The Dangers Of Not Having A Home Inspection
In hot real estate markets, like in Las Vegas, Nevada – the fear of losing a home to another qualified buyer is too much stress to overcome. That’s a huge mistake and in more than just one way.
A common misconception is that when a home is listed “as-is,” that means you cannot have a home inspection performed. Well, well, “As-is” doesn’t mean “no home inspection” — it simply means that any issues found during the inspection will not be addressed.
The real estate market can get extremely competitive, agents will know this all too well. Buyers going after limited listings often feel the intense pressure, so some decide to “skip a few steps” in an effort to win bidding wars.
Choosing to skimp on a home inspection, can lead to a whole host of problems. A number of sellers can be sly with hiding things from clients that they don’t want them to see. There have been stories of home inspectors discovering hundreds of thousands worth in repairs of ‘newly renovated’ homes that attempted to cover up the faulty foundation, piping, and wiring. Great home staging can also play a huge role in hiding maintenance issues. At an open house, you can be walking on a carpet that’s hiding a huge acid stain. In the same room, you can be looking at a fireplace that’s concealing an asbestos-wrapped chimney pipe. Without a proper home inspection, you would not know that you were being cheated.
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One of the most important aspects of buying or selling a home is getting a home inspection. A home inspection is when you have a qualified, educated person come into the home who knows Nevada code requirements for homes. They thoroughly inspect that home and create a list of any major or minor defects they find along with any maintenance issues in the home before a buyer buys it.
Even if you’re a dedicated do-it-yourselfer who’s well versed in home improvement, a home inspection can find problems you might miss and detect serious structural issues.
In some cases, the seller will conduct a pre-listing inspection and make a summary of the results available to any interested buyer. This is generally a good idea, but as a buyer, you cannot rely just on this and should still conduct your own inspection. You do not know how thorough the inspection was and, more important, what qualifications the inspector had.
Some sellers try and create the atmosphere for bidding wars by saying that they will not accept any offers for a four- or five-day period. They hope that buyers will come in early, pay for a home inspection in advance and then be in a position to make an offer without any conditions. While this is better than doing no inspection at all, the disadvantage is that you may pay for this inspection but still not win the bidding war.
You might be in the market to buy a bigger home, are relocating from out-of-town, or even wanting to downsize to reduce maintenance work. Whatever the case may be, skipping a home inspection is typically not a smart decision because there’s too much at stake.
For buyers, waiving the option to have a professional inspection contingent on their offer to purchase a home can have major repercussions in the long run. Sellers tend to like these offers because it essentially means they are selling the home ‘as-is’ and are not responsible for anything that is not immediately visible. Without a licensed inspector viewing the property, the buyer can only comment on the things that they see that are potentially wrong with the home. The buyer essentially loses the right to make any requests for additional repairs that aren’t agreed to at the time of signing the initial purchase contract.
What about a pre-inspection?
Other buyers are relying on what’s known as a “pre-inspection.” According to local Windermere real estate agent Matt Hume, a pre-inspection is when a home inspector is allowed to do a lesser, largely “systems-based” assessment of the property prior to an offer being submitted. If done well, a pre-inspection will likely catch the big things, he says, but won’t go as far as to “test every outlet in the house.”
But why are these offers attractive to sellers? Typically, an offer that’s contingent on a professional home inspection allows an out for buyers if they discover something wrong with the home, or provides leverage in negotiations to knock a few thousand dollars off the sale price.
So, for sellers, the appeal of an offer that’s not contingent on a home inspection is fairly straightforward. It speeds up the process and removes a potential pitfall.
That said, it’s not risk-free. For instance, if a buyer discovers a major problem after moving in, even if their offer was not contingent on a home inspection, they may still try to sue. And if you’ve got a bunch of home inspectors plodding through your house before you’re under contract, and something goes wrong, it’s difficult to know whom to hold responsible.
For buyers, both practices come with risks.
A good rule to remember is a buyer should never, ever waive a home inspection without first performing a thorough pre-inspection, sewer scope and any other inspections the home inspector recommends.
This protects the buyer, seller and agents from lawsuits down the road, should a buyer move in and find animals in the crawl space or something just as absurd.
A pre-inspection in this market is an advantage, but no guarantee of success.
And the cost can add up. We’ve even heard of someone paying for eight pre-inspections, which can cost $200 to $400, before even landing a house.
Can I trust an inspection?
Inspections are imperfect because in most cases the inspector is not permitted to look behind walls or under floors which means many potential problems are hidden. But Andrew Radomski of Pillar to Post, a professional home inspection company, tells me that inspection firms can identify plenty of potential trouble spots. These include:
- Obsolete knob and tube wiring. This can be found in most homes built prior to the 1950s in the City of Las Vegas. Keep in mind that it’s difficult to get insurance if your home has knob and tube wiring.
- A 60-amp electrical service when the norm today is either 100 or 200. Again this will lead to higher insurance premiums.
- Old galvanized plumbing. It rusts, can leak and plug up, slowing water flow. Old lead pipes are also a health risk.
- Any roof over 20 years old should probably be partially or completely replaced.
- Old foundations will gradually deteriorate, causing leaks, and are expensive to repair.
- Windows can be expensive to replace, if in poor condition.
Some firms use thermal imaging technology and, for an additional fee, can identify problems with the structure, moisture leakage or air leakage in a home. They can also better identify when there is insufficient insulation, plumbing leaks or poor construction, which can lead to problems down the road.
So it seems the reasons as to “why get home inspections?” are obvious, but recently there has been a trend of buyers choosing to skip home inspections. As a result of buying blind, some of these home sales ended up as pretty awful stories. Here are some real stories about home inspections gone wrong.
New house mold problem, Scott Patterson, Trace Home Inspections, LLC
Recently I inspected a new home that was only 4 months old. The owners said that the master bedroom and bath had a musty odor and that mildew was growing on the walls in the bathroom. The owner said it started about two weeks after they moved in. They have both been sick with asthma and what they thought was the flu.
I found 3 major problems:
- No bathroom ventilation exhausts fan had been installed.
- The whirlpool tub drain was not fully connected to the drain, and water had been standing under the tub. The connection to the drain was off by over 3 inches to the left!
- Mold growth was found under the wallpaper and on the supporting frame for the whirlpool tub. (Testing by a mold specialist revealed that the mold was of the Stachybotrys mold family. This is a mold that produces toxic spores.) Normally this would have been taken care of under the builder’s warranty, but the builder had gone out of business (bankruptcy) and no one was around to help! The new homeowners ended up spending $11,400 on repairs and cleaning and much more in medical bills due to the mold that initially came from the faulty and improper installation of the tub and ventilation.
Saving money by using a friend, Lindsay, Notorious D.E.B.T
Lindsay is a personal finance blogger and her husband was military, and they were separated during their first year of marriage while he was in Iraq and she was in the states.
They were living in Alaska when he came home, and they decided to use their VA zero-down loan to buy a house.
They found a great house, and their real estate agent suggested they use one of his friends for the home inspection to save money. The friend “declared the home in perfect condition after spending 10 minutes glancing over it.”
Five years later, they decided to move to Colorado and put the house up for sale. The selling season in Alaska is understandably short. It didn’t sell, so they connected with a property manager to rent it for them while they moved on, thinking they’d just sell it next year.
The issues started about two years after they moved in. You see, a home in Alaska comes with its own set of unique circumstances, such as permanently frozen soil, which is very difficult to dig into.
This home had a septic tank that was eventually declared unusable, requiring a new permafrost-friendly system that runs around $35,000.
That $800 they saved on the inspection looks like a bargain in hindsight.
If you can’t afford $400-$800 for an in-depth inspection, you can’t afford to buy that house. Period.
Buyers really couldn’t afford a Home Inspection, Casey Tibbs, Image Squared Marketing
“My wife and I bought our home in 2004 at the age of 22. We knew we were able to make the monthly payments and had built up enough credit to get the loan, but we didn’t have enough money to pay for much else and had to forego any ‘extra’ items we could. The exterior was far from attractive and clearly needed some attention, but the interior had been partially renovated a few years prior, so we didn’t have any concerns that we felt would justify the cost of an inspection.
Shortly after taking ownership, I opened the old trap door in the pantry, climbed down the worn wooden ladder into the cellar, and immediately noticed a number of water hoses that connected to a couple of double spigots. Prior to the spigots was old galvanized piping that connected to newer PVC piping. The water hoses supplied water to our bathroom. I couldn’t believe my eyes.
A few months later, we had our first of several cellar floods. These would occur when the o-rings in the water hoses would wear out. Actually, come to think of it, it was a combination of the leaking hoses, groundwater, and rain that pours through the foundation, and sump pumps that would eventually just die after a life of hard labor.
Eventually, after replacing the terribly inefficient old windows (bonus fail: not a single window was the same size, resulting in a huge expense for custom windows), we remodeled the kitchen & bathroom, replacing every last bit of the plumbing at that time.
It turned out to be worse than we thought — the drain from the kitchen sink included a smaller pipe that dropped down into a larger pipe. That larger pipe did not appear to connect to ANYTHING ELSE. The smell of the soggy, saturated earth, when disturbed by working hands, was enough to induce vomiting.
Oh! And I almost forgot about the septic system! This is great. There wasn’t one. One day, we noticed a sinkhole in the yard. Eventually, that little sinkhole became a BIG HOLE when the buried wooden cover of an old steel tank (makeshift septic tank…) finally rotted and collapsed. We now have a modern system. You’re welcome, nature.”
When the Seller was hiding something, Marie and David Haynes, David and Marie
One client skipped the inspection a few years ago “…because he felt he knew enough about home construction and repairs. It turns out that there was a crack in the home’s foundation that the seller had hidden by piling some bricks up in front of it. It ended up costing $6,000 to repair the problem, which is quite a bit more than he would have paid for a home inspector!”
The seller should have disclosed the crack — and obviously hid it on purpose to avoid a price reduction or the cancellation of the contract. But not getting a home inspection only helped the seller in this instance — and in many other instances as well.
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Keep on the lookout before buying!
Buyers in hot markets are also waiving home inspections in desperate bids to win homes. However, unseen problems could be lurking in the walls, the attic or basement, etc. It’s a terrible risk to buy a house without an inspection.
There could be costly issues such as worn-out shingles, water seepage in the basement, dying furnace or water heaters, termite damage and asbestos in the insulation.
A family that moves into a new home in the summer could get a nasty surprise in the winter when the furnace doesn’t work. A furnace replacement is anywhere from $3,500 to $5,000 and there’s a health issue there because if a furnace is not working, it produces carbon monoxide. (the colorless, odorless, and tasteless gas that is slightly less dense than air – also known as “the silent killer”)
We’ve seen the owner of a small house pay $15,000 to get asbestos removed. We’ve also seen people have to re-shingle the roof of their three-bedroom bungalow for at least $7,000.
Meanwhile, a home inspection can start at about $400. Are you going to put your whole investment at risk for $500? We hope not!
If you think you’re going to enter into a few bidding wars, consider working out a deal with a home inspector to inspect a number of homes for a discount. If you’re going to rely on the seller’s pre-existing home inspection report, make sure that it’s from a reputable home inspector.
At the very least, go and walk around the house with a knowledgeable or handy friend before you put in the offer. Peek under the area rug to check for cracks. Lift the microwave to look for holes. Open and close all of the windows. When there are recent renovations, sometimes they’re just covering up problems.
Talk to the neighbors and ask them: “Did you see any repair trucks here in the last year?” Then ask about the neighbors on either side of the property because you can’t easily get rid of a horrific neighbor.
If something goes wrong after you’ve purchased the home, you could sue the seller if you believe he’s intentionally concealed defects; but you want to avoid that nightmare if you can.
A home inspector is not required to be bonded or insured. However, it’s very wise to look for a home inspector who is. This means that the company has insurance and has secured money to an insurance company in the case that they are sued by a client for their work. It provides an extra level of protection for you as a client of the home inspector.
And if you try and buy a home by yourself, without an agent, you had better find a home inspection company first and determine how much time they might need to do an inspection for you. Real estate agents work with many home inspection firms, so they can normally arrange for an inspection for buyers within 48 hours.
Buyers shouldn’t get pressured into making an offer without a home inspection condition. Yes, the process can be frustrating, but it is better to be frustrated and lose a bidding war than to win a bidding war and pay more for it after closing.
Let’s assume for a second that you are an agent. Let’s say that your clients decide to skip the home inspection because they were so overcome by the competition. Later on, they find out all these problems and discover just how dangerous the home actually is after they already bought it. Once this happens, the horror story continues as you – the real estate agent who showed them the home in the first place, gets dragged into court.
In fact, failure to recommend property inspections to prospective buyers is one of the most common ways to get sued as a real estate agent. So if you do not get recommended a home inspection, you can sue on the grounds of Negligence. In a Negligence case, clients can make claims that they should have known something but did not, and failed to take the appropriate action.
There have already been a number of legal cases against real estate agents, and some of them did lose. To prevent legal action, the best thing to do is perform your fiduciary duties well. So remember this information and these horror stories so that this question never crosses your lips “Can I skip home inspections?”.