Friday, May 24, 2013

Should You Really Get a Home Inspection?

I have real problems with home inspectors and appraisers. Today, I'll pick on home inspectors.

First, to answer the question in the title: Yes. The issue is who does the inspecting.

In Nevada and California, we always found a contractor to look at homes before we bought them, even though home inspections weren't done in the day. Often, a pest and dry rot inspection was good enough. A pest and dry rot inspector really finds a lot of stuff. For example, he won't just find dry rot (if any), but will point out the water leak that caused it.

But the process has become more formal. In Oregon, it's very tightly regulated. Inspectors have to obtain a specialty contractor's license to conduct repairs.

The tight regulation has the effect of making inspectors wary of going beyond a narrow purview. They can point out leaky plumbing, failing siding and unserviced furnaces, for example, but they can't talk about water intrusion. They can say something like "an unserviced furnace this old might fail anytime," but they can't say "mitred window trim often leads to water intrusion." The damage would be latent and beyond the scope of their license.

Which can scare the crap out of a buyer, especially a first-timer. The statement on the furnace may be technically true, but the implied information that the buyer may have to buy a new heating system is, well, off-putting.

In Colorado, home inspectors are not licensed. We recently had one, where the inspectors pointed out a lack of winter housing for the whole-house fan, as well as mold in the crawl space. Accompanying their report was a bid to remediate both. The obvious conflict didn't sit well.

What it gets down to, regulated or not, is (a) who does the inspecting, and (b) what is the value of the information. We also had our un-serviced 1992-era furnace inspected, for example, and the guy, an Xcel inspector, just told us to service it and definitely not replace it because a higher-efficiency furnace would not pay for itself. That was useful.

The best home inspection I ever saw was a friend and client whose father was an architect.  He didn't care so much whether or not the dishwasher worked, but he cared a lot about, and located, all areas of possible building system failure and assessed their likelihood. 

The worst inspection I ever had was a father-son team in Portland. My buyers were getting an FHA loan, and the two bumbling inspectors failed to note exposed wiring and too-wide railing spacing on the deck, either of which would have disqualified the home for FHA if not repaired prior to close. I had to point the issues out, which was something my Remax bosses frowned upon (we weren't licensed for building issues and the E & O insurance may not have covered things).

What you want from a home inspection is not just information, but information evaluated and made useful. For example, if the inspection notes the ceiling insulation encroaches the venting, how important is that? Is it a bigger deal than, say, the bathroom fans not extending to an attic vent?  Or, say a repair is completed and you've called for a reinspection. Will the inspector say,"That's not how it's supposed to be done," or "That's not the best way to do it, but it will last another twenty years."

If possible, get an inspector who has worked in the trades. While it may be unfair to paint everyone with a broad brush, I had better experiences with inspectors who weren't franchises.  A huge metric of the home inspection process is lawsuit avoidance, both from the real estate broker and the inspector. With franchises, another risk control layer gets added. Litigation avoidance trumps information.

Again, get the home inspection. Get more than one referral from more than one person. Tell the inspector what you want, namely, information prioritized. Find out if he/she is familiar with FHA and other lender concerns.