Are You Considering a Limited Pre-Inspection?
Too many buyers, not enough inventory – Dylan Chalk answers your questions.
With record-low levels of housing inventory, historically low interest rates and swarms of eager buyers in bidding-wars over the same house, getting a home inspection done on a property these days is harder than ever.
One method prospective home buyers are using to compete in this hot market is doing a pre-inspection prior to even making their offer. This allows them to waive their inspection contingency, strengthening their offer to a lucky home seller who is culling though multiple offers from which they can choose.
This has become such standard practice in the Seattle market that many home buyers stand virtually no chance of winning a house without waiving their inspection contingency and trying to get the inspection done during a narrow window of time between listing and a deadline by which time offers will be reviewed by the seller.
A Little History
As a home inspector I first encountered the pre-inspection in the roaring 2005-6 market and it was not long before buyers grew weary of paying for complete home inspections on homes for which they were getting out-bid.
In response to the demands from buyers and Real Estate professionals in the 2005-6 market, there developed something called the “verbal walk-through.” This was not a real home inspection, just a cursory look at the property so that a buyer could waive their inspection contingency without paying for the full inspection fee.
In Washington State, home inspectors are now licensed by the Department of Licensing, a new development since that hot 2005-6 market when Washington State home inspectors were regulated by the Department of Agriculture as pest inspectors.
The idea of licensing seemed logical; to insure the public that state -licensed home inspectors would be performing inspections to meet or exceed a set of standards: All home inspections performed in the state should meet these standards and come with a written report.
However, according to the state licensing law: WAC 308-408-010, Washington State Licensed Home Inspectors are allowed to do a pre-offer verbal consultation as defined below:
- (10) A “Pre-offer consultation” is a verbal report that is limited in scope performed by a licensed home inspector. A pre-inspection agreement must be signed by the client and describe the limited scope of the consultation. This pre-offer consultation is conducted only prior to mutual acceptance.
- State law contrasts this pre-offer inspection with a standard home inspection.
- (14) A “Standard Home Inspection” is a prelisting or presale written report that contains all or most of the components listed in the standards of practice. The components must be listed in the pre-inspection agreement. This standard home inspection report cannot be delivered verbally and must be in writing.
The important thing to understand if you are a home-buyer is that the state does not actually define the scope of this pre-offer inspection. The scope of this inspection is defined by the pre-inspection contract you sign with your home inspector.
Some Real Life Experience
About a year ago, I had the uncomfortable experience of being one of two inspectors inspecting a house for sale at the same time. My competitor was doing a pre-offer consultation and I was doing a standard home inspection. The other inspector informed me that he had been inspecting for over twenty years and proceeded to spend an hour with his clients talking about the house while I also met with my clients and spent almost three times the amount of time inspecting the same house.
After he left his clients were loitering about measuring and evaluating the house when they overheard me discussing the abandoned oil tank in the back yard with my clients.
My client’s wife had a previous experience with buried oil tanks.
Exterior Oil Fill Valve: a detail easily missed in a limited Pre-Inspection
“She is not going to like this one bit,” my client said rather loudly.
When the other buyers over-heard this tone of voice they came over and started asking about abandoned oil tanks and my client launched into a horror story about his wife’s $40,000 experience and when their complexion lost a few shades of color it became apparent that they had no idea about buried oil tanks nor the one that was lurking in the backyard of the house they were measuring to buy.
I tell this story not to disparage this other home inspector but to point out the discrepancies in what we were paid to do. I was paid to spend 2-3 hours looking at a house. I was paid to follow 40 years of carefully developed national standards regarding the scope of a home inspection and he was paid to come out and spend an hour looking at the house and talking to his clients.
When I hear things like, “Just check the big stuff,” I become alarmed.
That is what a standard home inspection is! The idea that a standard home inspection can be arbitrarily cut in half because the fee is inconvenient is shortsighted and does not respect the complexity of the houses we are living in.
If you think that a standard home inspection is not already cursory, review the ASHI Standards of Practice.
In addition to these national standards, your typical standard home inspection contract might read something like this regarding excluded items:
…..pool, hot tub, and spa systems; pool, tub, and spa bodies and underground piping; building code or zoning ordinance violations; geological stability or soils condition; structural stability, adequacy or engineering analysis; asbestos, mold, radon, formaldehyde, lead, water, soil, air quality or environmental issues; electromagnetic radiation or any environmental hazards; building value appraisal or cost estimates; specific components noted as being excluded; private water and sewage systems; yard/lawn sprinkler systems; saunas, steam baths and their fixtures and equipment; radio-controlled devices, automatic gates, elevators, lifts, dumbwaiters; thermostatic and time clock controls, low-voltage wiring, security alarm systems; water softener/purifier systems and solar heating systems; furnace heat exchanges, freestanding appliances; adequacy or efficiency of systems and components; prediction of life expectancy of any item; and personal property
What You Should Do
If you are a home buyer in this market and you have been told to ask your home inspector for a limited pre-inspection, you need to understand what you may not be getting;
- You are not getting a standard home inspection and you may be getting an arbitrarily abbreviated version of a standard home inspection.
I am certain there are good home inspectors doing thorough verbal inspections where they follow their complete inspection process and omit the report to lower the inspection fee in exchange for the time saved in preparing a report.
However, asking your home inspector to discount their fees significantly is asking your home inspector to spend significantly less time looking at your prospective house and here’s the funny thing:
- Looking takes time; and looking leads to seeing and seeing leads to understanding and understanding leads to the type of professional knowledge that a home inspector is presumably being paid to deliver.
I can think of dozens of homes where I was staring at a big problem but I did not see it the first time. It took several perspectives and points of view before looking brought me to understanding. A quality home inspection takes time; it is a journey into discovery and the discipline involved in preparing a quality written report facilitates that discovery.
Not all big problems in homes are obvious; they don’t come with neon signs.
My advice to homebuyers is contained in this bulleted sequence:
- You have never taken a class about how to look at or understand houses, because such classes do not exist.
- Your house is the place you will live the rest of your life; if not this house then another house or 5 different houses.
- Your house is likely the most expensive thing you will ever buy in your life and maintaining a home is almost as expensive as buying a house.
- Take some time out of your busy schedule to be with your home inspector and learn about houses.
- Use the home inspection as an educational opportunity that will make you an informed homebuyer and homeowner.
- Make each inspection you do a part of your educational journey.
- The total sum that you invest in this education will be a small pittance compared to your university education and it will prepare you to be more informed about the most expensive thing you will ever buy and the place where you will spend most of your time in your life.
I hope this helps to clarify a complex subject that comes up regularly in today’s frantic home-buying market. Remember that rash decisions in real estate lead to the kind of problems we had in the 2008 housing bubble. Buying a house is not like signing a lease. Houses are complex and expensive and repairs can cripple the ordinary homeowner’s budget.
Take your time; be methodical. Build a strong team around a great real estate agent, lender and home inspector and you will be successful. You don’t need to sacrifice your standards to buy a house, but understand that the process is expensive and requires fortitude.