A thorough home inspection is one of the best investments potential buyers can make when they’re getting serious about a property. The home inspection report will outline potential problems with everything from water damage to electrical issues, giving buyers a clear look at exactly what they’re getting for their money.
The big follow-up questions everyone has after reading the home inspection report are about potential repairs. Which repairs should be taken care of first, and why? How much will they cost? Are there any that can wait?
And, perhaps, the biggest question of all:
Can the home inspector fix these problems?
It’s only natural for the home buyer — or the home seller, in the case of a pre-listing inspection — to turn to the home inspector for help. After all, the inspector is clearly an expert! And since he or she has just done a complete inspection, the home inspector knows very well what the house will need.
But is the home inspector the right person for the job? It depends — but probably not.
Here’s what you need to know.
The role of the home inspector in real estate transactions
A professional home inspector is just one part of a whole team of players involved in completing the purchase and sale of a home. Each player — including mortgage lenders, real estate agents, insurance agents, and title company representatives — has a specific and often legally prescribed role in the process.
The home inspector may be involved before a house goes up for sale if the listing agent recommends that the seller complete a pre-listing inspection beforehand. In this case, the seller is hoping that the inspection process doesn’t reveal any severe problems and that a “clean” inspection report will help the home sell quickly for a great price. If the home inspection report shows that some repairs are needed, the seller is then able to make those changes ahead of time to avoid delays in the sale of the home.
It’s much more common, however, for the home inspector to come into the process on behalf of the buyer by conducting a buyer’s inspection. This happens when the home buyer has already toured the house and is interested in placing an offer. Smart real estate agents usually add an inspection contingency that gives the buyer time to hire a home inspector and review the inspection report before the contract becomes binding. This gives buyers the ability to further negotiate to get the seller to pay for needed repairs — or to back out of the contract entirely if the buyer and seller can’t come to an agreement after the inspection.
It’s important to note that once the inspector’s work is done — whether on behalf of the buyer or the seller — he or she is no longer part of the home-buying process. That means that the home inspector cannot be hired to complete any repair request for either party in the real estate transaction.
Avoiding conflicts of interest in home inspections and repairs
So why can’t a knowledgeable home inspector turn around and accept a job replacing a leaky water heater, upgrading the electrical system, or making some other minor or major repair after filing an inspection report?
In most states, the answer is clear: Accepting payment for repairs on the same house you’ve just inspected is a major conflict of interest.
That’s because in the home inspection profession, clients are counting on getting an unbiased home inspection report. A potential buyer is not an expert and needs to know what’s going on “behind the scenes” that could end up costing money to fix down the road. There’s a lot riding on the inspection for the buyer, who’s looking for actionable information to improve negotiations and avoid closing on a house that may need huge investments.
In a pre-listing inspection, the real estate agent and seller also have an interest in getting a thorough yet unbiased review of the property. This will help them decide what repairs to prioritize to get the best price for the house — and what are merely cosmetic issues that can be skipped.
To maintain their good reputation as an unbiased expert, professional home inspectors must separate their home inspection services from their own financial interest. For example, suppose an inspector — let’s call him Inspector Bob — pointed out exposed wires in the basement of the house in the inspection report. This is fine, and it’s exactly the type of concern that potential buyers were hoping to uncover.
But now suppose that Inspector Bob provides an estimate for the cost of repairs and offers to replace the faulty wires himself — perhaps he hands the real estate agent his card to pass along to the homeowners so he can do the electrical work.
On the surface, this may seem innocent enough — convenient, even. But take a closer look, and this raises significant ethical issues. If Inspector Bob takes a repair job on the same property he has just inspected, he’s “double dipping” — getting paid to remedy a problem he has discovered.
This is also a problem when it comes to the home inspector’s reputation. How can real estate agents, sellers, and buyers fully trust Inspector Bob? After all, he could be looking harder for problems he knows how to fix, or making a big deal out of relatively minor issues to try to drum up business for his side job as an electrician or a general contractor.
Most reputable home inspectors would never dream of taking advantage of a client this way. But to ensure that buyers and sellers are protected, states have specific laws forbidding inspectors from doing repair work on a house they’ve inspected — typically for a period of one year after the inspection was completed, but laws vary by state.
Likewise, both major professional organizations for home inspectors have ethical standards that forbid inspectors from taking side gigs repairing homes they’ve reported on. The American Society of Home Inspectors (ASHI) specifically forbids activities that even appear to compromise the inspector’s integrity, which includes not repairing, replacing, or upgrading any inspected property or its systems for one year after the inspection date. Likewise, the International Association of Certified Home Inspectors (InterNACHI) forbids accepting a fee for repair of components covered in a home inspection for the same one-year period.
The bottom line? A home inspector should never offer to do any of the following:
- Provide cost estimates for specific repairs
- Complete repairs listed on the inspection report
- Upgrade or replace home systems covered in the inspection report
- Contact the buyer or seller to advertise repair or contracting services within one year of the inspection
These things — even if well intended! — are all ethical violations that make the inspector look bad (at best) and can lead to financial harm to the client (at worst).
What happens when an inspected home requires repairs?
Once the home inspector completes the inspection report, it’s up to the buyer and seller to come to an agreement about how to handle any needed repairs. According to Realtor.com, some of the most common repairs that occur after an inspection include:
- structural defects
- building code violations
- safety issues
- Chimney and HVAC problems
- septic system issues
- water heater replacements
- missing roof shingles
- obvious electrical system problems
- plumbing leaks
Many buyers will also ask for an additional radon and/or termite inspection to further assuage their concerns. These additional inspections can also lead to mitigation strategies before the final sale.
One reason that the list of common repairs is so broad is that the most successful home inspectors use a comprehensive inspection checklist that covers everything from the foundation to the rooftop. A great inspector will note anything out of the ordinary that can be easily seen, so the list of suggested repairs is sometimes extensive.
But ultimately, it’s up to the buyer and seller (along with their respective brokers) to negotiate which repairs the seller will complete and which can be delayed until after the sale, when they will become the buyer’s responsibility. It’s up to each side to get estimates from a third party — in many states, not the original inspector! — and use that information to negotiate the repairs or to adjust the price of the house to complete the sale.
Post-inspection tips for buyers and sellers
Once you’ve hired a home inspector and have the inspection report in your possession, don’t ask the inspector for cost estimates or recommendations for repairs. It puts your inspector in an awkward position due to the potential ethics violations. Instead, ask your real estate agent to help you find a reliable contractor to provide this information. Your broker has a lot of incentive to help you either get that house market-ready or to help you gather the information you need to close the deal, and brokers usually have lots of useful contact with local contractors.
Post-inspection tips for home inspectors
Many buyers and sellers are not aware that inspectors can’t complete home repairs, so you’ll have to politely tell them. It’s perfectly fine to explain that it’s against your code of ethics for you to do so. They’ll appreciate your honesty.
To make sure you don’t accidentally accept a job to do repairs on a house you’ve inspected within the past year, it’s crucial to keep good records. HomeGauge is here to help you with this important part of the job! We offer premium home inspection software that allows you to create and organize reports so you can search them easily in the future. Our online scheduler also makes it easy to keep your appointment calendar organized so you can quickly review the addresses you’ve inspected before. Make it a habit to search your records for a particular house address before you take on a repair contract, and you’ll make sure you always uphold your ethical obligations.
To learn more about HomeGauge’s suite of products for home inspectors, contact us today.