Home inspections may produce negative reports

Remember when the building inspector’s report used to tell the buyer and seller the condition of the house and, if any major repairs or structural corrections were needed, the two parties would adjust the sales price?

Now more than ever, potential buyers are using minor flags in the inspector’s report to withdraw or counter offers on houses. And, consumers also have come to expect more than a check of the basic health of the electrical and plumbing systems.

While some inspectors have attempted to become more thorough, they cannot see through walls nor be absolutely certain of the quality of all materials and craftsmanship. And to compound the problem, their reports now contain hold-harmless agreements and qualifying phrases (a result of lawsuits) that make some consumers wonder what service the $550 inspection fee is buying.

Courts and expectations have taken the basic structure from structural inspections. Look past the peeling paint and basic wear and tear, however, before demanding a price reduction.

The inspector’s job is to highlight the negatives and some buyers aren’t ready for all the negativity. What often happens is that a potential buyer suddenly faces a report that seems too picky and derogatory. That experience generates remorse and thoughts like, “Do we really want to move? The home we have isn’t so bad after all.”

For sellers, such reports can be infuriating report cards on conditions they inherited from the previous owner.

I don’t blame the building engineers and inspectors for doing their job, which is to find structural flaws in a house. And I think inspections really protect both buyer and seller.

However, consumers need to know up front that inspectors do not tear open wallboard to probe interior spaces. Just because an item does not make the “laundry list” this does not mean it is satisfactory or in working order - especially if it can’t be seen.

For example, a friend, who was presented with a qualified buyer and two backup offers, recently found herself in a typical situation. Her building inspection passed with no significant problems. The bank appraiser then arrived to ascertain the market value of the home and called for a pest inspection. The pest inspection discovered termites and dry rot that had existed for many years.

The woman was surprised to discover that those conditions were not covered in the building inspection. But inspectors do not always probe for pests, and they rarely perform environmental testing for materials such as asbestos, urea formaldehyde insulation and radon.

Many inspections do not include intercoms, appliances, smoke detectors, pools and pool equipment, hot tubs, saunas, elevators, dumbwaiters, heat pumps, furnace heat exchangers, electronic air cleaners, air conditioning systems, gas space heaters, gas fireplace accessories, solar systems, wall insulation, sewage disposal systems, water and “specialty items” like alarm systems.

Rarely is anything positive mentioned in an inspector’s verbal or written report, even when thousands of dollars have been spent to correct or remodel a potentially disastrous situation.

For example, several years ago we purchased a large home. We hired one of the most popular and established home-inspection firms in the area. The inspector said some of the improvements made by the previous owner were not up to the quality of the original construction.

We spent six years and thousands of dollars correcting interior shortcomings. Among other things, we remodeled a second-floor bathroom that had a tub about to fall through the first-floor ceiling. We also completely remodeled the kitchen and replaced dangerous wiring.

When we sold the home, the report given to the new buyers - by the same inspector - stated “the room has been remodeled since my last inspection” and there was no mention of most of the other improvements.

Real-estate agents, lenders and escrow officers should remind consumers that the inspection report will be a negative laundry list of everything the inspector “sees.” It is not necessarily a complete list because one inspector might not “find” the same things another one would.

Structural inspections are extremely valuable and I think all buyers should have one. They also provide the seller with protection from future claims, but they don’t come laced with seashells and balloons.

Get ready for a poor report card and use it as a negotiating tool only if the problems are major league.