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Home Inspections: Are They Good for Both ReSale AND New Home Purchases ?

Just about all real estate agents recommend to their buyers that when they purchase a "resale" home... like the one picture here, that they have it professionally inspected.

Great idea !  And just about every agent, and every set of buyers, agrees.  Even when the resale home your buyers purchase is just an absolute gem of a house... there may be things about that home that need attention, that even the seller might not be aware of.  So obviously, and inspection should be done.

But what about having a brand new builder's home inspected ?  Every once in awhile I see a blog post on Active Rain discussing whether or not a Realtor should recommend that a buyer have an outside independent inspection done on a new home that they are purchasing.

Usually when a post like that is done, the comments often follow one of two paths.  The first one says that absolutely yes... an outside inspection should be done.  You can never be too careful.

The other "camp" often holds the opinion that it is a NEW home... and that there really isn't going to be anything wrong with it.  They say having an inspection done on a new home is a waste of money. 

They go on to say that the builder will have a "walk thru" before closing on the home, and that anything that is found by the buyer during that walk thru will be fixed by the builder.

Of course, we all have seen varying types of new home builders as far as their expertise is concerned.  I have sold, over a period of thirty years... both as a Realtor, and as a new home builder salesperson... literally hundreds of new homes.

During the builder's walk-thru I mentioned, I have seen so many things happen both during construction, and at and after the walk-thru.  I could name specific builders, which I will not do, where when going to the walk-thru we found anywhere from an absolutely spotless home, with everything done (as far as we could see) and the home was totally ready to move in to, both inside and out... on one end of the spectrum. 

I have also gone to some "final" walk-thru's where the buyers and I found anywhere from a few... to over a dozen or so construction personnel and tradespeople still working on the home.  Even on the day of closing.  Just amazing.

So... what do I recommend with all that experience ?

Not only would I recommend to my buyers that they should have their new home professionally inspected in addition to the builder's inspections, and the city's code compliance inspections, and to do so BEFORE closing... I would also take this one step further.

All of the builders I know guarantee everything for one year, and request that the buyer submit at least two "punch lists" during the first year... one after sixty days, and one after ten months... just before the first year warranty expires. 

What I suggest to my buyers is that, in addition to the professional inspection they had before closing... that around the tenth month of their first year... before that first year of the warranty expires... that they have their home inspected again... and use that information, plus what they themselves have found, put it all together, and submit THAT for their final "punch list" that is allowed and requested by most builders during the first year guarantee period.

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Comment balloon 16 commentsKaren Anne Stone • September 10 2010 09:22PM

Comments

Hi Karen - You are so right!  Every home should be inspected in my opinion.  And I like your advice to have a second inspection within the first year.  If you call the same inspector, he can probably do a re-inspection which will be less inspection.  And things do show up later that seemed okay at first.  Last time I bought a new house I had a continuing punch list throughout the first year.  And there were still things I missed (not being an inspector).

Posted by Susan Neal, Fair Oaks CA & Sacramento Area Real Estate Broker (RE/MAX Gold, Fair Oaks) over 7 years ago

Karen: I have done many new home phase inspections, beginning with the foundation before the pour is done and the walls are enclosed. Once those walls are enclosed you have no idea what is behind those walls. I am doing a new home phase inspection for someone that lives out of state, he brought me the plans and I inspect with each phase of the inspection. I will say this builder has had to go back and fix some issues that needed to be addressed.. Homes built in rural areas have no city inspectors. In most cases it is the sub-contractor that may have caused a problem and the builder did not catch the item that needed to be addressed. It is just one more protection for the consumer.

As for Warranty inspections; absolutely.

I really hate that TRCC is no longer as it was good protection for the consumer.

Posted by Carl Winters over 7 years ago

Susan:  It is kind of ironic how we, being professional real estate agents, sometimes do NOT do things during our OWN purchases... that we would recommend, or even insist that our buyers do.  So, I understand about those things that you missed... as you said... not being an inspector.  Ouch !

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Carl & Ceil:  As far as "behind the walls"... I often suggest to my buyers that they go into their new home after the wiring is complete, but BEFORE it is insulated and sheet-rocked... and take pictures... several pictures... of EACH of the walls... showing the wiring and the duct work... and where it goes... just in case after they move in, something goes wrong, so that they know where everything that is hidden... IS.

As far as how TRCCis no longer as it was... as far as being good protection for the consumer... there are other consumer protections that have been watered down since the present gentleman living in the Governor's Mansion... has been our Governor.  Just my humble opinion.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Hello Karen Anne - Thaks for the great post.  I do them all the time and have yet to find that perfect home!

Posted by Andy Chaudoir, Your Home Inspection Connection in Central Texas (Professional Inspection Services - Georgetown, Texas) over 7 years ago

Thank you Karen Anne for this.  I had not thought about the 2nd inspection.  I had it in my after closing plan for new homes for the buyers to gather their punch list, but I love the idea of going ahead and doing another inspection.

Posted by Kristen Wheatley, Lewiston/Auburn Maine Real Estate Agent (The Maine Real Estate Network) over 7 years ago

Karen Anne - Always always do an inspection. Old or new home. New homes CAN be slapped together. Deadlines to be met there are a few things missed sometimes. ALWAYS.
And I too never thought about a second inspection. I will have to talk that one up.

Posted by Ken Barker Realtor® GRI, E-Pro Certified (Dilbeck Real Estate) over 7 years ago

Karen Anne ~  I couldn't agree with you more!  It is difficult for the homeowner to know if there are some "major" issues going on.  I also negotiate for a longer warranty period since my builder buddies tell me that a lot of things don't show up during the 1st year... so I try for 3 years..... The other challenge we face most of the time is that the builder's contract do not allow for an independent inspection!  I'm wondering, if prior to closing there is an issue.. how does your contract address how the issue will be resolved and by whom.  Most builders are not going to give any money back to the buyer or cancel the contract.  I'll be back to see what your experience has been.

Posted by Joan Whitebook, Consumer Focused Real Estate Services (BHG The Masiello Group) over 7 years ago

Andy:  You are very welcome.  There is no such thing as "the perfect home."  It could be built, I am sure, but nobody could ever afford it, and it certainly would not appraise.  Have a great weekend.

Is there an Active Rain group for home inspectors ?  If so, I would post this in that group, as well.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Kristen:  You are very welcome.  Honestly, just about 40% of my real estate experience is working for new home builders, and about 60% has been working as a Realtor.  And, I have sold literally hundreds of new homes... both builder "spec" homes, and "to build" homes.  So... I "know my stuff."

There are over ONE HUNDRED different new home builders in the Metro Fort Worth/Dallas area.  I must admit that I have concentrated on what might be called first homes, second homes, and once in awhile... third homes... as far as people buying "move up" new homes.

Most builders in this market have a four-step  builder new home warranty.  The first year, everything is covered.  The second year, the "systems"... or the stuff inside the walls are covered.  For ten years, there is a structural warranty which covers the foundation and anything dependent upon the foundation.  The fourth part consists of the individual items inside the home that have a manufacturer's name on them, which brings with it the manufacturer's warranty.  Like, thirty-year shingle warranty, five year furnace and A/C guarantee, ten year hot water tank guarantee, and the various appliance guarantees from their manufacturers.

Then, there are the "warranty service contracts"... the yearly insurance policies, which cover things going wrong.

Regarding the second inspection I recommended... I would do it NO LATER than ten months after closing.  And I would then "gentle ride them" after submitting the list from the inspector... to make sure that we did not get to the end of the first year without any of those items being addressed.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Ken:  I agree.  the inspections are critical.  Even when I built my new home, and with as much as I know about new home construction... I had both inspections done.

The Fort Worth/Dallas new homes market is SO competitive, it is more of a rare case that builders "slap" homes together.  Most codes are tough, and most inspections are "harsh."  It is a rarity that a builder gets away with anything.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Joan:  Regarding your idea of negotiating for a longer warranty period, I agree, although I have rarely seen anyone do it.  There are some builders in the Fort Worth/Dallas area who give a standard two-year warranty, rather than the one year I mentioned, as an "edge" and a marketing tool.  They figure, and usually correctly, that nothing will go wrong during the first two years, anyway.

As far as a builder's contract not allowing an independent inspection before closing, here in the Fort Worth market, it would be "instant death" as far as a builder's marketing.  Much too competitive for them to even TRY that nonsense.  Their competitor builders would simply BURY them.

You mentioned that most builders will not "cancel the contract."  This just shows the major difference between markets.  Ya know... that saying about all real estate is local.

Here... if a buyer wants to cancel... or "threatens to cancel"... most sales managers... not the sales people... will simply release them.  And, probably return their earnest money.

I am talking in the price range of up to... say... $225,000.  But, for that money here, a buyer can get a home over three thousand square feet, hard surface counter tops, incredible goodies and amenities... and often only be required to come up with a $1,000 earnest money check to the builder at time of contract.  Local builders, mostly, will release them, rather than waste time with them.  They know there are few completed spec homes out in the market place, and know it won't take long to resell that home.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Karen Anne  - I speak from my own experience of being a buyer who did not have a home inspection on a newly constructed home.  Big mistake.  I had serious issues that could have been avoided had I have chosen to hire a home inspector. It ended up being a costly lawsuit.  How much did I save?  I didn't. I ended up spending almost 5K in legal expenses. 

Posted by Carol Culkin, Overland Park (Reece & Nichols) over 7 years ago

Carol:  That's a very big "hit" to take... especially on something that was supposed to be a "dream come true" for you, as for most new home builders.  There is so much nastiness and expense that can be avoided... if we only take the time to be just a tad more careful.  I am sorry that you ran into such a mess.  Hope things have ended up for the better for you.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) over 7 years ago

Hi Karen.  I like your advice.

My comment is to have an annual inspection for every house.  A home owner should be aware of deteriorating conditions and prioritize their improvements.  An excessive delay on some repairs may escalate the repair costs and decreae the value of the home.  

I started doing this a few years ago for friends and family.  An eye  opening experience when you read a home inpsection report that indicates the house is in worse conditon this year than last year.  Especially when it seemed like so many repairs were performed.

Posted by Jim Mushinsky (Centsable Inspection) over 7 years ago

New construction homes should definitely be inspected by a professional home inspector.  I saw one once that revealed several very basic flaws in need of correction.

Posted by Eric Kodner, CRS, Madeline Island Realty, LaPointe, WI 54850 - (Madeline Island Realty) over 7 years ago

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