Home Inspection
A non-invasive assessment of a property’s current conditions
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What is Home Inspection?
A home inspection refers to a non-invasive assessment of a property’s current conditions – often before buying it. Home inspections are typically performed by a professional home inspector who looks for malfunctions, any needed repairs, and other issues that are required to be fixed.
Generally, a home inspector looks at various aspects such as plumbing, the structure of a home, electrical work, heating and cooling systems, and other issues that may impact the property’s value. It is one way of reducing the risk of purchasing a home. A home inspection is often confused with a home appraisal, which entails developing an opinion about a property’s value to determine the mortgage debt amount.
Summary
- A home inspection plays an important role in the property buying process, and it involves checking the property’s condition to determine if it is acceptable.
- Home inspections are exclusively regarded as the buyer’s role, though not always the case; a seller can also hire an inspector to conduct a home inspection on a property before its sale.
- A home inspection is different from a home appraisal in that the former focuses on the present condition of the property, while the latter focuses on a property’s market value to determine the loan amount to be given by a mortgage loan lender.
Home Inspection Explained
Prospective home buyers require a quick tour of a property to learn about its condition before purchasing it. Although home inspections are synonymous with property buyers, sellers may also request a home inspection before selling a property.
Essentially, home inspection involves hiring a qualified inspector who physically observes the house from its foundation to the roof and records the results and opinions based on objective criteria applied. Only a qualified inspector with full knowledge of home systems, such as construction, installation, and maintenance, can conduct a proper home inspection.
An inspector uses an inspection checklist to guide them through the inspection process to ensure that all aspects of a home inspection are exhausted. The list also serves as the checklist, which the inspector reports on the status of the property. The inspector prepares a written report containing findings and necessary recommendations.
Elements Covered in a Home Inspection
The party that requested a home inspection uses the report findings to make a buying or selling decision. The report describes the property’s current conditions but does not guarantee its life expectancy or its system’s future well-being. A home inspection can reveal more concerning information about the property, and eventually save a client from possible loss and aggravation.
A home inspector pinpoints the needed renovations, upkeep necessities, and builder oversights. The process delays the purchase cycle and eventually helps the buyer/seller make a more informed decision on the pending property purchase. It also helps sellers to upgrade or restructure their properties before accepting an offer from a potential buyer.
The home’s duration inspection depends on how large the home is, the condition of the property, and how thorough the inspector is. It is always important for potential buyers to attend a home inspection.
Minimizing Risks Using Home Inspection
On most occasions, a home inspection follows the completion of a purchase deal. The inspection contingency is, therefore, a necessity in a sales contract. It buys a seller enough time to request a home inspection and decide on the purchase based on the final report.
For example, a buyer may use the report’s assessment to continue with the sale schedule, depending on the property’s material or cosmetic defects. A buyer may also arrange for another home inspection, cancel the contract, or request repairs to be made. In the case of a major repair, a client may conduct another inspection to confirm whether the originally identified defects have been addressed.
While home inspection does help minimize the risk associated with purchasing a property, it is not the only option. An alternative method may involve a buyer purchasing a property insurance policy designed to cushion them from costs related to repairs maintenance. Under such an approach, the home warranty industry writes blanket home warranty policies, rather than tailoring them to a home’s specific condition.
Home Inspection vs. Home Appraisal
Although home inspection and home appraisal are valuable steps when purchasing a property, they are conducted for different purposes. In a home inspection, a professional inspector pays attention to the current condition of a house. It is the buyer who usually arranges for a home inspection.
A buyer may choose to attend the home inspection to get acquainted with the conditions and safety of a property. The process does not affect the amount that a buyer can borrow.
Conversely, a home appraisal is performed by a real estate appraiser, who determines the present market value of a property. An appraiser is hired by the lender when the buyer of a property applies for a mortgage loan. In addition, a home appraisal is conducted in the absence of the buyer.
Unlike in the home inspection process, a home appraisal can significantly impact the amount a lender will allow the buyer to borrow. An appraiser can adopt various evaluation approaches to find the value of a property, including the size, price, and quality of properties.
Additional Resources
CFI is the official provider of the global Commercial Banking & Credit Analyst (CBCA)™ certification program, designed to help anyone become a world-class financial analyst. To keep advancing your career, the additional resources below will be useful:
