Home Inspections 101 for Real Estate Professionals Global Property Inspections is solely responsible for the content of the material used in this course/seminar.
Course Goals • Increase your knowledge of the home inspection process. • Improve your ability to interact with home-buying clients and inspectors regarding the home inspection. • Increase client satisfaction with the home-buying process.
Home-buying and Client Terminology • This course concerns home-buyer inspections only, not prelisting inspections for home sellers. • The terms “home buyer” and “client,” as used throughout this course, refer to the same person or party to the transaction who is the home buying client of the real estate agent. • The terms “home buyer” and “client” also refer to the client who hires the inspector to perform the home-buyer inspection.
Role of the Home Inspection • Home inspections are optional but are included in most real estate purchase agreements. • The objective of the home inspection is to protect the home buyer from unpleasant and often expensive repair surprises. • A home inspection increases a buyer’s confidence in making an offer and their decision to purchase.
A Home Inspection Completes the Sale Information gathered from an inspection helps bring buyers and sellers together: • Information leads to knowledge • Knowledge leads to understanding • Understanding leads to agreement
Benefits for Sales Representatives • Reduces your liability (transfers to inspector) • Delivers a higher level of service to clients • Demonstrates your professionalism • Brings additional referrals from satisfied clients
Goals of the Home Inspection • To share unbiased information about major components and safety issues • To discuss repair, maintenance or safety issues • To move the sale forward
The Inspection: What It IS • A visual examination of readily accessible systems and components of the home • To identify conditions that, in the professional judgement of the inspector, are significantly deficient or near the end of their service life • To include the inspector’s recommendations to correct or monitor conditions
The Inspection: What It Is NOT • It is not technically exhaustive • It is not a code inspection • It will not identify concealed conditions or latent defects
Standards of Practice • Inspectors normally follow industry standards of practice, prescribed by industry trade associations. • The standards represent guidelines for the inspector to follow, including the scope and limitations of the inspection. • Inspectors in Ontario have several trade associations to choose from, including the following: • The Canadian Association of Home and Property Inspectors (CAHPI) • The Professional Home and Property Inspectors of Canada (PHPIC) • The Ontario Association of Home Inspectors (OAHI) • The International Association of Certified Home Inspectors (InterNACHI)
Tools and Equipment Even though the inspection is a visual examination, inspectors may employ tools and equipment to assist with their inspection: Gas Detector Moisture Meter
Inspection Limitations • Industry standards were written to provide consistency in inspections and to be practicable and affordable for home buyers. • For instance, if an inspection were more than a visual inspection, it would take many more hours or days to perform and might cost thousands instead of hundreds of dollars.
Common Documents Associated With a Home Inspection • Pre-inspection agreement: Defines the scope of the inspection, standards followed and fee charged • Home inspection report: Should be clear and concise and incorporate photos
Inspection Protocol Who should attend the inspection? • It is important to establish beforehand who will attend the inspection and when they will attend. • Client (e.g., home buyer) • Real estate sales representative • Will home seller or their sales representative attend? • Local rules may prescribe who must be in attendance
Home Inspection Report Basics Home inspection reports should: • Be clear and concise • Adhere to the industry standards of practice and cover all major components • Be delivered in a timely fashion (such as within 24 hours) • Define terms used therein: (e.g., “acceptable,” “marginal,” “defective,” etc.) Who owns the inspection report? The client.
Home Inspection Report Formats Home inspection report formats vary: • Checklist or narrative • Combination checklist and narrative • Computer-generated • Handwritten • May or may not include summary • May or may not include photos • Delivered at time of inspection or later
Professional Home Inspector Characteristics of a good inspector: • Trained, thorough and unbiased • Courteous and professional, and has the necessary tools and equipment • Has good written and oral communication skills • Insured Note: There is currently no home inspector license required in Ontario — no required training or exam.
What an Inspector SHOULD Do • Generally adhere to industry standards of practice and code of ethics • Inspect readily accessible systems and components • Report: • Systems or components that aren’t working properly or have reached end of service life • Explanations of the deficiencies • Recommendations to correct • Reasons if certain systems or components were not inspected
What an Inspector Should NOT Do • Predict remaining life of systems or components • Offer advice on methods, materials, costs to fix components unless qualified to do so • Offer to make repairs, refer specific contractors or receive referral fees • Comment on market value • Perform code inspections
Insurance Coverage for Professional Inspectors • General liability insurance • Should carry errors and omissions (E&O) insurance • Many E&O policies have a “referral” endorsement
Inspection Reduces Complaints and Liability Chart Provided by FREA
Informed Home Buyers • Most buyers know little about construction • Informed buyers are more satisfied and can better anticipate and plan for repairs and maintenance
Client Satisfaction • Home-buyer satisfaction depends on many factors. The condition of the property is one. • Once the home buyer moves in, do they feel they got the home they expected? • An inspection can help improve client satisfaction by eliminating or reducing unpleasant surprises after moving in.
Home-buyer Expectations Home inspectors can improve client satisfaction by managing client expectations. • Home buyers often set themselves up for disappointment by expecting that their homes will be in near-perfect condition. • They often feel a letdown when the inspector discovers deficiencies. • Inspectors can assist by explaining that few homes are in perfect condition, and if issues are discovered they can be corrected.
Home-buyer Satisfaction After Move-in Home inspectors also play a role in client satisfaction after the move-in: • Clients might expect that the home inspection would have uncovered every deficiency in the house, even hidden damage. • Inspectors can help set reasonable client expectations by making sure to explain the scope and limitations of the inspection. • Sales representatives and inspectors can help by asking clients if they have any questions about the home inspection report and inspection findings.
Home-buyer Satisfaction After Move-in What to do when issues arise after clients move in? • Clients might call about deficiencies discovered after they have lived in the home for awhile. • Suggest that the home buyer call the home inspector to have the inspector revisit the property • The client should review the home inspection report to see whether the deficient condition was mentioned in the report • A home inspector can make a mistake and might be liable, but sometimes the defective condition was hidden from the inspector’s view, (e.g., behind walls, under linoleum, etc.) or simply failed after the inspection (water heater goes out)
Explain the Scope of the Inspection A good inspector: • Explains the scope and limitations of an inspection • Makes sure the client reads and signs the preinspectionagreement • Invites the buyer along for the inspection • Explains how long the inspection might take, what the fee will be, and when the home buyer can expect delivery of the inspection report
Ordering a Home Inspection • Immediately after reaching a written purchase agreement with a home seller • In accordance with the Code of Ethics of REBBA 2002 (Real Estate and Business Brokers Act), sales representatives should be cautious when recommending home inspectors • Best practice is to offer options and provide a minimum of three or more names of inspectors and allow clients to make their own decision • Refer toREBBA 2002 Sec. 6: Providing Opinions and Sec. 8: Services from Others
How to Prepare for the Property Inspection • Secure pets • Turn off alarms • Remove obstructions to: • Furnace and water heater • Electrical panel • Attic • Garage • Crawl space, etc.
Grading and Drainage • Great curb appeal: But the inspector is looking for positive drainage • Water is the No. 1 issue with most homes • Need positive drainage (slope) on all four sides • Most drainage issues are easy to fix
Driveway, Walkway and Steps • Loose or missing handrails (inside or out) are a safety issue • Driveways/sidewalks/patios can have tripping hazards: • Heaving • Differential settlement • Excessive gaps
Porches, Stoops, Decks, Balconies and Patios • Ledger board should be bolted to the structure not just nailed. • Railing should have proper height and spacing • Railings and hand railings should be firmly attached • Support posts and stair stringers should have no earth-to-wood contact • Decks can be expensive, but are fairly easy to repair
Exterior • Trees can abrade roofs, as well as heave driveways and sidewalks • Tree roots can affect foundations, sewer lines, etc. • Other vegetation should be kept away from siding, air conditioners, etc.
Roofing System Inspection of roof: • Estimate age • Number of layers • Type of materials • Leaking or not? • Types of valleys • Flashing
Chimneys Chimneys are a frequent maintenance issue and can be expensive to repair. Inspectors check for: • Proper alignment • Proper height • Flashed properly • Lined and capped
Siding and Trim • There are many exterior coverings, such as wood, vinyl, stucco, brick, stone and synthetics • Some are more high-maintenance than others, e.g., cracks in stucco require sealing, wood needs painting, brick and stone may require tuck pointing, vinyl needs washing • Vegetation should be trimmed back to prevent damage from contact with the siding
Windows and Doors Inspect for: • Operation • Alignment • Weather-stripping • Evidence of leaks
Garages • A single garage door such as this one receives a lot of use • Examining the operation, tracks, springs, openers and fit is important • For child safety, auto reverse is a must
Electrical System Inspectors check for adequacy and safety, including: • Panel amperage/volts • Service entrance cable • Panel condition • Branch circuit wiring • Grounding • Wire conductor • GFCI, AFCI • Smoke detectors
GFCI Current standards require GFCI protection: • Most exterior outlets, not including upper decks • Bathroom outlets • New kitchen construction/renovation • AFCIs are not required as of yet on most existing homes but are required for electrical outlets in bedrooms of new construction
Smoke Detectors • National safety standards require smoke detectors • Can be battery operated, hard-wired or both • For best performance, should be mounted on ceiling or near center of the room, hall or stairway, and at the head of each stairway leading into an occupied area • Inspectors verify they are present and activate test button only
Carbon Monoxide (CO) Detectors • CO is called the “silent killer” • It is colorless and odorless • CO detectors are not required in existing homes • CO detectors are required in new construction in Ontario