Friday, April 10, 2015
New Home Need Inspections Too
Question: We are looking to buy a new home from a builder. We like the neighborhood and the price has been reduced to make it very attractive. Additionally, the builder is throwing in a number of extras, including paying all of our closing costs.
However, we do not know this builder's reputation, and would like to have the home inspected before we go to closing. Is this possible?
Answer: In today's buyer's market, most anything is possible, and I think it's a very good idea. However, builders often reject such arrangements, for a number of reasons. Some builders claim that this will void their insurance policy and are afraid that someone will get hurt during the inspections. Other builders don't want their employees bothered by too many questions from the inspector, while other builders just say that "we will provide you with a house that has been approved by the county inspectors, so you do not have to worry."
But you are correct in worrying. According to Frank Lesh, former president of the American Society of Home Inspectors (ASHI), "even new homes have defects that only a professional can detect".
Keep in mind that in many counties, the government inspectors are busy and do not have time to carefully look at all aspects of the new home. Often, by the time the county inspector makes a site visit, your builder may already have put up the drywall, thereby covering up the electrical and the plumbing.
I have been involved in a number of new home warranty issues, many of which could have been avoided had the buyer been given the right to inspect the new home as it was being built. In one case, the new homeowner kept hearing pipes knocking every time the upstairs bathroom sink was turned on. The homeowner forced the developer to open up the walls -- at the developer's expense -- and found that some of the plumbing pipes were not properly affixed to the wall. The building inspector that the homeowner retained -- after the house had been completed -- determined that this was what he called "water hammer".
Indeed, in this case, the builder acknowledged that had there been a periodic inspection, the problem would have been detected earlier, at a significant cost savings to the builder.
ASHI recommends a three-pronged inspection: prior to the pouring of the foundation, prior to insulation and drywall, and finally prior to the final walk-through.
You should tell the builder that you want the right to have an inspector of your choice -- and at your expense -- to conduct these three inspections. The sales contract you sign should spell out this right in clear terms.
There are many components involved in a new home -- such as the roof, the foundation, the electrical and plumbing and the heating and air conditioning systems. I recently heard of a situation where a homeowner complained that the new house was not being adequately cooled, and when a professional inspected the system, he discovered that the builder had made a mistake. The system that was designed for a smaller house was accidentally installed in the house that was inspected.
Once again, the developer had to spend a lot of money correcting the situation -- money which could have been saved had there been periodic inspections.
It often amazes me that when consumers buy a new car, they inspect it carefully, even to the point of kicking the tires. But when they buy a new house, they are more concerned about how many bedrooms there will be, and what size television will they be able to put in the family room.
To my knowledge, there are two major home inspection organizations: ASHI and the National Association of Home Inspectors.
If you do not have the name of a competent inspector, you can find one by going to either of these organization's website.
When you contact a home inspector, inquire of his/her qualifications and background and check him/her out on the Web and at the Better Business Bureau.
If you decide to hire an inspector, get a copy of the inspector's contract before you formally commit yourself. Read it carefully, and make sure that the inspector will be doing the job you want.
There is one controversial provision in most home inspector's contract, called "an exculpatory clause". This states that should the inspector make a mistake and negligently fail to pick up problem areas in the house, your only remedy is to get full refund of the contract price. This clause has been upheld in the State of Maryland. However, the District of Columbia Court of Appeals held that these exculpatory clauses will not be enforced "when a party to the contract attempts to avoid liability for intentional conduct of harm caused by ‘reckless, wanton or gross behavior." (Carlton v Home Tech, decided June 15, 2006). This was a modest fix but unless you can prove that the inspector was engaged in such behavior, the exculpatory clause will be enforced. State laws differ on this issue.
While not every home inspector will agree to delete this clause, it certainly is worth trying.
Purchasing a new home creates significant anxiety among many potential homebuyers. Why not get an inspector to be on your side to relieve you of at least one aspect -- namely is the house built properly or will we have problems after we go to settlement?
Looking to buy or sell? Let me know how I can help.
Contact your local RE/MAX Realty Center Agent Stacey Guzanick 262.490.3696, Guzanick@gmail.com, if you have questions about buying a house or selling one. I can guide you toward your next home.
See you at the closing!
Written by Benny L. Kass