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Home Inspection: The Forgotten Closing Cost

Flickr: subraytan

Imagine that after two years of exhaustive house hunting, and three lost bidding wars, you’re now almost the owner of a spacious three-bedroom bungalow. Your offer has been accepted, conditional upon only one thing: a satisfactory home inspection. While it’s easy to get caught up in the excitement of buying a home, the home inspection is not to be overlooked. In fact, it’s one of the most important closing costs involved in your journey to homeownership.

What is a Home Inspection?

A home inspection is a visual assessment of the overall condition of a home. From the roof and chimney on the outside, to the furnace and plumbing on the inside, a home inspector looks at all the major components of a home to ensure they are in working order. The main objective of a home inspection is to protect your interests, as the buyer. After you decide that you want to make an offer on a home, a home inspector will be able to go through it and list any defects, unsafe conditions and major repairs that could be deal breakers.

For this reason, it’s highly recommended that you attend your home inspection. Although you’ll receive a written report on the condition of the property afterward, being there in person is an invaluable experience. By doing a walkthrough with your home inspector, you can physically see any major issues or concerns for yourself. This also gives you the opportunity to ask any questions you may have. Although most home inspectors won’t tell you whether you should buy a home or not, you can ask them how your home stacks up against similar houses, to give you a better picture of the condition of your home.

A Condition in the Offer to Purchase

When you’re getting ready to buy a house, there are two types of offers you can make: clean offers and conditional offers. A clean or firm offer means your offer is free and clear of any conditions; as long as the price is right, sellers generally prefer clean offers. A conditional offer means one or more conditions must be satisfied before the buyer’s deal is firm and the offer is accepted. The two most common conditions to include are a satisfactory home inspection and subject to financing.

Unfortunately, in multiple offer situations, having too many conditions can make your offer less attractive. However, it’s still highly recommended that you request a satisfactory home inspection. If you think you’ve found your dream home and want to present a clean offer, a pre-inspection is also an option. A pre-inspection is where you get a home inspection before you present your offer. This can pay off if your offer is accepted, but there’s always the risk that it won’t be accepted. In that case, you would have spent a significant amount of money with nothing to show for it.

How Much Do Home Inspections Cost?

The average cost of a standard home inspection is $450, although you could pay more or less depending on the size, construction date and location. Foregoing a home inspection to save money is not recommended, as it’s a case of “penny wise, pound foolish” – although you may save money in the short-term, you could pay a lot more down the line, especially if you discover costly upgrades and repairs that an inspection would have uncovered.