Why
A Home Inspection?
Research has shown that the lack of
adequate attention to inspection of a house prior to
finalizing a sale was one of the biggest complaints of
buyers. This resulted in unanticipated repairs and
additional costs that diminished the buyer's
satisfaction with the newly acquired home.
In response to this problem, a new occupation was born
--the home inspector. At first it consisted of a
haphazard selection of self-professed knowledgeable
individuals that would take on the task of giving an
opinion on the condition of the inspected property.
The quality of their knowledge, in many cases was
minimal or uncertain. Of course there were some
who were involved in the construction trades or related
trades who did very good, competent, inspections.
Others were of uncertain merit.
As the volume or demand for
inspections grew, other entities recognized opportunity
for gain. States saw opportunity to regulate by
license, and to charge fees to support a new
organization. Educational organizations saw
opportunities to sell training -- and new training
entities were also born. Realtors saw opportunity
to reduce their exposure to risk in property
transactions -- risk transfer or risk avoidance.
The poor property buyers saw yet another increase in
transaction cost. And in most cases the buyer
foots the bill. In response to these
opportunities, there was a large influx of "wanta-be"
inspectors into the market, driving fees down and
decreasing the amount of time devoted to the inspection
in order to maintain profitability. Inspectors
also began to resort to computerized, canned reporting
systems which reduced the amount of customized,
specific, reporting of issues.
Enter then another competitor for the
buyer's fees -- home warranties. For a fee very
close to what you will pay an inspector, you can buy a
warranty against failure of major systems/components of
the property. The effect on the consumer is pretty
much the same as the home inspection, but recovery for
failures for a period of time should be relatively easy
-- provided the company is reputable and stays in
business.
While a thorough inspection is
recommended, whether or not a professional inspector
should be used is not as strongly encouraged. The
abilities of the buyer as well as the characteristics of
the property being purchased must be considered.
An objective, non-emotional evaluation of what the
inspector is promising to provide as well as the forces
acting on the inspector must be considered.
The use of the professional inspector transfers a large
part of transaction liability from the realtor to the
inspector. This provides a large incentive for the
realtor to promote use of the professional inspector.
It shelters the realtor from liability risk and is done
at the expense of the buyer who is supposedly being
protected by the inspection. Liability can become
harder to allocate. The capabilities of the
inspector and the content of the inspection process can
vary widely with the inspector used. If the
inspector is used, he/she should be selected and hired
by the buyer without intervention by the realtor.
The inspection should be a purely objective inspection
without concern over whether or not it will be a "deal
breaker."
The decision to use an inspector
should remain the buyer's choice. The inspection
industry and the real estate industry have made
statements and demonstrated effort to make the use of a
professional inspector mandatory. This would be a
further erosion of personal property rights, and would
further increase the creep of transaction costs to
buy a home. Some attempts to bring the inspection
industry under the umbrella of the realtor organizations
have also been suggested - a very real conflict of
interest.
While the home inspection cannot
possibly guarantee that any home is free of defects, it
can provide the buyer with much of what is needed for an
intelligent, informed, buying decision. The buyer
is placed in a stronger bargaining position with a
potential of large savings from acceptance by the seller
of a lower price, by more favorable terms, or perhaps
from discovery of serious problems which would lead to
rejecting the purchase.
The seller my also reap many benefits
from a home inspection before placing it on the market.
If problems are found and corrected prior to the sales
effort, the property is more attractive and has a
greater potential to sell earlier and at a favorable
price. The longer a home stays on the market, the
more its perceived value tends to decrease. The
absence of major visible defects will most likely
forestall unwarranted probing and delayed sales.
These benefits also accrue to the sales agent through
lower marketing costs, and a quick sale at the seller's
price also provides a happier client/customer and
potential referrals.
The decision for a buyer to use a
professional home inspector has many dimensions to be
considered. What essential service does the
inspector bring to your situation?Can your interests be
better served by buying a warranty (which also shifts a
major part of the transaction liability from the seller
and realtor, but provides specified benefits to the
buyer)? Or, can you save your money and do a
better job yourself, perhaps with the assistance of
specialists such as HVAC repair/maintenance services,
pest control services, etc.
Some Helpful Inspection Links
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