The article did suggest that you should get your home inspected before you buy it like pretty much every bank doesn't already require that. It also failed to mention that home inspections are largely useless.
Horseshit. When looking for a house earlier this year we had an offer accepted on a place we loved. Only question mark was the basement. Independent inspector took a through look at the basement and plumbing and basically said we will be living with water during the storm season without mitigation that could range between 5k and 25k. I have two plumbers in my family that took a look at the photos/report and confirmed the price estimate/work was spot on.
On top of that he found asbestos (we knew before hand) and high radon levels (we did not know). Needless to say the $600 I paid for the inspection was the best money I've spent in a long time.
Home inspections are mostly useless (i want to say always, but im sure there is some exception out there), but they're even more useless when they're provided by the seller and the market is so healthy that they don't feel the need to allow an independent view.
Not as many will tell you that the AC unit is 26 years old and likely to die soon. In my experience you have a 50/50 shot of them actually telling you that, but my sample size is very small.
Single data point: I just (last week) had a title insurance claim for ~$21,000 for re-wiring of a property denied, despite the fact that I have documentation from the purchase process stating "All Knob and Tube wiring has been removed", and a home inspection report (seller provided) that did not uncover any K&T wiring. It was missed because whoever "removed" the old wiring (owner before the previous owner) left old wiring in between circuits and the outlets, which we found by accident when removing part of a wall. Electrical safety code requires that if we need to revise any wiring on these circuits that we bring them to current code, which to confirm there is no old wiring left at all means deactivating the circuit and re-running the entire circuit. Additionally my home insurance does not cover K&T wiring, as such i have 60 days to become compliant or my insurance is void.
My option here is now to lawyer up, which at best, I'm going to get $21k out of, for a $1.58m house. There should be stricter and clearer liability here, but unfortunately it's just not how the law is structured here in Toronto.
Compared to England, where every prospective buyer has to pay 3-400 pounds for a survey, as no bank will give a mortgage without one, I prefer having the seller provide the survey.
However, the surveys are useless themselves. None of the reports I viewed had any information I didn't see myself in the property, and as I was looking at victorian tenements, they all have warnings about pointing, flat roof, old guttering, which are present in _every_ 150 year old stone building...
Conflict of interest.
They know most people won't sue them over issues, especially if the courts are just as likely to side with them outside of some truly egregious violation.
There is also plenty of precedent for courts to side with the buyers in misrepresentation cases in the UK. The law has provision for 2 years in prison, and surveyors have been jailed previously for lying on surveys.
Though my banks did require an appraisal, and the appraiser does do a physical inspection to look for signs of gross neglect. Many buyers here also waive their appraisal contingency too, so if the appraisal comes in low, the buyer has to kick in more cash to cover the difference in the loan value.
Even if we paid their fee they wouldn't even send someone out to look at the house, it would be 100% just looking at comps in the area--which we dismissed because it was the middle of the housing crash and almost every comp was a short sell of a unit that had been utterly trashed/gutted on the inside.
I bought i super unique house, 100 years old out in the country. While talking to the appraiser asking him if the house was worth what i had offered, he said somthing like 'well if thats what your offering thats what it's worth'.
In hindsight, the market would tell me the house definately was not worth it.
Really i think the appraiser is there to prevent simple fraud.
The appraisers real job (when a mortgage is involved) for the bank is to assess the best offer they could get besides yours, since the bank wants to know what the property would sell for were your unable to pay the mortgage.
Presumably, if you are buying the house, you are (exceptions clearly exist, this is a simplified model) the most interested buyer, they really should be looking as to what the next most interested buyer would pay.
With large enough markets and commodity properties, which probably account for most housing sales, it's not entirely unreasonable to assume that the difference between those two is negligible, though, so I can see how it becomes a default approach.
An appraisal without visiting the property does sound like a scam, how do they know the inside of the house is not gutted?
I can understand why the bank requires an appraisal, so it's not purely a scam, but I don't think it's an accident that most appraisals come in exactly at the selling price. The bank needs some independent 3rd party to verify that the house really exists and is not completely trashed. I assume the appraisers usually just take the selling price and work backwards to find comps and adjustments to support it rather than starting with the comps to come up with a fair selling price.
Though that's not always the case, I did have an appraiser save me $20K once -- the appraisal came in at $25K under the accepted offer price, the seller asked me to kick in an extra $25K on the loan, I said I couldn't. They asked me to meet them half way, and I said I couldn't, but I'd offer an extra $5K. They accepted and the deal went through.
The seller appealed the appraisal (the comps weren't perfectly comparable), but they already had a property lined up to purchase and didn't want me to walk, so they finally accepted the lower price. A month later an identical property in my complex sold for $50K higher than my original offered price (so $70K higher than what I paid). The SF Bay Area is a weird market.
The actual home inspector spent an hour or two inspecting the house and charged much less. I'd gladly pay him again.
According to whom?
Even when they aren't, finding a reputable one who will actually do a good job is extremely difficult. Most are just looking to run through a house as fast as possible and collect their fee. There isn't some directory of problems they've missed. As far as I know there isn't any way to recover costs from them over issues that they missed and caused you to buy a home that you would not have given the problems. This makes them quite prone to being a rubber stamp and yet another fee for home buyers.
My home inspector had a 1 year warranty on anything that he tested in his report. Does that mean the company will cover all damages or buy the property from you, no; but it is a small disincentive to be a rubber stamp.
And really, the most expensive repairs are on things you can't see. Wiring. Plumbing. Damage to the structure of the house.
Even then I wouldn't be surprised if they tried to weasel out of for example your roof started leaking 2 months after you move in. The inspector will point out that there was no water damage when he inspected it so the issue developed after the inspection.
Also friends, family, coworkers, local real estate agents you trust, etc.
Going into the entire home buying process without preparing adequately is the buyer's first mistake.
The buyer's second mistake.
They are hired by the agent
Another complication to be aware of: Inspectors can face "blackballing" by banks or realtors if they scuttle too many deals by finding bad things. If you find an independent inspector, don't balk at paying a little more -- they may need it to make up for business lost from being honest.
Not exactly. Real estate agents do care about repeat business and referrals.
Don't hire the agent's inspector. Likewise, make sure you have your own agent, don't use the seller's. And if you're in court someday, don't expect one lawyer to represent both parties. Simple stuff.
It's similar to buying a car: don't ask the dealer's maintenance department whether it's a good car. Drive it to your independent mechanic on the test drive and ask them to take an unbiased look at it.
If you don't know a reputable home inspector, you could ask your painter, contractor, or handyman if you have a good relationship with someone who knows houses to take a look.
We paid over £1000 in two different inspections when we purchased our house. Since moving in I've discovered that the entire extension to the house was built without lintels, electrical work which is not even close to complient and brickwork which is little more than rubble.
The structural engineer said he was unable to determine whether the lintels were sufficient (because they were hidden behind plaster and face bricks) and he said that there is some evidence of electrical rewiring but that we should commission a report into that.
If you want a useful opinion hire an experienced builder to assess the property - perhaps under the pretext of costing possible renovations.
When I was selling my mother's house a few years ago, a builder who viewed it instantly spotted all the problems that professional surveyors either missed or couldn't be bothered to mention.
That being said, I always hire my own certified home inspectors. Both my spouse and I have enough understanding to know when an inspector is blowing smoke and when they are looking at a real issue, and we monitor them while they do the inspection. A home inspector can't go into details on an issue - that isn't their job - they are only there to tell you what experts you need to call in during your option period.
Banks require appraisals, not inspections. While the two things seem descriptively similar, they are functionally radically different: an appraisal tells the bank a number that represents the market value of the house (used to determine if the value of home combined with the requested loan amount fits within the maximum loan-to-value ratio the bank is willing to accept—or allowed, for programs with mandatory limits), an inspection identifies specific problems and recommended corrections/mitigations.
> It also failed to mention that home inspections are largely useless
On both homes I've been involved in purchasing from the buyers side, the home inspection has been quite useful (though less critically so in the one that was new construction, though there's no guarantee that that is the case.)