Risk Conversation®

In the early stages of the pandemic, when demand for larger homes with more outdoor space surged, homebuyers faced daunting challenges. Interest rates were low but so was housing supply. Bidding wars, once a phenomenon in a relative handful of cities and neighborhoods, became common. Home inspectors, who evaluate a home’s structure, appliances and major systems, had backlogs of two weeks or more. Many families faced disappointment as their dream home was snatched up by a higher bidder, some of them making all-cash offers. Confronted with such a competitive market, many homebuyers decided to waive their inspection contingency when making an offer.

This trade-off carries risk. In waving your inspection contingency, you may eliminate your ability to walk away from the home if the inspection findings are problematic. You may also end up with a home that requires costly repairs, cannot get insurance, or is even uninhabitable.

Home Inspection Tips

According to the International Association of Certified Home Inspectors, the InterNACHI, a home inspection is a visual examination of the home’s major structure, systems and components that are visible and safety accessible. After a home inspection, the buyer will receive a report outlining the condition of the home and any concerns that were identified prior to the purchase of the home.

A home inspection is not technically exhaustive, nor will it reveal all defects within a home.  Your primary focus as a buyer should be on the issues that are deemed to be a “material defect” by your inspector. A material defect is a specific issue with a system or component of a residential property that may have a significant, adverse impact on the value of the property, or that poses an unreasonable risk to people.

Here are five tips to consider when undergoing a home inspection:

1. Find a reputable realtor who knows your local market and has connections to a knowledgeable and experienced home inspector.
2. Read the sellers disclosures carefully.
3. Make sure that the utilities, water main and hot water heater are turned on and that all the electrical panels are visible and not blocked by storage.
4. Ensure that the HVAC systems are accessible and NOT turned off with the emergency switches.
5. Recognize that a home appraisal is not a replacement for a home inspection. Even though an appraisal can provide some important information about the property, its purpose is to determine the market value of the home to protect the financial interests of mortgage lenders, which typically require them during the home buying process.

Depending on the results of the inspection and the characteristics and home systems in the specific home you are purchasing, consider other inspections like radon, well water quality testing, septic, HVAC and roofing inspections.

A home inspection should not be feared and should be used as an education day for which to learn about the home you have planned to purchase. Take the time to attend the inspection, ask questions, and retain your home inspection report for future maintenance and improvements.

Keith Walsh is a Personal Lines Risk Consultant for Chubb Personal Risk Services.