle with emotions and fears and finally choose an imperfect house.

THE HOME INSPECTION

During a Home Inspection, a buyer will receive a significant amount of information.  Considering that a buyer is usually at a particularly high state of anxiety at this time, this volume of information, if inappropriately disclosed or perceived, can increase this level of anxiety and result in the buyer backing out of a deal.  The reasons for his/her backing out may not be a result of a negative home inspection but rather a result of his/her inability to determine what information is truly relevant.  The buyer must have some means of making this judgment.  The best way to do this is to set up categories for the information received during the home inspection.  One method used is represented by the definitions outlined below.

MAJOR PROBLEM - A major problem is something that is not functioning as intended and represents a significant safety risk or would require a significant outlay of money to rectify.

MINOR PROBLEM - A minor problem is a component that is not functioning as intended and can be repaired at moderate cost.  All homes, even brand new homes, typically have some minor problems.

MAINTENANCE ITEM - A maintenance item is a component that requires some maintenance attention. All homes require maintenance irrespective of age and to assume that a resale home will not require any attention is not reasonable.  A general rule of thumb for a low to moderately priced home is to budget $1000 to $2000 in annual maintenance.

PERSONAL RISK ASSESSMENT ITEMS- These are items such as Urea Formaldehyde Foam Insulation, Asbestos, Electromagnetic Fields, Proximity to Industrial Areas, Termite Treated Areas, Aluminum Wiring etc.  Only the buyer can determine whether or not they are willing to live with such elements.  Again, many homes come with some kind of personal risk assessment item.

Smart homebuyers will categorize the information given and will only allow Major Problems or unacceptable Risk Assessment Items to affect their buying decision.  All too often people react badly when they are confronted with unexpected minor problems.

Purchasers can set themselves up for disappointment when their expectations are not realistic.  They can waste time and cause themselves undue anxiety.  The best way to avoid this potential for self sabotage is by:

1. Understanding what it is you are buying,
2. Putting homes you are looking at into perspective by comparison to similar homes, and
3. By understanding and having some criteria for assessing the information given at the home inspection.