Using Property Inspection Services
This Is A Member-Only Page
Invest Web Homepage
Although property inspections are often thought of as being for owner-occupant purchasers of single-family homes, there is no reason not to use a home inspector, as well as other specialized inspectors, in the purchase of investment properties of all types. The cost of qualified inspections of at least major components of any property is relatively negligible compared to the investment being made in the purchase of that property.
The routine utilization of home inspection services is a relatively new trend. While there have always been some buyers who had their contractor brother-in-law take a look at their potential purchase, the formal inspection by a qualified person is a relatively modern phenomenon.
Previously, buyers simply relied on their own impressions of the home and the representations of the seller and/or his real estate agent. Today, the process is quite different. Most real estate purchase contracts for single-family homes now give the buyer fairly broad rights to order one or more professional inspections of the home before completing the purchase.
Home inspection made its debut as a consumer service in the 1970's. Since then, selecting a Home Inspector has become almost as important as selecting a qualified Real Estate agent, or even selecting the right home itself.
The growth of home inspection services is the result of several factors. First, has been the fact that over the past several decades Courts have made real estate estate agents ever-more responsible for disclosure of property defects. Disclosure has come to include not only what the agent actually knew, but also what he should have known being a real estate professional. Having a property inspected by another professional, particularly one with expertise, transfers some of the liability for defects to the other professional.
Second, as the home inspection profession has matured and inspection companies have promoted their services, more consumers have become aware of the benefits of an inspection. With full inspections of an average-size single-family home running in the range of $200 to $300, many buyers see the value of including an inspection in making what may be the biggest purchase of their life, often well over a hundred thousand dollars.
Regulation of Inspectors
Historically, the home inspection business has been unlicensed and unregulated. And, that continues to be so in most states even today. In those states, just about anyone with a checklist, a flashlight, and maybe a stepladder can set up and operate a home inspection service.
Finding a competent and diligent inspector can be a challenge. There are a couple of exceptions to this statement.
First, special training is required to perform inspection or remediation work for such potentially hazardous materials as asbestos and lead-based paint and these services are well-regulated in most jurisdictions.
Second, one can always utilize licensed contractors for each of the various trades and it is probably relatively easy to find qualified licensed contractors for each trade. However, properly selecting the various contractors may require significant time and effort. Also, using licensed trade contractors for every item in a property - e.g., plumbing, electrical, heating/cooling, roofing, etc.- will usually be significantly more expensive than using a qualified home inspector. Finally, most plumbers, electricians, etc. are not set up perform detailed inspections - e.g., they are not prepared to provide standardized test reports for the layman.
However, when you only need a contractor's expertise for only one or two items - e.g., the heating/cooling system and/or roof - because you or a friend are adequately knowledgeable about the other components, then you might be better off using the expert with years of specialized experience in that trade at a cost of typically $45 to $75 per trade.
The lack of regulation is changing rapidly. A number of states are now setting up strict licensing programs for home inspectors. They are requiring experience, education, and testing.
However, it will be years before these programs are fully implemented in most states and some states are not even heading in this direction. So, in the meantime, whether your state provides any kind of protection or not, we recommend selecting a home inspector using the following procedures.
Selecting a Home Inspector
Most real estate agents can probably recommend several well-qualified home inspectors. You can also check with one of the numerous home inspection associations. At the bottom of this page we provide information about a number of associations and other resources for tracking down potential inspectors. However, even after you have a list of potentials you still need to select the best candidates among the group. Here are the important factors to consider:
Inspector Qualifications
References. Ask for the names and telephone numbers of several homeowners who have used the company's services. Call those people and ask them whether they were satisfied with the report and other services they received. Be sure to talk to some people who have owned their home for a significant time since the inspection. Some problems overlooked by an inspector can take months to surface.
Training & Experience. Ask questions about the inspector's training and experience, both in general and as it relates to home inspections. The inspector should have some training in construction and building maintenance standards. Probably the best background is as a licensed general contractor, but actual hands-on experience is important since many general contractors act only as a manager if sub-contractors. A track-record of experience specifically in the home inspection business is desirable.
If the location and age of the property is such that asbestos, lead-based paint, or other potentially hazardous substances are a concern, be sure that the inspector is qualified to deal with of these matters. You may need to hire a separate inspector who is certified in hazardous materials.
If you cannot find general home inspectors qualified to inspect roofs or heating/cooling systems you may need to hire contractors who specialize in those items. The small extra fees required may be worth it for these major expensive components. If the particular location or structure makes the issues relevant, you may also need to hire a geologist or structural engineer.
Memberships. Many good inspectors don't belong to a national or state association of home inspectors. However, all else being equal, an association membership is often a plus. These groups provide their members with training and certification programs and up-to-date information about industry practices and inspection standards. Below we provide information about several major associations.
Documentation
Scope of Inspection. Determine which components of the property are (and are not) included in the inspection. Will the inspector check out the roof, the swimming pool, the built-in appliances, heating/cooling systems? Do they represent that they are qualified for each of these components?
Sample report. Ask for a sample of his checklist or inspection report that will be used. Does the report include a narrative description or just check-off boxes? Is the information presented clearly and completely? Does the report highlight any problems that could present a safety hazard and/or are not according to building codes?
Inspector's Liability
Even experienced and conscientious inspectors are only human and can make errors or overlook problems they should have noticed. What is the company's stated policy in such situations? Does the company or individual inspector stand behind the report?
Does the inspector have sufficient financial resources that you would be able to collect on a judgment if you ever won a claim. Don't worry that this would be difficult to ascertain because, in reality, personal liability is probably not an issue. Most inspection businesses will be a corporation or other limited liability entity with relatively low net worth that would be reachable in the event of a claim.
Accordingly, your best protection in the event of a problem will be whether the company has liability insurance for errors and omissions. Not only is adequate insurance coverage your best bet for collecting a future judgment, but an settlement sometimes eliminates the need to go to court. Ask for a copy of their insurance policy and read it carefully.
Many companies ask customers to sign a waiver limiting the company's liability to the cost of the inspection. This should not be acceptable. The degree to which liability is limited should be a major consideration in selecting an inspector.
Home Inspection Associations
There are a number of associations in the United States and Canada that offer education and certification for home inspectors. In addition to several national associations, many states have associations, some affiliated with a national association, some independent. These associations usually also develop Standards of Practice and a Code of Ethics for their members. A few are listed below along with the addresses of their Web sites.
To locate information about other associations as well as general information about the industry, enter "home inspectors" into a search engine such as google.com. You might also search your state's web site for information about regulation in your state.
A web site from which you can search for home inspectors by location is found at http://www.homeinspectorlocator.com. Although we mention this site, we have no personal knowledge regarding the accuracy of information provided. You should view the information about the site prior to deciding whether to follow their recommendation.
American Association of Home Inspectors - AAHI
http://www.aahi.com
The American Association of Home Inspectors Inc. is a professional membership organization of "Certified Home Inspectors"TM nationwide. AAHITM was organized in 1989 by the American Institute of Home Inspectors, who has been training home inspectors since 1981.
AAHI has members in 48 states, Canada and Puerto Rico.
American Society of Home Inspectors - ASHI
http://www.ashi.com
In 1976, a group of home inspectors established the American Society of Home Inspectors, a not-for-profit membership organization. Their goal was to build consumer awareness of home inspection and to enhance professionalism by developing Standards of Practice and a Code of Ethics.
Today, ASHI is the largest professional association for home inspectors in North America, with more than 5500 members. California Real Estate Inspection Association - CREIA
http://www.creia.com
The California Real Estate Inspection Association, (CREIA), was established in 1976 in California as a non-profit voluntary professional association. CREIA has grown to over 500 members and candidates today.
The Certified Professional Inspector (CPI) designation is the highest rating that can be obtained through CREIA.
Canadian Association of Home Inspectors - CAHI
http://www.cahi.ca
CAHI® was formed in 1982. CAHI operated as the Canadian arm of the American Society of Home Inspectors® (ASHI®), until 1994, when several provincial/regional organizations formed CAHI National.
The current Standards of Practice and Code of Ethics adopted by CAHI are a derivation of the ASHI model. There are now seven local chapters. Canadian Chapters include:
CAHI Atlantic
CAHI Alberta
CAHI British Columbia |
CAHI Manitoba
OAHI Ontario |
AIBQ Quebec
CAHI Saskatchewan |
National Association of Home Inspectors - NAHI
http://www.nahi.org
The National Association of Home Inspectors, Inc. (NAHI) was established in 1987 as a nonprofit association to promote and develop the home inspection industry.
Invest Web Homepage
|