MORTGAGE MATTERS

4 min read

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Oct 2022

Home Inspections: Do You Really Need One?

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WHAT YOU'LL LEARN

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FHA renovation loan highlights 

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The ins and outs of Conventional renovation loans 

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Why a VA renovation loan isn’t available to everyone

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WHAT YOU'LL LEARN

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FHA renovation loan highlights 

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The ins and outs of Conventional renovation loans 

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Why a VA renovation loan isn’t available to everyone

Buying a home is a huge accomplishment—and a huge financial commitment. You’ll want to make sure the home is in great shape before you buy it —but you’ll also want to keep your closing costs to a minimum.

A home inspection will tell you how safe the home is and how critical features like the roof, plumbing, and HVAC are functioning. You don’t want to buy a home and immediately discover an expensive repair is necessary on top of a new mortgage.

But in addition to your other upfront costs, a single-family home inspection typically costs $300-$500, according to Realtor.com. Having an inspection will also add more time to your closing schedule. And when you’re facing a “seller’s market” – meaning demand is higher than supply – requiring a home inspection can make your offer less competitive than those of buyers who are willing to buy a home as-is.

So, do you really need a home inspection?

What Is a Home Inspection?

As the buyer, you select the home inspector, who’ll examine the physical structure of the home to determine if there are any issues that need to be addressed within features like:

  • Foundation and basement

  • Plumbing

  • Electrical

  • Heating and cooling systems

  • Condition of windows, doors, and door frames

  • Major appliances

  • General exterior and trees adjacent to the home (if applicable)

The inspection itself takes three to four hours, and it’s a good idea to be present so you can see the findings for yourself. The final report will take another few days.

Remember, manufactured homes have different inspection requirements according to the loan program. Ask us for more information.

Sometimes the seller has already paid for a home inspection to make their home more attractive to buyers. If so, be sure to get a copy, including receipts, for any repairs made.

What a Home Inspection Is Not

A standard home inspection generally does not test for mold, radon, asbestos, lead, fireplace functionality, or pitched roofs, but you can order inspections/testing for these specific conditions either from your current inspector or a separate company specializing in those services. Pest inspections are also a separate service and not required; however, termite inspections specifically are required for U.S. Department of Veterans Affairs (VA) Loans.

The home inspection is different from an appraisal, which lenders order to determine the fair market value of the home, nor does a home inspection analyze cosmetic features like countertops or fixtures.

Also unlike an appraisal, the home inspection is not required by the lender or law. But the inspection will tell you exactly what to expect in your potential home and can give you tools to negotiate a better deal if repairs need to be made.

How Does an Inspection Help Buyers?

Besides helping you get to know your potential new home, the inspection can put you in a better bargaining position. If the inspector finds issues that need to be repaired, you and your agent can ask the seller to make the repairs now or deduct the cost from the sales price. If the seller won’t negotiate, and your contract has been written correctly, you can back out of the deal and keep your earnest money depositA deposit made to the seller that represents your good faith to purchase a home.earnest money depositA deposit made to the seller that represents your good faith to purchase a home.. You may lose a few hundred dollars on the inspection, but that’s better than losing thousands on a massive repair.

What Are the Downsides of an Inspection?

As we mentioned, you will need to pay for a home inspection out of pocket, it will take extra time, and requiring one can make your offer less attractive to a seller with multiple offers. If you’re willing to take the risk, you can forgo the inspection, but Atlantic Bay believes that’s best only for new homes that are under builder warranty.

A safer approach might be to include a home inspection “for informational purposes only” in the contract. This way:

  • The seller isn’t responsible for any repairs at all, OR

  • You can promise to overlook any repair under an amount like $500, OR

  • You state you’re only looking for specific issues, such as a faulty foundation

If the inspection brings bad news, with a correctly worded contract, you can walk away. Ask your agent or us for more information.

Trust the Professionals

Remember, if a seller says an inspection is unnecessary, that’s a red flag. They might innocently overlook an issue they don’t know about, or they may try to cut corners by being dishonest. When it comes to inspections, trust your agent and us. We have the experience to give you proper recommendations. Unless it’s a new home under warranty, it’s better to be safe than sorry!