All About the Property Inspection

What to Expect During the Property Inspection

Almost every offer to purchase residential real estate includes a property inspection contingency.  If a buyer is not satisfied with any aspect of the property after conducting the inspections, the inspection contingency allows the buyer to cancel the purchase contract and receive a full refund of the earnest money deposit.

The property inspection period is the buyer’s opportunity to investigate and learn everything about the property that may affect the property’s value. 

Types of Inspections?  Every aspect of the property is subject to inspection by the prospective buyer.  Most buyers will hire a professional property inspector to perform a general property inspection.  If the “generalist” inspector notes specific areas of concern, he or she may suggest a more detailed inspection of a specific part of the house.  Other more specific inspections may include a geological inspection, a foundation inspection, a plumbing or electrical inspections, a roof inspection or an inspection of any other aspect of the house.

Seller Disclosures:  During the inspection period the buyer will also review written disclosures from the seller about the overall condition of the property.  The seller must disclose his or her knowledge regarding any past repairs or problems that may impact the value of the property.  The inspection period is also a time for the buyers to investigate the neighborhood crime statistics, the local school system and any neighborhood barking dogs. 

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The Property Inspection Contingency

When a buyer makes an offer to buy a house, there are three main contingencies that are part of the contract. The first two, the appraisal contingency and the financing contingency, are related to the value of the house and the buyer’s ability to obtain financing. The third contingency, which is just as important to the buyer, is the property inspection contingency.

Typically a buyer has 17 days to complete their inspections, accept all the seller disclosures and remove their contingencies.  During the first two weeks of escrow, a buyer will hire a licensed physical inspector who will check all aspects of the house. The inspector will be a “generalist” who is knowledgeable in all aspects of construction and can inspect the roof condition, plumbing, electrical, foundation, heating and air conditioning systems, and the overall condition of the house.

Many buyers choose to accompany the inspector so they can have first-hand knowledge of any items of concern.  After the inspection is complete, the inspector will provide a written report recapping the findings.  Some of these items that will show up on the inspection report are of little or no concern, such as water pressure and cracked sidewalks, but often times there are concerns related to health and safety that must be addressed and corrected before the close of escrow.  If an inspector notes problems with specialized areas, such as a chimney or soil condition, he will likely suggest further inspections by another inspector who is a specialist in a specific aspect of construction.

The Residential Purchase Agreement states that the buyer may conduct investigations of the property and, based upon their findings, may either cancel the agreement or request that the seller make repairs. In most cases the buyers will request that the seller fix defects in the house that concern them or that present a health or safety danger.  Depending on the demands made by the buyer, the seller most often will agree to either repair the requested items or offer the buyer a credit in lieu of repairs.  At the time of the final walkthrough, the buyer will check to see that their requested repairs were made.

The inspection process has the potential to derail a real estate purchase.  Many homeowners feel that their house is in “perfect” condition and they feel personally insulted when an inspector finds faults with their house.  It is important that both the buyer’s agent and the seller’s agent are able to remove the emotional component from what is truly a business transaction and keep the purchase on tract.  If all parties are committed to closing the deal, there is usually a compromise that can be worked out so that the deal can move forward.