Inspections
Update 1999-2008 by Dan & Shelley Lubbers
Q # 1 What is a Home Inspection?
An inspection is a general, visual evaluation of the house and its appurtenances that reports on conditions existing at the time of the inspection. A complete inspection report should cover the major systems of the house: structural, plumbing, electrical heating and cooling, general interior, insulation, ventilation siding, windows, doors, roofs, and attached garages. A pest and wood rot or wood destroying organism (WDO) report is typically included. Usually not included are septic systems, wells, underground piping, swimming pools, and other items that are not considered part of the main structure or are not visible or accessible.
Q #2 What are the most common inspection(s) requested?
• Pest & Wood Rot for most loans, generally required by lender for purchases with less than 20% downpayment.
• Roof Condition, may be required by lender, 3-5 years of remaining roofing material life is necessary
• Complete Home Inspection, required for some low down payment loan types
• Well Flow Testing - 4 hour, 5 GPM required for some loans
• Water Testing - Nitrates/Coliform Bacteria, required for all domestic wells
• Electrical, Heating, Foundation, or other individual inspections
• Septic System Evaluations, required for some loan types
Q #3 What type of inspections should be recommended upon listing a property?
The most common lending requirements for inspections are the Pest & Wood Rot (WDO) and Roof inspections. It is recommended that you and the homeowner have a clear understanding of the home's condition related to pests, wood deterioration, and the roof condition early to help set appropriate expectations and prevent surprises after an offer is received.
Q #4 The appraisal was completed, why do I need an Inspection? The appraiser did an inspection didn't he?
The appraiser is qualified to evaluate market trends and calculations to determine market value. The inspection is an evaluation of the property as it relates to overall physical condition and condition of specific components in the home. Home inspections reveal signs of failure and need for repair. The inspection and the appraisal are intended for different purposes. The completion of an appraisal does not eliminate the need for inspections or vice versa. The inspection is for the client and the appraisal is for the lender.
Q #5 How long is an inspection good for?
The inspection can generally be used for up to six (6) months after it has been completed to satisfy loan requirements; extensions of this time frame should be approved through the lender and inspector.
Q #6 Is an inspection transferrable to a new buyer?
It depends. The majority of inspection contracts restrict the inspection to use by the client that pays for the inspection. Some contracts allow for transfer to other parties after certain conditions are met.
Q #7 Can a house fail an inspection?
No. A house will often have conditions that require repair for lending or should be repaired for safety or to maintain value or livability; however, the inspector does not pass or fail a home during the inspection. The inspection is additional information for the buyer, real estate agent, and lender to use to help determine the feasibility of a particular home for a specific loan type or buyer qualifications and expectations.
Q #8 What qualifications should a home inspector have? Are their any exceptions?
With few exceptions, home inspectors in Oregon are required to pass a State of Oregon Construction Contractors Board (CCB) administered Home Inspectors exam. The exam covers laws, systems of the house, reporting, and standards of inspection. Upon passing the exam, the inspector becomes Certified by CCB and will have an individual OCHI number. Additionally, the inspector must own or work for a company that is licensed by CCB.
Some inspectors are exempt from the certification requirements but are still required to hold a contractors license. Check with CCB to verify the inspectors credentials.
Many inspectors will also have a Pest Control Applicators license (PCA) from the Department of Agriculture which means they have passed an exam regarding the identification and treatment of structural pests for doing wood destroying organism inspections (WDO).
Q #9 Can I verify the inspectors certifications?
Yes. Contact the CCB office at (503) 378-4621 or their web site at http://www.oregon.gov/ccb to find out if the inspector or a contractor certification or licensing and insurance and bond are current. You can also ask about past and present claims history.
Q #10 Are Inspectors bonded and insured?
Yes. Home inspectors are required by the CCB to have a bond and liability insurance. The bond will range from $10,000 to $15,000 and the insurance will range from $300,000 to $500,000 depending upon the category of licensure.
Q #11 Can I refer an inspector?
Most professionals would suggest that you do not make a direct referral of an inspector, you should make a list. Besides verifying licensing, here are a few things to consider as you create your list of inspectors. Get to know the inspectors you are considering. Each inspector will have a different education and experience background. Find out how long they have been in business. Find out their areas of expertise. Get to know their personalities. Consider the type of inspection report they create (narrative, checklist, combination). What is their delivery timeframe? What are their pricing practices?
Try to assist the client in understanding the various service types available – some inspection types will be more appropriate for some transactions and clients than others. It is the variety of services in the industry that allow you to suggest the most appropriate services to meet the clients needs and expectations.
Q #12 What do I do if the inspector misses something on an inspection?
First contact the inspector. Don't start the repair work unless further immediate damage would result. Let the inspector know that you believe something was missed in the inspection that you and your client believes he should have seen. Most inspectors will arrange an appointment to discuss and see the problem. If you are not satisfied with the response from the inspector, and it is less than one year from the inspection date, the inspection client can file a complaint with the CCB and have the case heard by a claims investigator and handled through the CCB claims process.
Q #13 What is an NPMA-33 form? Who can complete it for me?
The NPMA-33 form is utilized for FHA and VA loans. It reports on Wood Destroying Insects and must be signed by the inspector, buyer, and seller. The NPMA-33 form is not a complete pest and wood rot inspection and should not be used as such. This form should be completed and signed by a licensed Pest Control Applicator (PCA). Many home inspectors also are licensed PCA’s.
Q #14 What is a Work Verification or Re-inspection?
The work verification or re-inspection is generally requested by a lender to determine if the lender required repair work was performed. This does not determine if the repair contracts, offers, or addendums were adhered to and does not substitute for the buyer or seller's own evaluation of any repairs they have requested.
Q #15 Can an inspector verify the repair work or re-inspect a property he did not originally inspect?
Not generally. The lender will want the work verification or re-inspection completed by the same inspector that originally inspected and reported on the property. With the exception of some FHA loans, the appraiser or FHA fee appraiser may be able to perform the re-inspection.
Q #16 How do I prevent canceling a transaction if the inspection reveals one or more serious conditions?
If you are presented with serious or expensive conditions, such as the house needs a new roof, additional negotiations will generally be necessary. The best way to help this situation is if you were able to plan ahead and leave some negotiation room in the original offer. If the condition found was unforeseen and you were not able to plan ahead, then your reaction to this situation can make or break this deal. Work with the buyer and seller to determine what repair scope and costs will be. Don't guess, get bids. Often the seller has no idea they needed these repairs completed to sell the house. Give them some "buy-in" time. (If one buyer wants a repair done, it is likely the next buyer will too.) Remember, that there are very few conditions in homes that cannot be repaired. Whether or not conditions will be repaired is generally up to the financial resources of the buyer and seller and the requirements of lending.
Q #17 How do I get repairs completed that show on the inspection? Will the inspector do them?
Contact several (at least 3) licensed contractors for repair bids. Do not let the contractor bid the repairs without looking at the house himself. The inspection report will not provide enough detail for him to make an appropriate and accurate bid. Once you have the bids in hand, negotiate with the buyer and seller to determine what repairs will be completed and which party will pay for the repairs.
The Certified Home Inspector is prohibited from performing repairs on a property that he inspects for one year from the inspection. This eliminates any potential conflicts of interest during the inspections. The inspector may work verify or re-inspect repairs made by others.
Q #18 Do rural properties have any special inspection needs?
Rural properties with domestic wells are required to have Nitrates and Coliform Bacteria water testing performed. ORS 448.271 states that the test is the sellers responsibility. This tests for contamination of the well water. Forms, including test results, are required to be submitted to the Oregon Health Division Drinking Water Program at closing.
Some lenders or buyers may also want Well Flow or Septic inspections done. Lending standards require that domestic wells have at least 5 gallons per minute (GPM) of water flow over a four (4) hour duration or a holding tank large enough to achieve the same. Septic systems should be functioning and properly connected to an approved drainfield.
Q #19 Is there anything special I should do when writing an offer that includes inspections?
Allow sufficient time. Scheduling inspections, receiving reports, negotiating repairs and finalizing repair requirements take time. Make sure to allow for sufficient time in earnest money agreements to allow for the process to occur and eliminate unnecessary frustration on your part. During busy months, a minimum of 10-14 working days should be allowed for scheduling and completion of the inspection and report.
Q #20 Who should order the inspection?
The real estate agent will generally schedule the inspection to simplify the process; however, it is generally recommended that the person paying for the inspection select the inspection company. You will want to have a list of quality inspectors in your area and information about their inspection and report style to allow your client to choose the inspector that best fits their expectations.
Q #21 What is my responsibility for disclosure of sale fail inspection reports?
Anything material to a subsequent buyer must be disclosed by the seller. The seller can either copy the report or provide an explanation. The seller is responsible to explain the sale failure for previous transactions that fail under the inspection clause. If a copy of the inspection report is used, additional information should be provided to explain why the report is provided and that the inspection report is not owned by the property seller. The buyer should be advised to seek their own inspections to meet their lending and personal needs.
Q #22 The Professional Inspections clause of the offer allows the buyer to request/require repairs, correct?
No. The Professional Inspections clause is silent on repairs. Remember that the inspection period also does not automatically extend for the parties to negotiate repairs. Consult your broker or attorney regarding the best language for repair conditions to prevent issues with the standard requirement for unconditional approval or disapproval.
Q #23 Who generally pays for the inspection?
The responsibility to pay for the inspection fees are often negotiated in the earnest money agreement or are determined by the loan program selected by the buyer. VA loans generally require the seller to pay for the WDO Inspection. Nitrates and coliform bacteria water testing are also technically the sellers responsibility. Other inspection costs are typically paid for by the buyer; as always, everything is negotiable.
Q #24 Can the inspector pay a referral fee for inspections or to be on my list of inspectors?
No. An inspector is restricted by Oregon Administrative Rules from directly or indirectly compensating a realty agent or other party that has a financial interest in closing or settlement, for referral of inspections or for inclusion on a list of recommended inspectors, preferred providers or similar arrangements. There are also restrictions on compensation (financial or material) for promotion of products, contractors, or services. Essentially, the inspector may only accept compensation, of any kind, from the customer that the inspection was performed for.