A home inspection is a professional evaluation of the structural and mechanical systems of the home. The resulting report can reassure homebuyers, influence their starting offer, or scare them off.
Many sellers also pay for home inspections so they can get ahead of any potential problems. An inspector will point out things that happened so gradually the homeowners did not notice, like tree branches overhanging the house. In a strong wind, that branch could damage the roof.
An inspector also brings a valuable big-picture perspective to homeowners. Having evaluated many homes, the inspector can tell abnormal from normal. Homeowners get used to minor issues, like standing water next to the foundation after it rains. "What's the big deal? It dries up after a few days." An inspector, on the other hand, will look at standing water and note improper drainage.
The results of a home inspection can seal the deal—or sink it. Insurance coverage could be affected too. So what are the most common reasons why homes fail inspection?
Failure Is in the Eye of the Buyer
The report of a certified home inspector will document problem areas and rank their severity. Some people may notice what they call "red flags," but the truth is failure is in the eye of the buyer. The inspection's purpose is to inform buyers and sellers, and the findings must be taken into consideration with everything else about the home: location, property values, schools, walkability, climate, square footage, and so on.
According to inspection software maker HomeGauge, the most common problems that appear in a home inspection report include:
- Roof problems (leaks, missing shingles, damaged fascia board, etc.)
- Old or damaged plumbing
- Faulty or outdated electrical wiring
- Damaged furnace
- HVAC issues (damaged insulation, dirty air filters, disconnected ducts, etc.)
- Foundation issues (sloping floors, foundation cracks, etc.)
- Water damage and drainage issues (poor grading; moisture stains on the ceiling, windows, or walls; mold; etc.)
So actually, a home "fails inspection" only if the inspection makes a potential buyer walk. It all depends on the buyer. A few problem areas and projects won't discourage a handy person who expects to make a few repairs to stay on budget. Plenty of buyers are the DIY type, looking forward to putting their stamp on their next home. If the buyer is after a turnkey home, though, one too many minor remarks on the home inspection could scare them off—but don't worry; the right buyer might come knocking tomorrow.
Yes, some red flags in an inspection can be severe enough to affect insurance coverage. Buyers will likely bring that up in negotiations, expecting to pay less for the home so they can make the necessary repairs and obtain coverage. For homeowners who stay in the home, repairs could be necessary to maintain their current coverage.
“Seldom will a home inspection come out completely clean with no damages or potential problems at all.”
Often, when a sale falls through because of an inspection report, it's because the buyer's expectations didn't match reality. They didn't understand normal wear and tear. They inflated the importance of minor cosmetic problems. They thought the seller should repair every little thing on the report and make the home "perfect." Experienced real estate agents and certified home inspectors strive to educate this kind of buyer.
What Happens If the Inspection Isn't So Good?
Although a home inspection is a crucial step in the buying process, what potential buyers do with the information is up to them. A wide range of responses is possible, from doing nothing (buying the home as-is) to backing out of the sale. Often, buyers will request that the seller make some repairs before the sale, or ask for a discount on the sale price.
"It all comes down to how significant the issues are, what kind of market you're in, and how strongly you feel about the house," says HomeGauge in its advice to potential buyers.
The significant issues that will need to be fixed before the bank agrees to release funds for the purchase usually involve expensive structural problems, blatant building code violations, or safety concerns. Examples of required fixes:
- Excessive radon
- Termite damage
- Leaky roof
- Defective HVAC, plumbing, or electrical systems
"It’s usually in the seller’s best interests to accommodate the requests for major repairs in one way or another," says HomeGauge. "After all, if the deal falls through, the problems will still be there the next time someone is interested in buying the house."
What Home Inspectors Typically Do and Don't Do
A certified home inspector is generally required to:
- Personally inspect every part of a home, including all rooms, the grounds, attics, crawlspaces, and more.
- Write and deliver clear reports to the client.
- Explain findings to clients.
- Work with real estate agents and prospective buyers.
On the other hand, home inspectors do not appraise the home's value. Also, don't expect a home inspection to include repair estimates. A glowing inspection report does not guarantee that the home complies with building codes. No home inspection should be considered technically exhaustive, says the North Carolina Real Estate Board; "rather, it is an evaluation of the property on the day it is inspected, taking into consideration normal wear and tear."
- A home inspection is a necessary step in the buying process.
- Major problems include termite damage, faulty plumbing, bad HVAC or electrical, and leaky roof.
- A buyer's expectations play a major part in interpreting the results of an inspection.
- An inspection report is not a to-do list of repairs the seller must make.