Home Inspection When Buying A Home: The Ultimate Guide
Home inspection, as part of the home-buying process, is a critical stage of real estate transactions.
Sellers may consider it a deal-killer but it is every home buyer’s best friend.
So what happens during a home inspection and what exactly do they do in a home inspection?
In this guide, we’ll show you how home inspection works and answer all questions you might have regarding the most important financial decision of your life— that is, buying a house.
Let’s dive in!
Home Inspection For Buyers
Home inspections are generally done after the intent-to-purchase agreement has been signed. They are not created so you can bargain the price of a home down, though.
Home inspections are there primarily so you’ll know whether the house is safe or unsafe to live in.
A home inspection identifies the house’s major problems, which you can then ask the seller to address.
As well, a home inspection will give you the whole picture of the house’s condition so you’ll know what to prioritize for replacements, repairs and improvements in the future.
Your financial institution may also require a home inspection report in order to approve financing as well.
Home inspections don’t typically include cosmetic issues like peeling wallpaper in the bedroom or cracked tiles in the kitchen. Minor issues aren’t bargaining chips for lowering the final offer.
Yes, home inspections can open purchase price renegotiations and major problems are cause for price adjustment.
Anytime you’re not satisfied with the negotiations after a home inspection, you can walk away from the home purchase contract. But so you can, you must make sure the contract has an inspection contingency or “due diligence contingency” clause.
We’ll talk more about this later. First, let’s talk about how home inspection works.
What To Expect From A Home Inspection?
To be clear, a home inspector can only inspect what he can access and what he can see.
Meaning, if the trap door for the crawl space is under an unmovable furniture and can’t be accessed from the outside, don’t expect your inspector to have a report on what’s inside of it.
Nope. You won’t know there’s another occupant in the house.
Home inspectors don’t also break down walls or drill holes on them to see what’s inside of those walls. Also—and this is important, if the house is packed with the seller’s stuff, your home inspector won’t be able to do as much inspection as he could in an empty house.
You, the buyer, and anyone can stick around during a home inspection. You may also just wait for the report but it’s always better to be present so you can ask questions and you can see for yourself the home inspector’s findings.
How Long Does A Home Inspection Take?
Home inspectors in Alberta must be licensed, and a newly licensed home inspector, according to the Canadian National Association of Certified Home Inspectors, Inc. (CanNACHI) should be able to complete inspection of a standard-size house within 3 hours.
Experienced home inspectors can cut down that time to 2 and ½ hours or even less.
What is a standard size house?
A standard size house is a single-family house of about 2,000 sq ft with a single kitchen and 3 bathrooms.
Naturally, a house bigger than this will take longer to inspect.
Now on to what home inspectors look for during a home inspection.
Home Inspection Checklist: What To Look For In A Home Inspection?
The major things your home inspector will look for are:
- Signs of foundation damage and other structural issues
- Old and damaged roof
- Broken electrical system components
- HVAC problems
- Faulty plumbing system
- Pest infestations
- Drainage and grading
- Building code problems & violations
Your home inspector will likely start from the exterior of the house, and then move on to the interior.
They will look at the following:
- Patios, driveways, walkways, and steps
Home inspectors will check for drainage and water pooling issues. He’ll also look for trip hazards like raised walkways.
- Retaining walls
Inspectors will check for cracks in the walls that may cause it to shift or crumble.
40% of building-related problems are directly related to water intrusion. So, home inspectors will check not only for damages in the roof and the roofing components, but also for water leaks and intrusions.
- Fireplaces & Chimneys
Chimneys can also be a point of entry of water, but on top of that, home inspectors will also check the insides of the chimneys for obstructions that will affect airflow, and wood tar buildup that can cause fires.
Since most Albertan residences have some sort of fireplace or wood burning stove, you may want to consider having a WETT certified inspector look over the installation for current Alberta code and safety compliance.
- Heat pump and cooling system
Inspectors will check if everything is functional and energy efficient.
A home’s insulation is usually exposed in the attic. So inspectors will check if the home has adequate insulation for the heat in summer and the cold in winter.
- Plumbing system
Inspectors will check pipes, drains, water heaters. They may run water in sinks and baths to see if there are any clogs because clogs could indicate plumbing problems.
- Electrical system
To check the electrical system of a home, inspectors will look at the electric panel, furnace, and water heater. If the house is old, inspectors will check if the panel is outdated and needs replacement.
- Attached structures (carport, garage)
Garages are inspected for safety issues. One of the things inspectors will check are sloping floors for potential pooling of spilled gas and whether the gas will flow inward or outward. Inspectors will also look for cracks on the floor that could indicate structural problems.
Detached structures will need separate roofing inspections and may not always be included in a home inspector’s service contract.
These are the basic inclusions of a home inspection. Lead, mold, air quality, and asbestos typically fall under special inspection because they aren’t always discovered through visual examination.
This means that if there are signs of water seepage on walls or floors, and there are visible water stains and spots, or if the roof is leaky, then your home inspector can tell you if the home has mold.
The same applies when asbestos-containing materials are found in the house. Your home inspector will know what building materials have asbestos.
After the inspection, you can expect the report 2-3 days later.
How Much Does A Home Inspection Cost?
The cost of home inspection varies depending on the size of the house, location, age of the house, and other factors.
Below is the average cost of home inspection in Alberta.
|Town House Inspection||$425-$600|
Note: These are rough average costs. The cost of home inspection can vary quite greatly by region, type of building and requested inspection services.
Who Pays For The Home Inspection?
The buyer pays for the home inspection service. When you, the buyer, contracts the services of a home inspector, you should be clear on exactly what you are paying for.
Check with the inspector what is included and what is not. If you want special inspections to be made that aren’t part of the inspector’s basic contract, be sure to let the inspector know.
Is Home Inspection Required For Loans?
In most cases, no. A home inspection is not typically a requirement in mortgage loans by most lenders. Lenders may only require an in-depth home appraisal, or the property’s estimated value.
Still, home inspection is a critical aspect of the home-buying process. So getting a home inspection, requirement or not, is always a good idea.
Should You Get A Home Inspection On New Construction?
Absolutely! Just because it’s new doesn’t mean it has no safety or structural issues.
Some people skip a home inspection when it’s a new construction, but savvy home buyers understand that new builds can have defects as well.
And no, they don’t just bring along a friend of uncle Johnny’s who does construction on weekends. They hire professionals who are trained to spot problems in homes.
Then again in Alberta, all new homes built after February 1, 2014 must have a new home warranty coverage.
So if you’re buying a new home, you’re protected by the New Home Buyer Protection Act, and you are covered for the following:
|Defects in finishes throughout the home such as paint and flooring||1 year|
|Defects in labour and materials related to heating, electrical systems, and plumbing||2 years|
|Defects in the exterior of the home such as the roof and walls||5 years|
|Defects in the building’s structure such as foundation and frame||10 years|
If you’re like us, you might still want to have a home inspection even with the warranty, just to be on the safe side.
The new home warranty is required in Alberta, Ontario, British Columbia, and Quebec.
What Is Due Diligence Contingency
Due diligence is a condition you set in your intent-to-purchase agreement with the seller that makes your purchase conditional on its satisfaction. When buying a home, a home inspection should be a part of your due diligence.
In law, there is a principle called caveat emptor (latin for buyer beware) where the responsibility for checking defects in a product falls on the buyer. What this means is that after the purchase, the seller isn’t required to do anything to remedy defects the buyer fails to identify before the purchase.
This principle applies to real estate transactions in Alberta.
In other words, if you failed to identify problems in the house you’re buying because you didn’t get a home inspection service, you’re stuck with your purchase— leaking roofs and all—and there is no way out of the contract.
So a due diligence contingency gives you the right to have the house inspected, cancel the contract, and it helps you negotiate for repairs or a lower purchase price.
Your inspection contingency should include details like the number of days you’re allowed to do the inspection.
In Alberta’s current housing market, where supply is low and demand is high because of factors like low interest rates, you might just get a few days for completing the home inspection.
Don’t despair, though. Latest data shows that home sales in March 2021 has increased 5.2% because of new supply.
So while the market isn’t showing signs of slowing down, you might be able to haggle for a longer time (probably a week or longer) because the supply has increased.
Ask your local realtor for assistance.
What Are Things That Fail A Home Inspection
Before anything else, a home inspection isn’t a fail or pass test. There is no passing or failing mark.
A home inspection is simply a report that shows the condition of the house, which you, the buyer, and the seller can act on.
That said, some of the common and top problems that home inspectors find are:
- Faulty electrical wiring
Fire hazards like worn out electrical insulation, outdated wiring, and damaged wire are some of the electrical issues that your home inspector may raise.
- Structural defects
Missing structural components or inadequate foundation reinforcements, and foundation cracks all fall under structural defects.
- Roofing problems
Improperly installed roofs, rotting wood bars, aging roof materials, blistering roof shingles, and roof leaks are some of the most common roof problems.
- Plumbing issues
Outdated plumbing systems usually require updating only on an “as-need” basis. If your home inspector didn’t find plumbing problems, you may insist on an upgrade only as an option.
Leaky pipes, on the other hand, are obvious problems that need immediate addressing.
- Poor insulation
Crumbling insulation may be a major issue in energy efficiency and high utility costs.
- Mold, radon, lead, asbestos problems
These are all health hazards that if found, must be removed or mitigated for your safety.
- Termite damage and pest infestation
Termites and pests are major issues to raise in renegotiation.
- HVAC problems
Poor maintenance, improper installations, gas leaks, and pipe cracks are some of the most common problems found in a home inspection that may be considered as defects.
How To Counter Offer After A Home Inspection?
So if you find the home you’re buying to be lacking, you can ask the seller to re-open negotiations.
In a renegotiation, you can request repairs for major problems in the home inspection report. You can open the option for ‘repair credit’ (where expenses for the repairs will just be subtracted from the closing costs) if you want to do the repair yourself.
You can also ask the seller to lower the purchase price.
A counter offer should be written and should include a copy of the inspection report, plus repair and construction estimates from professionals.
Your local realtor will draft a counter offer detailing each repair request that he will also help you pick from the home inspection report.
This is why having a skilled and experienced realtor matters. He would know what repairs are crucial and he would have the experience to deal with sellers.
Take note that the seller is not obligated to solve all or even one of the problems in the home inspection report. He can call the deal off just as you can.
So if your seller is not budging, even if your repair requests are reasonable— no, we don’t mean the chip on the bathroom tiles or the door that refuses to latch— you may consider terminating the contract instead.
Home Inspectors In St. Paul & Bonnyville, Alberta
Looking for a home inspector in St. Paul, AB or Bonnyville, AB areas? We have a list of trusted local home inspectors in our region, available upon request.
Things To Keep In Mind When Buying A Home
Now that you know how important a home inspection is, here’s a list to keep handy when you’re in the market for a home.
You can also check out our post on choosing a house that’s right for you if you need insights on finding the perfect home.
To be sure you’re ready for a major commitment, you must consider your income and employment status. These are also the things that banks and lenders will look into when determining your eligibility for loans.
The following will help you in your home-buying process:
1. Get a mortgage pre-approval
Before you start your house hunting, find out how much you can actually spend. To do that, you should get a mortgage pre-approval from lenders, who will ask about your financial portfolio. Lenders may be banks, credit unions, loan companies, etc.
Be sure to compare options offered by different lenders.
2. Find the right real estate agent
The right real estate agent will make your home-buying experience a breeze. His knowledge and experience in negotiation, particularly when it comes to home inspection, will be extremely valuable to you.
Real estate agents have access to listings that may not be available to the public. As well, if you’re looking for a certain style, they will know where to look.
So getting a real estate agent will prove very useful in helping you find the perfect home in a neighborhood that’s perfect for you and your family.
3. Start searching for your dream home!
Take notes and take lots of pictures and videos. These will help you remember each house you see when it’s time to make a decision.
4. Get a home inspection
After you made an offer, you should start getting ready for a home inspection. Your real estate agent should be able to help you find a home inspector who can do the inspection within your contingency period.
5. Get your mortgage approved
In Canada, you need a minimum 5% of purchase price as down payment, which is typically paid at closing. Now the remaining costs of the purchase will be paid by your lender.
Choose the lender that offers the lowest interest rate or one that offers payment frequency or terms you’re comfortable with.
6. Have the home appraised
To make sure that you’re paying a fair price, an independent appraisal of the value of the house will generally be arranged by your lender.
A home appraisal is different from a home inspection, and is done by a different professional.
7. Close the sale
After your lender has completed all the paperwork, which includes proof that your seller is the rightful owner of the house you’re buying, you’re now ready to close the sale.
Before closing, you’ll have a final walk-through of the house to confirm that all the agreed upon repairs have been made.
After you sign and return all the paperwork to the lender, it will take a couple of days for your loan to be funded. Once the seller received the check, you are ready to move into your new home!
Don’t Skip A Home Inspection!
To sum up, a home inspection is an important part of the home-buying process. It identifies major issues in a house and helps you save money— and headaches!— in the long run.
As a buyer, a home inspection also works in your favour because you can use it as a negotiating tool and as a way out of a contract incase problems are found.
So, don’t skip a home inspection! Trust us, it’s going to be worth every penny of your home-buying budget.
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