WHY YOU NEED A HOME INSPECTION
Most real estate contracts contain a due diligence period during which the home buyer may have any inspections of the property conducted, including surveys, lead based paint inspections (for houses built before 1978), radon inspections, termite inspections, and home inspections. The time clock on the due diligence period begins running as soon as the seller accepts the contract. So, it's imperative that you begin the inspection process immediately.
Many buyers are under the mistaken impression that an appraisal and a home inspection are the same thing. An appraisal is conducted on behalf of the lender in order to value the property. A home inspection is conducted on behalf of the home buyer in order to identify any defects in the property.
A home inspection can range in cost from $250-$500 and is one of the best investments a buyer can make. Although, by law, a seller is obligated to disclose any defects in the property of which he has knowledge, there is no guarantee that the seller actually will disclose those defects or even knows of their existence. So, the best way for a buyer to protect himself is to have a home inspection conducted.
Once the closing has taken place, the buyer is solely responsible for the property. The seller's obligation and responsibility ends at the closing table. It's quite difficult, in most cases, to prove that a seller knew of a particular defect. To avoid the stress of a costly legal battle with the seller, a buyer should invest in a home inspection so that he knows, prior to closing, the condition of the property.
Once the inspection is complete, the home inspector will provide you with a report identifying the condition of all the major systems of the property, including the foundation, plumbing, electrical, roof, chimney, and appliances. If the report notes any defects or recommends any kind of repairs, you can ask the seller to repair those items prior to closing.
Depending upon how your contract is written, you may be able to terminate the contract if you and the seller cannot agree on how the repairs will be handled. Make sure to ask your realtor if the contract is being written in order to give you the utmost protection as to the home inspection and repair issues.
Keep in mind that many lenders no longer allow repair credits to appear on the settlement statement. One reason for this is because there is no guarantee that the buyer will actually make the agreed upon repairs. Therefore, it might be necessary to renegotiate the sales price in order to cover the cost of the repairs.
It's also important to understand, in the case of bank owned properties, that a bank will usually reject an offer that has a due diligence period of more than 7-10 days or that asks for repairs. However, if final loan approval is contingent upon certain repairs being made, a bank will usually agree to make those repairs in order to keep the deal from falling through.