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Month: September 2010

Contract Contingencies – They Can Make or Break a Deal

When buyer and seller have agreed upon a price to purchase a property, and the financing is in place, the deal is done, right? Not quite! Rarely would a buyer and seller agree to a contract without certain contingency clauses, and for good reason.

Contingency clauses offer protections for buyer and/or seller against situations or occurrences that would make the transfer of ownership problematic.

Contingency clauses included within the purchase agreement, for example, specify the conditions under which either buyer or seller could cancel the sale, with or without penalties, depending on the specific contingency terms.

Among the contingency clauses that can be included in a contract are:

  • Home Inspection: The seller could be required to correct any problems found during the inspection prior to finalization of the sale.
  • Termite Inspection: The contingency clause should specify who will pay for this service, or will the cost be split between buyer and seller?
  • Roof Inspection: Although this inspection is typically handled by a home inspector, most inspections are cursory due to the inspector not wanting to walk on the roof. This inspection is best handled by a roofing contractor.
  • Radon, Mold and Asbestos Inspections: Best handled by specialists.
  • Early Occupancy: This contingency allows the buyer to occupy the property prior to escrow upon the seller’s prior approval of this contract clause.
  • Preliminary Title Search:  This clause requires the seller to provide clean title to the property.
  • Contingency to Sell Existing Home: Not all sellers will agree to this clause. If this clause is agreed to by the seller, the buyer will be given a certain number of days to finalize the sale of his residence.
  • Appraisal Contingency: Buyer could cancel the contract or renegotiate terms of purchase in the event of a low appraisal.
  • Some contingencies can be waived and others added during the negotiations between buyer and seller; it all depends on various circumstances that may or may not affect either or both parties to the contract.
  • Dependent upon contract terms, either party could cancel the sale upon violation of any contingency.
  • Violation of a contract contingency by the seller could allow the buyer to walk away from the sale without penalty, and require the seller to return the buyer’s earnest money deposit in full.
  • Violation of a contingency clause by the buyer could allow the seller to cancel the sale and legally retain the buyer’s earnest money deposit.

Contract contingencies keep everyone honest. The buyer is assured that everything specified in the sales contract will be strictly adhered to by the seller or the buyer can legally walk away without penalty and receive a refund of deposit monies.

Some contingencies favor the seller, such as sale subject to buyer’s obtaining funding or selling a current residence within a limited time period.

Contingencies are an important addition to any property sales contract due to the fact that the sole purpose of these additions is to eliminate risk. How can anyone disagree with that?

Las Vegas REOs

Investors are interested in purchasing Real Estate Owned properties (REOs) because they know that the lending institutions who own these properties, banks, for example, or government agencies such as HUD or FHA  are anxious to clear their books and rid themselves of negative inventory.

As a result, many of these properties will be sold at attractive, below-market prices, especially when REO inventories are exceptionally high, as they are at this point in time.

However, if a deal is made in which the investor and the lender have agreed upon a sale price, there could –dependent upon the sale price as opposed to prevailing market conditions- be a problem with the appraisal.

An appraisal could come in low due to any number of reasons, including the possibility of the appraiser being inexperienced or unfamiliar with the area, the selling price being out of line with declining market values due to fallout as a result of an excessive number of distressed properties, etc.

In such cases the buyer can request a second-opinion appraisal, make up the difference in cash, walk away from the deal, ask the seller to lower the selling price, or possibly offer to make up the difference with a second mortgage as an example.

Dependent upon the lender and market conditions, an estimated cost of repair presented to the lender might be a negotiation bargaining point. Very often, there are repair issues with REO properties primarily due to the fact that the former owners would have little incentive in maintaining the home during a foreclosure proceeding.

During these uncertain times, the investor should be wary of being lured by an attractive considerably below market priced foreclosure offered for a property that is located in a depressed, or likely to become depressed neighborhood.

Because of current market conditions which are causing loan defaults in record numbers, depressed areas will likely take years to recover, and buying an REO property in such a neighborhood would seem unsuitable for investment purposes.

Although they are much less in number, and as a result, would be harder to find, there are some properties that may be loosely termed Individually owned REOs.

That  would refer to landlords, who have taken back lease-optioned properties or properties that were  lender financed and the deals have fallen through due to the tenant or buyer’s financial difficulties, and are now themselves in need to sell circumstances.

It’s best to remember that despite the hype, institutional and government lenders aren’t going to give their REO properties away, and most foreclosures will be priced at very near market value. Disclosure of defects isn’t mandatory, and it is often a “buyer beware” situation when it comes to purchasing an REO.

But even though REO asking prices may soften somewhat as new REO properties are released to the marketplace, smart home sellers in good standing with their lenders, with well-maintained property in good repair, a realistic selling price and a savvy agent, will prove to be a very competitive force that should easily attract buyers who are not willing to hassle with countless rules and regulations in order to pursue a “bargain” property and still possibly end up with a fixer-upper headache.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Las Vegas Real Estate Owned Properties

Las Vegas REOs are a less complex and often better way to purchase distressed properties than having to deal with a seller facing foreclosure, or at auction. There are some real bargains out there, and many Real Estate Owned properties can be found that are under-priced and marketed at attractive under comparable sales discounts.

No question, but that the really “hot” properties, in other words, true bargains, will receive multiple offers. In order to tempt the lender with the most attractive offer –while still maintaining a healthy profit margin- is to have your Realtor check the bank’s purchase price on the deed.

That is the figure that you need in order to compare figures with the price the bank now wants for the property. Certainly some competitors for the property will offer more than list price, so you need to be careful to avoid a bid that will negate your profit margin if you are buying the property as an investment.

Your Las Vegas real estate agents will guide you in the right direction as far as arriving at an offer that is profitable to you and simultaneously acceptable to the lender.

Your agent will run a neighborhood Comparative Market Analysis check (CMA) on the property, interact with other agents for information on pending sales prices, if possible, check on the lender’s listing agent’s  recent MLS postings and through these investigations, determine a list-price to sales-price ratio. Offering a percentage or two over that figure might be a deal closer as far as the lender is concerned.

Another thing to keep in mind is that although the lender certainly will not give the property away, bids are welcomed and appreciated. REOs are loans gone bad. REOs don’t pay interest, and the bank has an even lesser interest in owning property. They are not in the real estate business.

Even if you are an experienced investor, the agent representing you should be experienced in the bidding process, and rules and regulations governing the purchasing of REO properties, whether they are bank-owned, HUD, VA, etc.

For example, an experienced investor/agent team will know that an all cash offer has the best chance of beating out the competition. If financing, a lender’s pre-approval letter is a must. It’s a good idea to get a pre-approval not only from your lender, but from the lender who is selling the property as well, even though the seller will not be financing the property sale.

Other procedures required to finalize an REO purchase will include a limited-time inspection period, transfer fees, title insurance, and an appraisal.

Although REOs can have downsides and may not always be a super bargain in terms of price and profit, when REO inventories are high the profits can get better.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Overpriced Homes – Can They Be Sold?

Under today’s marketplace conditions, with the availability of so many Las Vegas distressed properties, foreclosures, short sales and motivated sellers in abundance, offering properties that can be purchased at considerably under market prices, why would anyone consider making an offer on a home that is unquestioningly over priced?

The overpriced home is probably in excellent ready to move in condition, has desirable upgrades, and is most likely located in a stable and well-maintained neighborhood.

Certainly, the overpriced, but well maintained home looks very good compared to distressed properties that may be in variable states of disrepair. Many buyers might be inclined to pay a little bit more for a property that has passed inspection with high marks.

Comparisons may be made between the true cost of buying a property needing repairs and upgrades and a property that is ready and waiting for you and your furniture, with no additional fix-up expenses, and the answer to this comparison might well be surprising.

Of course, all is not so simple. In the first place, most buyers will not even bother to look at an overpriced home, much less make an offer for the property.

Additionally, the question to be asked is; why would the listing agent not advise the client that the home is overvalued? The listing agent cannot use inquiries about the home to divert buyers to less expensive properties since no one will be calling.

However, the overpriced home may be the dream home some buyer has been looking for, and the buyer’s agent can use some strategic negotiating tactics to try and work out a deal that would be agreeable to all parties.

First of all the buyer and his/her representing agent needs to find out why the home has been priced out of market.

Could be that as mentioned previously, the listing agent might be inexperienced, and neglected to do a comparative Market Analysis (CMA) to aid the seller in setting a realistic at or under market price for the home. As a result, the buyer might be unaware of how far out of line the asking price might be.

Could be that the seller has an inflated view of what the property is actually worth, and has refused to consider the advice of his agent.

A savvy buyer’s agent, knowing that his/her client really loves this property, would offer to provide the seller and listing agent with a CMA, and an estimate of what a fair price for the property would be, and would follow-up by making an offer that would be closely in line with the market analysis.

By pointing out market conditions to the seller, and affirming that the buyer has been pre-approved by a lender and is in a position to purchase, particularly if there are no contingencies to complicate the deal, the buyer may now be in a position to buy that dream home at a mutually agreeable price.

If you are interested in selling your Las Vegas Home and have any questions about the process or the need to do a short sale, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

Las Vegas Real Estate Investments in an Ever Changing Market

Las Vegas Investors, small and large, can only prosper when they are totally flexible and adaptable to market changes, and, to be sure, the market is and will always be in a state of flux. Some changes may linger for awhile but to be sure, change is inevitable.

To be successful, the investor must keep up with and take advantage of the global changes brought on by the integration of many international economies. The current value of the U.S. dollar in comparison to the Euro for instance, has continued to attract international investors interested in properties within the United States, particularly Las Vegas.

Tax shelters designed to shield capital gains are less effective when market prices are falling, and sound, fundamental management is what is required to maximize property income during both good times and bad.

The astute investor in real estate must keep up with the way in which advances in communication can affect demands for certain kinds of investments.

Will the ability to complete entire transactions on the world-wide web have serious implications in regard to the demand for office space and traditional brick and mortar retail stores?

There will always be opportunities for the small investor in good times and bad, particularly since larger investment firms are rarely interested in smaller apartment houses, office buildings and single family home properties.

The small real estate investor must be sure of the kinds of investments he/she are most knowledgeable about, and most comfortable with. What are the goals?

What is your risk tolerance? Are you investing for Capital appreciation, current or tax-free income? What are your exit strategies, and time frame?

Additionally, the investor must estimate a time frame for return OF investment (return of the originally invested funds) and the return ON investment (profit.)

Investors in general look for properties which are easiest to convert to cash, (investment liquidity) at market values.

Liquidity is certainly very important, but location is one of THE most important factors in determining a property’s overall performance.

Evaluating trends in the local market and surrounding areas are a crucial part of deciding the worthiness of a particular property as an investment objective.

The investor must also examine possible restrictions as to use of the property, such as zoning laws, how demand for the property may be enhanced or diminished by interest rates, building codes and environmental laws, an oversupply of similar properties in the area, and such.

All of the above constitute greater or lesser risk factors. A certain amount of risk is an unavoidable factor in any investment, whether it be real estate or a new business start-up. However, the successful investor knowingly assumes only “calculated” risks, factors in the investment that have been carefully thought out and investigated before making a commitment.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Las Vegas Buyer & Seller Negotiations

The negotiation process between buyer and seller that begins with the buyer’s initial price offering, is an emotional and very stressful time for both parties. Las Vegas Real Estate Agents naturally go through this process with their clients time and again, but first time buyers and sellers may need a lot of hand-holding to keep calm and think rationally.

Since each and every transaction is unique in its own way, the listing and buyer’s agents must help their clients to plan properly, fully understand the process, and how to react to each others negotiating tactics.

Agents for both sides could close deals faster and more often if they would educate their clients about fair market values, and explain how the results of a Comprehensive Market Analysis (CMA) can help establish a realistic price that would assure both buyer and seller that they are in a win-win situation.

Once an agreeable price is established, the buyer has already been lender approved, and the house passes its appraisal and home inspections, the deal is just about done.

Establishing a selling price for a property could be fairly easy to determine if all factors were ideal, which is generally not the case.

Ideally, the home would be in good physical shape, and well cared-for, both inside and out. There would be no encumbrances other than a first mortgage, or none at all if the home was paid off. No liens of any kind, unpaid taxes, etc.

A CMA taking into consideration any upgrades to the home and similar neighborhood properties that might be considered competition, should be a reliable guide to establishing fair market value for the seller.

The buyer should also be made to understand the relevance of a CMA, which would serve as a guideline for the seller’s offering bid. If negotiations are to get off to a promising start, the buyer –in consultation with his/her agent – should offer a first bid that would seem fair to the seller. A bid so low as to be insulting will not receive a counteroffer.

When the seller and buyer realize that the seller will make an acceptable, but not unreasonable profit, and the buyer is paying no more and most likely less than fair market value, then you have the win-win situation that will result in a done deal.

Of course, that is a perfect scenario, and does not take into consideration all of the complexities involved in the sale and purchase of distressed properties.

However, in any case, particularly with first time buyers and sellers involved in property sale negotiations, the listing and buyer’s real estate agent’s should provide the education and communication that will prove beneficial to all involved.

If you are interested in purchasing a home in Las Vegas and have any questions about the Las Vegas Market or would like to set up a time to view properties, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

Real Estate Taxes & Homeowner’s Insurance

Often, first-time home buyers neglect to consider the costs involved in purchasing insurance, and/or how the cost of property taxes will impact their mortgage payments. Likewise, someone selling their first home may not be fully aware of how much of an impact taxes levied on the sale of the home will have on the seller’s net profit.

A first-time buyer may be unaware that the property taxes paid by the seller will most often differ from the property taxes paid by the new owner. Property taxes are  based upon the assessed value of the property, and may be higher or lower for the new owner.

When Homestead exemptions are allowed, in accordance with governing state laws, the new homeowner can apply for and receive a tax reduction. In some municipalities a further age-related property tax deduction can be applied for if the home owner is in the sixty-two to sixty-five year old range.

Home Owner’s Insurance

Although a new home buyer may surely be aware of the importance of having adequate homeowners insurance coverage to protect the home against catastrophic damage resulting in a total loss of property, such as from fire, flood, hurricanes, etc., or lesser but major problems within the home, liability coverage and the like, many people still purchase insurance based on cost rather than on the reputation for quality service of a company.

Case in point; in the aftermath of the devastation caused by Hurricane Andrew in South Florida in 1992, some companies –which will remain nameless- refused to pay the full amount of damages incurred by many of these homes by second guessing reputable and reliable contractors. However, some lesser-known and smaller companies accepted the damage claims of reliable contractors and paid in full to repair and often fully restore these homes up to current code.

That is why it is so important to be sure you are covered by an insurance company with a reputation for standing by its customers in time of need. Ask your friends and neighbors about their experiences with their companies, and do some research before you commit to a company which may add to your grief at a difficult time.

Of course other insurance costs may involve title insurance which protects the borrower against ownership challenges, flood insurance (a federal program,) which could be mandatory if the property is located in a flood risk area, and FHA loan required mortgage insurance, which protects the lender against the risk of foreclosure.

A full understanding of all the details involved in buying insurance can save you big dollars. For example, the higher your deductible –the amount of the claim you are personally responsible for – the lower your insurance premium.

At least a 20 per cent down payment on an FHA backed mortgage loan will save the expense of carrying mandatory mortgage insurance coverage. Other arrangements can be made so that the insured can pay a slightly higher interest rate and have the insurance built into the loan. An additional benefit of this arrangement is that it is tax deductible, which the separate mortgage insurance is not.

Home Buyer Questions and What They Mean

As any Las Vegas Real Estate Agent hosting an open house event can tell you, that is the time when many questions are asked by visitors. Although most questions are relevant some are very revealing as to the type of potential buyer this person might be.

  • How long has this place been on the market? The question reveals that this person may be looking to low-ball the seller based on the idea that if the house has not sold in some unspecified period of time, the owner is probably desperate.
  • What is the tax appraisal on this property? As though they can accurately formulate an offer to the seller based on that figure. The disparity in tax appraisals from one property to the next, even in the same neighborhood, can be maddening to decipher at times.
  • Has the house been inspected? Apparently this person, or these people, are not aware that they would need a new inspection of their own if they plan on purchasing the property.
  • Why are they moving? Not always a relevant question. If this is the house you want, and it can be purchased at a fair price, and passes inspection with flying colors, that’s all you need to know.
  • Obviously the question of why the seller is moving is asked to find out how motivated the seller is. The seller may also be aware that revealing the true reason for moving might weaken the seller’s bargaining position.
  • How much did they originally pay for the house? That’s a really silly and totally irrelevant question. What if the house was purchased fifteen or twenty years ago? All the potential buyer needs to know is what is the true and current fair market value of the home. The reason a person may ask this question is that some buyers really resent the idea that the seller is going to profit from the sale. Strange but true.
  • I’m not sure what I am really looking for, but I’ll know when I see it. Can we just drive around and look at some properties? That question requires an educated and tactful answer.

Certainly, no one wants to discourage a potential client –who, of course is no being represented by any other agent- but this person needs to be made to understand that he/she should sit down with paper and pen and do some soul-searching. The client should be told to consult with family members as to what is important in a home versus what would be nice but not a must, budgetary limitations, time frame, current housing situation, etc.

The client should be made to understand that just driving around in the “hope” that the ideal property can be found would prove a waste of everyone’s time.

Providing a well thought out list, the client should be told, will increase the chances of finding the ideal home in Las Vegas the shortest time, since the agent will examine the list and then choose the properties to visit that are closest in line to what the client would want.

For further information about purchasing a home in Las Vegas call 702-376-0088.

Buy First or Sell First?

If you are planning to sell your Las Vegas Home and purchase a new one, you might be tempted to look for a new residence before your current home has been sold. Don’t do it! Just think of the predicament you would be in if you find and purchase your next dream home, and are still carrying the mortgage on your current home.

Are you one of the lucky few who could comfortably manage two mortgages simultaneously? That wouldn’t seem to be the best of situations for most people. Besides, you aren’t just paying two mortgages, you are also having to maintain two homes. That means paying double utility bills, insurance premiums, lawn maintenance, repairs, etc. And another thing, how will the insurance premiums on your old house be affected during the time it is unoccupied?

Suppose you have a serious (and qualified) buyer for your present home, and you are already into serious negotiations with the seller of a home you have decided to purchase, and both deals go through, what happens then?

Unless you are extremely lucky, coordinating closing dates to everyone’s satisfaction won’t be easy. Of course, simultaneous same-day closings can be accomplished, but the chances of something going amiss could pose problems for all.

You could also approach the owner of a home you are interested in buying and offer to purchase the property contingent upon selling your home. The seller might agree to that condition, provided you already have a contract from a buyer of your home.

Whatever you do, try to avoid overlapping mortgages. It could become nightmarish. It makes much more sense to sell your old home first, and then, leisurely and without undo pressure, search for your new home.

Remember, you naturally want to sell your home quickly, and at a satisfying price, so it is important to remember that under any market conditions, the property that looks good inside and out, is priced right, marketed right, and has experienced and knowledgeable listing agent representation, is the house that will sell in a buyer or seller’s market in a reasonable length of time.

Once you sell your home and are free of mortgage payments you can rent temporarily while you are house-hunting. Even if you decide to stay in a hotel or motel while house-hunting, and your furnishings, etc. are put in storage, it’s a whole lot better (and cheaper) then carrying two mortgages.

Under current market conditions, and with an experienced real estate agent representing you, you shouldn’t have to rent for very long. The time is as ripe as it will ever get to buy a home. Selling prices are still falling, and if you have really good credit, interest rates are at mouth-watering all time lows.

If you are interested in selling your Las Vegas Home and have any questions about the process or the need to do a short sale, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

The New Investor in Distressed Properties

The possibilities of making big profits in distressed properties has lured many new investors into the field. Many, surprisingly enough, are willing to risk financing these kinds of properties without the knowledge and expertise, much less the experience of the successful, long-time investor.

Frequently, these newcomers rely on “instinct” rather then on the advice of knowledgeable professionals, such as real estate agents and attorneys. Their hunger for quick, profitable deals and lack of true market knowledge most often leads to investments that either do not materialize, or turn out to be money-losing propositions.

These entrepreneurs often do not know of all the options an owner of a distressed property may have before actually being foreclosed, such as:

  • If the owner is in a higher than debt equity position, but has fallen behind on payments to the lender, he may opt for a quick sale to get out from under the mortgage
  • Deed in lieu of foreclosure – giving the deed to the lender – may avoid foreclosure, but is not the best of all possible options
  • Short Sale: The borrower must convince the lender to allow the property to be sold, even if the sale price is less than what is still owed on the loan.

The borrower must additionally ask the lender to agree that no further action against the borrower to collect any balance still due on the loan- after the sale of the property – will be taken. The possible tax ramifications of such a sale may not leave the seller free and clear of all debt.

“Jumping” into a distressed property purchase, without a complete understanding of the process, and without a skilled advisory team is often a recipe for financial disaster.

Without these advisers, how will the new investor know the true market value of a distressed property, particularly in a difficult market such as the present?

Certainly, the new investor should be aware of the outlay of funds required-other than the purchase price- such as appraisals, home inspections, title searches, financing conditions, rehab and upgrade costs, etc.

Further investigation may be needed to uncover possible second or third mortgages, contractor’s liens, judgments, and so on.

Additionally, the new investor who finds a truly profitable investment, will rarely be the only one who knows about the property, and will quickly find himself up against the old pros, savvy, long-time investors with deep pockets, who will be difficult to compete with.

At this point, all we can say to the new investor is, do not take the plunge into distressed property investment until you have thoroughly familiarized yourself with the market in which you are playing. Put together the best advisory team possible, and make sure your funding sources will enable you to make the purchases that will make you the kind of money that drew you into this investment field in the first place.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-0088.

Added Value Properties

Added value properties are properties that for one reason or another are undervalued, but with renovation, sometimes minor, sometimes extensive, investing in these properties could be profitable.

This is dangerous area for new investors, particularly those with a get rich quick mentality. Careful analysis by an experienced investor and his/her investment advisers is a requirement of good judgment and the only way to make a qualified decision as to whether the deal is worth pursuing or walking away from.

How to recognize a possibly under-valued property that with some tender love and care would add value, might make a worthwhile investment takes experience in evaluating real estate investment targets.

Some examples of a possible added-value investment property:

  • A rental property in which the owner is not experiencing the expected cash flow from the investment. Possibly the current owner is unaware of how to track rental market trends or inexperienced in finding the right kinds of tenants and is experiencing high tenant turnover.
  • The neglected, vacant property of an out of town owner, who doesn’t need the money, and may have not as yet gotten around to having the home fixed up and marketed.
  • A for sale by owner (FSBO) home that has fallen into disrepair due the owner’s lack of funds. The owner has little knowledge of the property’s true market value, and is selling the property in “as is” condition.
  • The owner was recently deceased, and the beneficiaries are out of town and anxious to sell. The property may be in some disrepair, maybe minor, possibly major.

The beneficiaries are reluctant to put any money into the property for renovation, and may be putting pressure on the listing agent for a quick sale and might be amenable to selling at an attractive under-market value price to a qualified buyer.

  • The once residential home is now in an area that has been re-zoned for commercial use, and the owner is not inclined to be a landlord to a business owner tenant and would rather just sell the property.

There are many other reasons as to why a property could be targeted by the investor as an added value prospect, and as mentioned previously, it takes real know-how to identify and analyze a real estate investment of this nature.

As any experienced investor knows, it takes the knowledge, resources and experience of a real estate agent who knows how to recognize these kinds of properties to find the investments that may be worth pursuing.

If you have any questions about investing in Las Vegas Real Estate, feel free to give us a call at 702-376-7379.

Las Vegas Home Inspections

Having a Las Vegas Home inspected prior to purchase is an important safeguard for buyers and lenders, in order to ensure that the structure that represents thousands of dollars in investment capital is sound and the home’s vital components are in good working order.

Las Vegas Home sellers would do well to have their homes inspected prior to listing, in order to be assured that the home is in good repair or that any problems found have been dealt with.

Although some states do not require licensing of home inspectors, the State of Nevada does. Inspectors are licensed and regulated by the Nevada Real Estate Division, and certified under the categories of Residential, Commercial and Master Inspector.

Home inspectors can be located through the National Association of Home Inspectors (NAHI.) Certification by the NAHI is a professional credential for home inspectors.

A home inspector check list will include the following:

  • Home interior
  • Home exterior
  • Foundation
  • Roof, flashings and gutters
  • Roof support structure
  • Attic
  • Basement (if applicable)
  • Insulation quality
  • Garage
  • Electrical
  • Visible plumbing, interior and exterior
  • Central air and heating

After inspection, a written report will be issued that will describe the home’s overall condition and will indicate any problematical issues discovered.

When interviewing an inspector, find out what type of insurance coverage or coverage’s he has. He should have liability insurance, but he may or may not be covered by an errors or omissions policy (E&O.) An E&O policy will cover an inspector who is negligent in his work, overlooks a serious defect or malfunction, or signs off on an inspection report without denoting an obviously existing problem.

It is important to note that inspectors do not examine a home in minute detail. Inspections are visual and done primarily to discover adverse conditions, and/or safety concerns, and not cosmetic items. Wiring and plumbing not visible to the naked eye, for example, would obviously not be possible to inspect.

Inspectors do not verify code compliance, and cannot inspect inaccessible areas of the home. Additionally, the inspector cannot guarantee that some structural problem or component of the home that has been inspected might fail sometime after the inspection date, if it was in apparently good condition or good working order at the time inspected.

Since long-term prospects of systems can’t be predicted, it would be a good idea to ask the inspector if any systems he has examined might need a specialists attention in the near future.

Certainly, radon and pest inspections are very important as well, and a home inspection company might offer to subcontract and get these inspections done for you, but it probably would cost less to hire these specialists yourself.