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Seven Ways to Use a Home Inspection Report

Home Inspections are an Important part of the Due Diligence that a first time home buyer or investor should undertake when buying a bank owned (or any other home, for that matter) home in the Hemet - San Jacinto Valley, in CA.

The following report was first published by, Jim Bushart. one of my fellow ActiveRain Bloggers and a Missouri Home Inspector. He points out several key reasons for a home inspection.

If you visit his blog, you'll see I did ask a couple of questions that may be considered to be a negative...tell me what you think...

Jim,

This is a good report worth repeating and using a s a useful tool for first time home buyers, which dominate our local market.

The down side...if there is such a thing is if the buyer pulls out, we are not suppose to make that report available to the next buyer. I understand everyone wants the work, but a report should then become part of the known disclosures for a property.

The other down side, if there is a defect pointed out to the buyer the buyer cannot technically file a claim with a home warranty company. If the furnace is not working now - why should the home warranty company replace it? I know it happens, but would that not be considered mortgage fraud?

John

Via Jim Bushart (Home Inspection Services of Missouri):

In random order, I present to you seven different ways in which a home inspection report can be used by parties to a real estate transaction for advantage and benefit.

1. Buyers can consider the reported conditions of the home's systems to determine their ability to afford to maintain the property. A home with a 12 year old water heater, an 18 year old furnace and a 25 year old composite shingled roof is going to need some costly investments in the near future.

2. Buyers can sometimes use information regarding undisclosed defects to negotiate the seller's action to repair the defect(s) or adjust the asking price for the home.

3. Sellers can obtain a home inspection and use the report to disclose known defects to potential buyers.

4. Sellers can obtain a home inspection and use the report to identify and correct significant defects that could interfere with a buyer's desire to submit a contract to buy the property.

5. Buyers can use the inspection report as a "punch list" or "to do list" for maintaining the property after purchase.

6. Buyers/Sellers can use the report to communicate to contractors the nature of the defect(s) to obtain estimates for repair or to arrange for repairs or replacements.

7. Buyers can sometimes use the inspection report as a means to withdraw from the contracted agreement to purchase the home when certain types of undisclosed defects are reported.

Buyers and sellers should consider obtaining inspection reports only from professional full-time home inspectors. Inspection reports generated by builders or contractors are often used by them as marketing tools and a means to generate business for maintenance and repairs and do not always represent the actual conditions of the property.

Until Next Time, Have a Blessed Day,

John Occhi, ePRO & Five Star Certified REO REALTOR®
www.JohnOcchi.Com
Hemet - San Jacinto Valley, CA
The Excellence in Real Estate Team @
Allison James Estates & Homes
2281 W. Esplande Ave, #102-B
Next to "Starbucks"
San Jacinto CA 92582
(951) 654-5550

This blog and the contents written here is the intellectual property of John Occhi, Hemet - San Jacinto Valley REALTOR® in the South West Riverside County region of the Inland Empire of Southern California. The views and opinions expressed are just that - views and opinions of John Occhi and those who comment. Please note that I am not an attorney or a tax professional and any time I discuss either topic, I suggest you consult with the proper professional for relevant assistance.

This blog is part of the ActiveRain Real Estate Network, which is a social network highlighting the best of Web 2.0. Information is provided with the intent of educating and assisting home owners, home sellers, home buyers and real estate investors with information the can be used to make better real estate decisions.

I am proud to be a full time REALTOR® who is proud to be a contributing member of the ActiveRain community.

Posted by John Occhi, ePRO, Hemet-San Jacinto CA Real Estate, 951-443-6259 on 11/01/2009 10:08 AM

Comments (4)

Originally posted at: John Occhi's Blog: Seven Ways to Use a Home Inspection Report

4 Comments on Seven Ways to Use a Home Inspection Report

NOV

John, home inspections are valuable for so many reasons, but if the buyer pays for it, it is his.

I only give it to the seller if there is a negotiable repair needed, or if the buyer chooses not to buy the home due to the inspection results.

I do not give it to the appraiser, or send it to the title company to be part of the records.

Hello, John.

Thank you for the kind words regarding my post and please accept my best wishes for continued blessings from God for you and your wife.

I would like to point out a few things about an inspection report that might help you understand how, after time, it diminishes in value and accuracy.

First, my inspection reports represent only a part of the communications that I have provided to my client regarding the condition of the home and its systems on the date of my inspection. In addition to the written report is the walk through that my client, his realtor and I had the day of the inspection since I encourage my clients to be present whenever possible. During that conversation, my client asked questions and we communicated issues that are not always contained in or addressed by the written report for the sake of redundancy. In this sense, the report is incomplete.

Second is the fact that the report is a snapshot in time that represents my opinions of the conditions of the home on the date I inspected it. As we all know, furnaces can stop operating an hour after the inspection for no outwardly apparent reasons. A report reflecting a working heating system on October 10 may not necessarily be correct and true on October 12.

If you are looking to have a report that will stay with the house, encourage your seller to obtain his own inspection and make copies of it...along with any receipts from contractors who have repaired any of the defects contained in the report...for all who tour the home to read. I cannot support these statistics on my own, but I have been told that less than 25% of buyers will pay for their own inspection when the seller has had one that appears credible and shares the outcome with the prospective buyers. They do have credibility and will go much farther in serving the purpose that you are looking for, IMO, than an outdated buyer's inspection report.

Good luck to you.

NOV

It show how important it is to have a home inspection specially for first time home buyers

NOV

Hey, John

Since you're in California, and not Missouri, your first "down side" is wrong.

The Leko v. Cornerstone decision of January 31, 2001, by the Second Appellate Court, made home inspection reports part and parcel of the disclosure process here in California, and the California Association of Realtors jumped all over that decision by modifying their standard purchase contract the following October to say that the Seller is now entitled to all reports on the property at no charge, notwithstanding any so-called contractual confidentiality statement between the home inspector and his Client.

The Court said, "Inspection companies do not have a privileged, fiduciary relationship with the client, and their reports are not confidential." Black and white, and home inspectors have not been able to get that overturned through legislation because Realtors are against us there and they have a more powerful lobby than we do.

Additionally, the Court was kind enough to provide us with third-party liability: "A home inspection company that negligently fails to discover or disclose defects in real property may be liable to a client who purchases that property."

I'm not sure how you are reaching your conclusion in your other down side:

The other down side, if there is a defect pointed out to the buyer the buyer cannot technically file a claim with a home warranty company. If the furnace is not working now - why should the home warranty company replace it? I know it happens, but would that not be considered mortgage fraud?

Why would one not be able to fine a claim with one's home warranty company? That doesn't make any sense whatsoever as long as the policy is still in force for the current owners of the property and the policy. And what does that have to do with the mortgage and mortgage fraud?

Now if the home inspector notes that the furnace isn't working and recommend repair, and the new buyers ignore that recommendation, moves in, and then files a claim against their new policy, that would be tantamount to insurance fraud, but not mortgage fraud. Fortunately, insurance companies are learning that there's a lot of meat in the home inspection report and they have decided to get their share of the meal by requesting home inspection reports or home inspections when claims are filed immediately after buying a property.

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