Do I Really Need A Home Inspection?
Is it worth $300-$500 to have a professional home inspection prior to making a purchase? This is a question that I ask myself frequently. For most people the answer is absolutely! The average homebuyer does not have the experience or the knowledge to effectively evaluate a home prior to purchase. Experienced real estate investors, and especially rehabbers, probably have enough of a background to make a decent evaluation, and use aids like a home inspection checklist to help out. However, that doesn’t mean that they shouldn’t have an inspection done.
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That First Rehab
My first rehab project was a bank REO that I purchased in New York about 15 years ago. The price seemed right, but it was an as-is purchase. I had some construction experience but I was not an experienced rehabber. The house was in a great area but needed to be completely redone, I naively assumed that it would be a piece of cake. (see article: That First Rehab )
Since the house needed everything I thought that an inspection wouldn’t be necessary. If I had done one I would have learned about many problems that I had missed. I didn’t see the termite damage to many parts of the house; I missed the carpenter ants that had devoured a large part of the roof deck. I also didn’t find the pipes that had frozen and burst and I certainly would have liked to know that the furnace needed to be replaced. Had I spent the $300 for an inspection I would have known about the unexpected repairs that cost almost $10,000.
I probably would have gone ahead with the purchase anyway, but I would have done so with a better understanding of the problems that I faced.
A Negotiating Tool
Today I have a much better idea of what to look for prior to making a purchase. And while a home inspector may not find anything that I can’t find myself, the inspection report can be used as a negotiating tool. If the inspection uncovers anything significant I can seek a price reduction or additional concessions from the seller. If you use a home inspection contingency (and you always should) in your purchase contract you will have the option of walking away without a penalty should something significant turn up.
One thing to remember is that a home inspection is only as good as the home inspector. If you are using a knowledgeable and experienced inspector it almost certainly pays to have it done. If the inspector is not thorough it is probably going to be a waste of money. Seek referrals from experienced investors when choosing an inspector and you should be able to find a good one. The bottom line is that a home inspection will either save you from making a huge mistake or give you peace of mind when making a purchase.
A man who carries a cat by the tail learns something he can learn in no other way.