Presentation Transcript

1. Home Inspections 101 for Real Estate Professionals Minnesota Edition for Licensed Real Estate Salespersons and Brokers *National Property Inspections is solely responsible for the content of the material used in this course/seminar.
2. Part 1: Home Inspection 101 Introduction and Basics

3. 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. By applying the course information to your business practices, further the cause of protecting the home-buying client via home inspections.

4. 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.

5. 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.

6. 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

7. Benefits for Real Estate Licensees

   Reduces your liability (transfers to inspector) Delivers a higher level of service to clients Demonstrates your professionalism Brings additional referrals from satisfied clients

8. 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

9. The Inspection: What It IS

   The observation 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

10. 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

11. Standards of Practice

    Home inspectors follow industry-prescribed standards of practice and a code of ethics. The standards represent guidelines for the inspector to follow, including the scope and limitations of the inspection. Inspectors may be members of certain inspector trade associations that each have adopted their own standards of practice (e.g., ASHI, InterNACHI).

12. Inspection Limitations

    Why are there limitations with inspections? 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 “technically exhaustive,” it would take many more hours or days to perform and might cost thousands instead of hundreds of dollars.

13. Tools and Equipment

    Inspectors may employ tools and equipment to assist with their inspection, such as: Gas Detector Moisture Meter

14. 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

15. 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 licensee Will home seller or their sales representative attend? Local rules may prescribe who must be in attendance

16. 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.

17. Home Inspection Report Formats

    Home inspection report formats vary: Checklist or narrative Combination checklist and narrative Computer-generated Handwritten Include photos Delivered at time of inspection or later

18. 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

19. Trade Associations

    Inspectors in Minnesota may also be members of home inspector trade associations, including the following: The American Society of Home Inspectors (ASHI) The International Association of Certified Home Inspectors (InterNACHI) The National Association of Home Inspectors (NAHI)

20. 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

21. 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

22. Insurance Coverage for Professional Inspectors

    General liability insurance Should carry E&O insurance Many E&O policies have a “referral” endorsement

23. Inspection Reduces Complaints and Liability

    Chart Provided by FREA
24. Part 2: Educating the Home Buyer

25. Informed Home Buyers

    Most buyers know little about construction Answering questions puts their minds at ease Informed buyers are more satisfied and can better anticipate and plan for repairs and maintenance

26. 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.

27. 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.

28. 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 agents and inspectors can help by asking clients if they have any questions about the home inspection report and inspection findings.

29. 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 pre-inspection agreement 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

30. Ordering a Home Inspection

    Immediately after reaching a written purchase agreement with a home seller A safe practice is to offer options and provide a minimum of three or more names of inspectors and allow clients to make their own decision

31. 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.
32. Part 3: The Inspection Process: Exterior Inspection

33. 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

34. 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

35. 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

36. 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.

37. Exterior

    Check foundation if visible: Bowed or leaning? Major gaps or cracks Crumbling or missing mortar joints Peeling stucco Disintegrating brick Note any problems and check crawl space and interior of home for more evidence.

38. Roofing System

    Inspection of roof: Estimate age Number of layers Type of materials Leaking or not Types of valleys Flashing

39. 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

40. Siding and Trim

    There are many exterior coverings, such as wood, vinyl, stucco, brick, stone and synthetics Some are more high-maintenance than others Vegetation can affect siding Check for deterioration

41. Windows and Doors

    Inspect for: Operation Alignment Weather-stripping Evidence of leaks

42. 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
43. Part 4: The Inspection Process: Interior, Electrical, HVAC and Plumbing

44. 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

45. 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

46. 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

47. Plumbing and Fixtures

    Water is the No. 1 concern: plumbing and plumbing fixtures are a significant part of the inspection Inspector is looking for leaks, adequate flow and pressure Also checking for sluggish or plugged drains

48. Plumbing System

    Plumbing leaks can also damage: Cabinets/vanities Behind shower tile Subfloors, ceilings below, etc.

49. HVAC System

    Check for adequate heating (gas furnace): Overall size, age and condition of unit Proper location of unit Adequate combustion air Adequate temperature rise Heat source in each room Condition, size and location of ducts Condition of blower/humidifier Heat exchanger (mostly hidden) Check for flue gases and other leaks around exhaust and in supply air Dirty filters obstruct flow and affect temperature rise Thermostat unit responds to controls

50. HVAC System

    Check for adequate cooling: Overall size, age and condition of unit Outside unit, clean, level and up off the ground, suction line insulated No obstructions interfering with unit Discharging heat-ambient test Adequate temperature drop (14 to 22 degrees F) Blower clean and variable speed Dirty filters obstruct flow and affect temperature drop Thermostat unit responds to normal controls

51. Basement and Foundation

    Check for moisture and water damage Efflorescence on walls Signs of mold or mildew Sump pump Note whether the basement is finished or unfinished Condition of stairway Structural: Cracks in walls and floors Condition of overhead joists

52. Crawl Space

    Check for moisture and water damage Plastic vapor barrier Adequate ventilation Insulation Signs of mold or mildew Insect damage Structural: Condition of overhead joists

53. Attic Checklist

    Roof: Sagging? Roof sheathing and rafters: Rotting, splitting or insect damage? Signs of water penetration or condensation Insulation Ventilation Electrical: Any bare splices? Bathroom vent terminating in attic?

54. Kitchen

    Cabinets: Countertops, tile and backsplashes Stoves: Operable burners, not timers Disposal: Inspect for smooth operation, excessive noise Dishwasher: Condition, leaking, proper air-gap device Ventilator: Recirculating or nonrecirculating Other Built-ins: Microwaves, trash compactors, refrigerators Many inspectors do not inspect appliances

55. Bathrooms

    Can be one of the most expensive areas to replace or refurbish With simple maintenance, expensive repairs can be avoided

56. Walls, Ceilings and Floors

    Walls, ceilings and floors can be covered by a wide variety of materials Inspector checks for deflection/tolerance in floors, bowing or cracking in walls, cracks, stains or wet spots in ceilings Operation and fit of doors and windows from the inside

57. Irrigation System

    Sprinklers are mostly out of sight, but not out of mind: Underground leaks/erosion can greatly affect driveways, sidewalks, etc. Poorly placed heads can lead to water intrusion in the basement, etc. In the best case, sprinklers are high-maintenance

58. Pools, Hot Tubs and Spas

    Swimming pools and hot tubs are high-maintenance Could involve filters, skimmers, gas, electric or solar heat, a pool house, etc. Self-closing gate with a 6-foot-high security fence is a must

59. Other Inspections

    Some inspections might require specialists: Pests (e.g., termite) Seawalls, private docks Well inspections (and water potability tests) Septic inspections
60. Part 5: After the Inspection: Inspection Findings and the Response

61. After the Inspection

    A good inspector will: Leave things the way he/she found them Verify that the furnace/AC is running and return thermostat to original setting Turn off lights or running water Make sure doors are locked, etc.

62. Reviewing the Inspection Findings

    The inspector should review the inspection findings with the client (home buyer) soon after completing the inspection. If the client was present for the inspection, the review should take place at the end of the inspection. Depending on the inspector, the review could be verbal only or involve a review of photos or the actual inspection report. If the client is unable to attend the inspection, the inspector should have the client read the entire inspection report and then phone the client to discuss and answer any questions.

63. Delivering the Inspection Report

    Depending on the inspector, the following are report delivery options you might encounter: Emailing a PDF of the inspection report Printing a copy of the report with a portable printer onsite (in the home) Delivering a hard copy

64. Delivering the Inspection Report

    Who should receive the report? The client only, unless the client has given the inspector permission to deliver a copy to the real estate sales representative. In some instances the protocol or requirement is to also deliver a copy to the home seller.

65. Responding to Inspection Findings

    To help avoid misunderstandings by your client: Ask your client if they have any concerns or questions about the home prior to the inspection and after the inspection. Invite your client to ask the home inspector any questions they may have about the inspection findings. Ask the inspector questions yourself about the findings for clarification.

66. Responding to Inspection Findings

    You can assist your home-buying client by: Reviewing the inspection findings with your client and developing an appropriate response to the seller. The response might include the following: 1) Making a repair request of the seller 2) Requesting a price concession for repairs 3) Canceling the purchase agreement

67. Putting the Inspection in Perspective

    Are all home inspection findings of equal importance? Usually not. Normally, inspectors consider safety-related deficiencies a priority (gas leaks, etc.) Naturally, your home-buying client might consider the more expensive repair items to be more important than other findings

68. Sample Inspection Report

    Review/read sample inspection report: Pre-inspection agreement Body of report Summary section Q&A regarding the report

69. Q&A

    Are there any remaining questions?
70. Congratulations on completing the course! Please complete the course evaluation.