houses under a magnifying glass

How to put a home inspection to work for you

By Laura Kapp

January 2021

You’ve found the perfect house. Your offer is accepted. And then you get the 50-page inspection report.

“Whatever you do, don’t freak out!  You’re paying your inspector to thoroughly review the condition of the house,” commented Jim Fisher, real estate agent with Shorewest Realtors in Cedarburg, Wis.

Technology makes it easier for inspectors to provide thoroughly detailed inspections, complete with photos. But when you get that comprehensive list of flaws in your potential new home, it’s easy to start questioning your decision.

Find out what’s cosmetic, a maintenance issue or a major defect

Amy Jewell, who has bought and sold 3 houses in 2 different states over the past 4 years, noted that it’s important to be there during the inspection. “You will always have stuff in your house that you will eventually have to fix. At least you know what you are getting into,” she said.

That’s exactly the point, Jim Fisher said. He suggested that you use the inspection to detail the major defects in the house: “Your real estate agent can help you understand the difference between what’s cosmetic that can be overlooked, what’s maintenance to keep in mind for the future and what is a major defect that should be fixed right now.” 

According to the American Society of Home Inspectors (ASHI), the most important items to be inspected in your potential new home are the roof, foundation, and mechanical systems such as heating, cooling, plumbing and electrical. You should also be aware of issues with radon, lead paint, asbestos and potable drinking water. 

Can you back out of buying a house after the inspection? 

If you include an inspection contingency in your offer to buy, you may be able to walk away from the sale if there are “defects” listed in the inspection report. “It’s important to understand what a defect actually is before writing an offer,” Jim said. Check out the definition of “defect” in a typical Offer to Purchase: Defect means a condition that would have a significant adverse effect on the value of the Property; that would significantly impact the health or safety of future occupants, or that if not repaired, removed or replaced would significantly shorten or adversely affect the expected normal life of the premises.

Jim also noted that most offers include a “right to cure,” which means the sellers have the option to fix any of the issues. “In a competitive market, most sellers will not accept an offer without this option,” he said.

Stephanie and Andrew Budnik recently put an offer on a Muskego, Wis. home built in 2005, but the inspection was uncomfortable. “I was overwhelmed. The house was so flawed, and he pointed out so many things, I was stressed out,” Stephanie said. They ultimately used the inspection report to back out of the sale.

It was an uncomfortable situation, but looking back, the inspector was right. “Those sellers refused to fix anything or drop the price. The house was poorly constructed and needed a new roof, siding and windows, a total of $30,000 in repairs, which was over our budget. We found out later that the house finally sold at a lower price, just not to us!” Stephanie said.

On the other hand, an emotional reaction to a lengthy inspection report could cost you a perfectly good house. Jim said he worked with first-time homebuyers who overreacted when they saw all the miscellaneous things that were wrong with the house. There were no major defects, but they opted out. “And they regretted that decision! Because they eventually had to settle for a smaller, not-as-nice house at a higher price,” Jim said. 

How to use your home inspection as a negotiation tool

An inspection can reveal issues that can be used to negotiate for sellers to either pay for repairs or offer a discount. That’s what Amy did when she bought her latest house in Grand Rapids, Michigan. “The inspection report revealed some mold in the attic which the sellers didn’t want to fix, so they took $2,500 off the closing costs,” she explained.

But don’t take it too far – Jim cautioned that in a competitive market, buyers shouldn’t go overboard asking for too much (repairs, discounts) and risk losing the house. 

Should you ever waive a home inspection? 

Jim explained that you could potentially offer $5,000 to $10,000 less for the home if you waive the inspection contingency, as the inspection is the seller’s biggest concern in a transaction. In a seller’s market, waiving the inspection makes your offer more attractive: You shave days off the process and give the seller peace of mind that your offer will go through.

But Jim stressed that you should inspect the house very thoroughly yourself before submitting an offer without an inspection contingency, and only submit an offer if you’re prepared to take on possible significant expenses that an inspection may have caught. An experienced real estate agent can help you realistically assess a specific home, the price, the competition and the current market before considering waiving an inspection contingency. It’s not a step you should take lightly!

If you do waive the inspection, what about your own peace of mind? If you’re buying a home where the sellers have a relatively recent home inspection to share, that may give you enough confidence to move forward without your own inspection. Here are 2 examples:

  • Amy bought her Pittsburgh, Pennsylvania home in 2018 and sold it a year later. The inspection report was fresh enough that the buyers were comfortable in waiving the inspection.
  • In 2020’s hot market, Stephanie and Andrew waived the inspection on the home they eventually bought: “It was built in 2018, so we knew there wouldn’t be any big defects,” Stephanie said.

Final takeaway – the inspection is your reality check

You may fall in love at first sight with a certain house – but the inspection shows hidden flaws. Or maybe an inspection will reveal that a so-so house is in perfect condition and just needs a cosmetic makeover.

When you get that 50-page inspection report, you know what NOT to do. Don’t overreact! Consider the cost of the items listed on the inspection report and keep in mind there is wear and tear and maintenance that is just part of homeownership. Lean on the experts: your home inspector revealed the home’s issues, and your real estate agent will help you decide how to deal with them.

“And keep in mind how much it would cost to build a new house!” Jim noted. 

David Armstrong

Foundation wall for cracks, how up to date is the electrical, if septic when last time was pumped out, how’s the roof, is it a flood zone and how old is the heating system.

Christina Ortiz-Castro

This is a great piece to read up on. I had always heard about home inspections but never knew there was so much into it.

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Laura Kapp is the former creative director of the writing and design team at MGIC. Now she works from her 1958-ranch-style home, accompanied by dust bunnies. Her messy home office proves the saying, “Creative minds are rarely tidy.”
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