Home Inspections 101 for Real Estate Agents California

1. Home Inspections 101 for Real Estate Agents California *National Property Inspections is solely responsible for the content of the material used in this course/seminar.

2. Part 1: Home Inspection 101 Introduction and Basics

3. Course Goals • Increase your knowledge of the home inspection process. • Improve your ability to interact with home-buying clients and inspectors regarding the home inspection. • By applying the course information to your business practices, further the cause of protecting the home-buying client via home inspections.

4. Home-buying and Client Terminology • This course concerns home-buyer inspections only, not prelisting inspections for home sellers. • The terms “home buyer” and “client,” as used throughout this course, refer to the same person or party to the transaction who is the home buying client of the real estate agent. • The terms “home buyer” and “client” also refer to the client who hires the inspector to perform the home-buyer inspection.

5. Role of the Home Inspection • Home inspections are optional but are included in most real estate purchase agreements. • The objective of the home inspection is to protect the home buyer from unpleasant and often expensive repair surprises. • A home inspection increases a buyer’s confidence in making an offer and their decision to purchase.

6. A Home Inspection Completes the Sale Information gathered from an inspection helps bring buyers and sellers together: • Information leads to knowledge • Knowledge leads to understanding • Understanding leads to agreement

7. Benefits for Sales Representatives • Reduces your liability (transfers to inspector) • Delivers a higher level of service to clients • Demonstrates your professionalism • Brings additional referrals from satisfied clients

8. Goals of the Home Inspection • To share unbiased information about major components and safety issues • To discuss repair, maintenance or safety issues • To move the sale forward

9. The Inspection: What It IS • The observation of readily accessible systems and components of the home • To identify conditions that, in the professional judgement of the inspector, are significantly deficient or near the end of their service life • To include the inspector’s recommendations to correct or monitor conditions

10. The Inspection: What It Is NOT • It is not technically exhaustive • It is not a code inspection • It will not identify concealed conditions or latent defects

11. Standards of Practice • The standards represent guidelines for the inspector to follow, including the scope and limitations of the inspection. • The standards are the “minimum standards required” by a home inspector. • Most inspectors adopt the standards of practice from a home inspector association they belong to (e.g., ASHI, InterNACHI, NAHI).

12. Inspection Limitations Why are there limitations with inspections? • Industry standards were written to provide consistency in inspections and to be practicable and affordable for home buyers. • For instance, if an inspection were more “technically exhaustive,” it would take many more hours or days to perform and might cost thousands instead of hundreds of dollars.

13. Tools and Equipment Inspectors may employ tools and equipment to assist with their inspection, such as: Gas Detector Moisture Meter

14. Common Documents Associated With a Home Inspection • Pre-inspection agreement: Defines the scope of the inspection, standards followed and fee charged • Home inspection report: Should be clear and concise and incorporate photos

15. Inspection Protocol Who should attend the inspection? • It is important to establish beforehand who will attend the inspection and when they will attend. • Client (e.g., home buyer) • Real estate sales representative • Will home seller or their sales representative attend? • Local rules may prescribe who must be in attendance

16. Home Inspection Report Basics Home inspection reports should: • Be clear and concise • Adhere to the industry standards of practice and cover all major components • Be delivered in a timely fashion (such as within 24 hours) • Define terms used therein: (e.g., “acceptable,” “marginal,” “defective,” etc.) Who owns the inspection report? The client.

17. Home Inspection Report Formats Home inspection report formats vary: • Checklist or narrative • Combination checklist and narrative • Computer-generated • Handwritten • May or may not include photos • Delivered at time of inspection or later

18. Professional Home Inspector Characteristics of a good inspector: • Trained, thorough and unbiased • Courteous and professional, and has the necessary tools and equipment • Has good written and oral communication skills • Insured

19. What an Inspector SHOULD Do • Generally adhere to industry standards of practice and code of ethics • Inspect readily accessible systems and components • Report: • Systems or components that aren’t working properly or have reached end of service life • Explanations of the deficiencies • Recommendations to correct • Reasons if certain systems or components were not inspected

20. What an Inspector Should NOT Do • Predict remaining life of systems or components • Offer advice on methods, materials, costs to fix components unless qualified to do so • Offer to make repairs, refer specific contractors or receive referral fees • Comment on market value • Perform code inspections

21. Insurance Coverage for Professional Inspectors • General liability insurance • Should carry E&O insurance • Many E&O policies have a “referral” endorsement

22. Inspection Reduces Complaints and Liability Chart Provided by FREA

23. Part 2: Educating the Home Buyer

24. Informed Home Buyers • Most buyers know little about construction • Answering questions puts their minds at ease • Informed buyers are more satisfied and can better anticipate and plan for repairs and maintenance

25. Client Satisfaction • Home-buyer satisfaction depends on many factors. The condition of the property is one. • Once the home buyer moves in, do they feel they got the home they expected? • An inspection can help improve client satisfaction by eliminating or reducing unpleasant surprises after moving in.

26. Home-buyer Expectations Home inspectors can improve client satisfaction by managing client expectations. • Home buyers often set themselves up for disappointment by expecting that their homes will be in near-perfect condition. • They often feel a letdown when the inspector discovers deficiencies. • Inspectors can assist by explaining that few homes are in perfect condition, and if issues are discovered they can be corrected.

27. Home-buyer Satisfaction After Move-in Home inspectors also play a role in client satisfaction after the move-in: • Clients might expect that the home inspection would have uncovered every deficiency in the house, even hidden damage. • Inspectors can help set reasonable client expectations by making sure to explain the scope and limitations of the inspection. • Sales agents and inspectors can help by asking clients if they have any questions about the home inspection report and inspection findings.

28. Explain the Scope of the Inspection A good inspector: • Explains the scope and limitations of an inspection • Makes sure the client reads and signs the pre-inspection agreement • Invites the buyer along for the inspection • Explains how long the inspection might take, what the fee will be, and when the home buyer can expect delivery of the inspection report

29. Ordering a Home Inspection • Immediately after reaching a written purchase agreement with a home seller • A safe practice is to offer options and provide a minimum of three or more names of inspectors and allow clients to make their own decision

30. How to Prepare for the Property Inspection • Secure pets • Turn off alarms • Remove obstructions to: • Furnace and water heater • Electrical panel • Attic • Garage • Crawl space, etc.

31. Part 3: The Inspection Process: Exterior Inspection

32. Grading and Drainage • Great curb appeal: But the inspector is looking for positive drainage • Water is the No. 1 issue with most homes • Need positive drainage (slope) on all four sides • Most drainage issues are easy to fix

33. Driveway, Walkway and Steps • Loose or missing handrails (inside or out) are a safety issue • Driveways/sidewalks/patios can have tripping hazards: • Heaving • Differential settlement • Excessive gaps

34. Porches, Stoops, Decks, Balconies and Patios • Ledger board should be bolted to the structure not just nailed. • Railing should have proper height and spacing • Railings and hand railings should be firmly attached • Support posts and stair stringers should have no earth-to-wood contact • Decks can be expensive, but are fairly easy to repair

35. Exterior • Trees can abrade roofs, as well as heave driveways and sidewalks • Tree roots can affect foundations, sewer lines, etc. • Other vegetation should be kept away from siding, air conditioners, etc.

36. Exterior Check foundation if visible: • Bowed or leaning • Major gaps or cracks • Crumbling or missing • mortar joints • Peeling stucco • Disintegrating brick Note any problems and check in basement for more evidence.

37. Roofing System Inspection of roof: • Estimate age • Number of layers • Type of materials • Leaking or not? • Types of valleys • Flashing

38. Chimneys Chimneys are a frequent maintenance issue and can be expensive to repair. Inspectors check for: • Proper alignment • Proper height • Flashed properly • Lined and capped

39. Siding and Trim • There are many exterior coverings, such as wood, vinyl, stucco, brick, stone and synthetics • Some are more high-maintenance than others • Vegetation can affect siding • Check for deterioration

40. Windows and Doors Inspect for: • Operation • Alignment • Weather-stripping • Evidence of leaks

41. Garages • A single garage door such as this one receives a lot of use • Examining the operation, tracks, springs, openers and fit is important • For child safety, auto reverse is a must

42. Part 4: The Inspection Process: Interior, Electrical, HVAC and Plumbing

43. Electrical System Inspectors check for adequacy and safety including: • Panel amperage/volts • Service entrance cable • Panel condition • Branch circuit wiring • Grounding • Wire conductor • GFCI, AFCI • Smoke detectors

44. GFCI Current standards require GFCI protection: • Most exterior outlets, not including upper decks • Bathroom outlets • New kitchen construction/renovation • AFCIs are not required as of yet on most existing homes but are required for electrical outlets in bedrooms of new construction

45. Smoke Detectors • National safety standards require smoke detectors • Can be battery operated, hard-wired or both • For best performance, should be mounted on ceiling or near center of the room, hall or stairway, and at the head of each stairway leading into an occupied area • Inspectors verify they are present and activate test button only

46. Plumbing and Fixtures • Water is the No. 1 concern: plumbing and plumbing fixtures are a significant part of the inspection • Inspector is looking for leaks, adequate flow and pressure • Also checking for sluggish or plugged drains

47. Plumbing System Plumbing leaks can also damage: • Cabinets/vanities • Behind shower tile • Subfloors, ceilings below, etc.

48. HVAC System Check for adequate heating (gas furnace): • Overall size, age and condition of unit • Proper location of unit • Adequate combustion air • Adequate temperature rise • Heat source in each room • Condition, size and location of ducts • Condition of blower/humidifier • Heat exchanger (mostly hidden) • Check for flue gases and other leaks around exhaust and in supply air • Dirty filters obstruct flow and affect temperature rise • Thermostat unit responds to controls

49. HVAC System Check for adequate cooling: • Overall size, age and condition of unit • Outside unit, clean, level and up off the ground, suction line insulated • No obstructions interfering with unit • Discharging heat-ambient test • Adequate temperature drop (14 to 22 degrees F) • Blower clean and variable speed • Dirty filters obstruct flow and affect temperature drop • Thermostat unit responds to normal controls

50. Basement and Foundation • Check for moisture and water damage • Efflorescence on walls • Signs of mold or mildew • Sump pump • Note whether the basement is finished or unfinished • Condition of stairway • Structural: • Cracks in walls and floors • Condition of overhead joists