When buying a property, it always pays to do your due diligence. With all the excitement of searching for your new home, it can be easy to overlook structural, electrical or appliance-related issues. Most buyers are understandably swayed by their emotions, but unless you’re an expert in home systems, how can you see beyond the curb appeal to tell whether something is seriously wrong with your potential new home? Here’s everything you need to know about getting a home inspection.
- What is a home inspection?
- What does a home inspection cover?
- What’s not covered by a home inspection?
- 5 tips for making the most of your home inspection report
- How to find a reputable home inspector
- Home inspections and your insurance
- Frequently asked questions
What is a home inspection?
A home inspection is a comprehensive check of most (but not all) of a building’s systems and structural components. Home inspections are available for most types of residential properties, including detached homes, townhouses and apartments. In Canada, home insurance professionals (sometimes referred to as a HIPs) are unlicensed, with the exception of those practicing in British Columbia and Alberta. Ideally, inspections should be arranged by the buyer using an inspector of their choice. (If the seller insists that you use their choice of home inspector, take this as a major red flag.)
Inspections usually take around 2-3 hours and it’s a good idea to be present during the process so that you can ask any questions that may arise. At the end of the inspection, you’ll receive a report detailing the inspector’s findings. Depending on the contents of the report, you may wish to reconsider (or even rescind altogether) your offer on the property.
The cost of the inspection depends on the size and complexity of the property, but expect to pay around $500. While this may seem steep, try to consider the cost within the overall context of purchasing a property. For example, if the report highlights structural damage that would cost $20,000 to repair, the $500 inspection fee suddenly represents excellent value.
What does a home inspection cover?
Canadians face a unique weather system with extreme temperature and precipitation variations. Over time, this can take its toll on buildings. It’s a good idea to select a local home inspector as they’ll have a better idea of the risks specific to your climate. For example, Canada’s west coast receives a lot of rain. So, a home inspector there is likely to pay specific attention to the building envelope while checking for water ingress, as well as checking the basement for mould.
While location-specific assessments can help to make the most of your inspection, all home inspections should be sufficiently comprehensive to identify major problem areas. Here are some of the basics that your home inspector will look for:
Typically, a home inspector will begin the process by walking around the outside of the property. Exterior walls are reviewed for damage to siding, cracks, or any evidence of insects. While there, they’ll check the landscaping of the property, with a specific mind to grading and drainage. (The inspector will determine whether water drains away from or towards the property.)
Points of egress (i.e. your windows and doors) can be expensive to replace, so your home inspector should evaluate their expected lifespan and provide a cost for replacing like-for-like. Foundations are inspected for evidence of cracking or settling (a term that refers to the distortion of parts of the home due to unequal compression of its foundation).
Finally, the roof will be checked for signs of water ingress, or damage to shingles, as well as the condition of the gutters. The home inspector should also be able to estimate the remaining life span of the roof as this could be one of the most expensive elements of the home to replace.
The majority of the home inspection will take place inside the property. Your inspector will check the plumbing for leaks visible at any faucets. They’ll also identify the type of plumbing used in the home as well as the location of the main shutoff valve.
The entire electrical system will be reviewed, with a specific focus on the home’s main electrical panel. The type and condition of wiring will be identified, and the inspector will check the function of ground fault circuit interrupters in key areas. Again, the inspector will indicate the age and expected lifespan of all components, paying specific attention to any areas of concern. The same approach applies to the home’s hot water heater and HVAC system. Your inspector will also identify any leaks in the heating/cooling ducts to determine the home’s energy efficiency.
Bathrooms are checked for leaks, ventilation and properly secured fixtures. Your home inspector may also check the caulking on the tiles where applicable, as well as the flow and pressure of water. Basements or crawl spaces are checked for evidence of moisture or pests, as well as any issues relating to insultation or the structure of the foundation. Finally, your inspector will check that any miscellaneous safety systems are operational, such as fire alarms, carbon monoxide alarms and sprinklers.
What’s not covered by a home inspection?
Home inspections are fairly comprehensive, though each company sets their own standards for what’s included and what’s not. There are, however, some areas of the home that don’t fall under the realm of a home inspection and may require a specialist. Generally, home inspectors won’t inspect:
- Swimming pools
- Insultation voids
- Radon gas
- Lead paint
- Pest or vermin control
- Toxic mould
5 tips for making the most of your home inspection report
So, now you know what your home inspector is looking for. But how can you make the most of the inspection report once any issues have been highlighted? Here are 5 tips for making the most of your home inspection report.
1. Read the report carefully
The home inspection report is designed to be comprehensive; a point with both positive and negative connotations. On one hand, it provides potential buyers with as accurate a view of the property’s condition as possible. On the other, home inspectors will often report even extremely small deficiencies which you could easily take care of on your own, like chipped paint. You’re unlikely to receive a blank report on a home, even if it’s brand new and has never been lived in.
So, we recommend focussing first on the big-ticket items; those with repair costs of $2,000 or more. And, if you purchase the home, focus on repairing or replacing these items first.
2. Use the report to re-negotiate your offer
In the event that your home inspection report highlights significant problems, one way to recoup the initial inspection cost is to reduce your offer, or make your offer contingent that repairs are completed before the sale closes. To protect yourself against the possibility of deficiencies that might seriously affect your decision to purchase a home, consider making your offer conditional upon a satisfactory home inspection.
3. Understand the limitations of a home inspection
We’ve mentioned several times that home inspections are relatively comprehensive. While this is true, home inspectors are bound by certain rules. For instance, home inspections are purely visual. Inspectors are not allowed to move furniture or cause damage to any part of the home when looking for issues. This means that your home inspector won’t know if there’s a problem inside the drywall or under the carpets, for example. It’s also worth keeping in mind that a home can’t fail an inspection.
4. Consider getting a second opinion
In a market that’s largely unregulated, it may be worth getting the opinion of a second home inspector. Even within regulated provinces, buyers shouldn’t expect the skill and experience level of all home inspectors to be uniform. It’s always possible that an inspector might miss something important. To avoid possible conflicts of interest, hire and pay your own home inspector to work on your behalf, rather than home inspection companies chosen by (or with close links to) the seller, listing agent, property management company, or any person/organization involved in the selling process.
5. Consider a home warranty
Once you’ve received your report and adjusted your purchase offer accordingly, you may wish to consider purchasing a home warranty. New homes in Canada often receive a warranty (similar to the 2-5-10 warranty) as a legal requirement. However, many consumers are not aware that it’s possible to protect a home’s structural and cosmetic components by purchasing a third-party home warranty. And the best part? The home doesn’t have to be new. Homes of any age can qualify for a warranty.
How to find a reputable home inspector
Within the last ten years, there has been a movement within the industry towards regulation. The Canadian Association of Home & Property Inspectors (CAHPI) is at the forefront of this movement. Members of the CAHPI must meet certain criteria to attain either National Certificate Holder or Registered Home Inspector status.
“Our homes are the largest investments we’ll ever make. That’s why it’s so important to choose the right home inspector and not to skip the inspection entirely,” says Graham Clarke, President of Registered Home Inspectors for CAHPI. “Having a home inspection can be one of the smartest decisions you make during the purchase of your home, however, choosing the right home inspector can be challenging.”
“You want to hire an inspector who is qualified to inspect your home and point out the deficiencies. They need to have knowledge of plumbing, electrical, HVAC, structure and more.”
Registered Home Inspectors that are part of CAHPI must also adhere to the standards of practice, code of ethics and undertake continued education to learn about the latest developments in construction technology. We recommend starting your search for a home inspector with this organization. You can use their search tool here.
For more specific tips on selecting an individual, once again it pays to do your due diligence. Speak to your home inspector over the phone and ask about their training and experience with this type of property. Price should be the last thing on your mind at this stage.
Home inspections and your insurance
If you decide to continue with the purchase once you receive the inspection report, it’s up to you and the seller to determine who’s responsible for the costs of any necessary replacements, and how this affects the value of the property. Most buyers can’t afford to purchase a property outright and will require the help of a mortgage provider; in most cases, a bank. Most banks require both home insurance and an appraisal before they’re willing to release funds, though some may also insist on a home inspection to protect their investment in your property.
However, there can be some additional benefits to replacing damaged or deficient home systems that are highlighted in the inspection report. For example, your insurance provider will want to know if your home uses knob and tube wiring, or if there’s any damage due to mould (a common exclusion on most home insurance policies). Rectifying these issues, (replacing knob and tube with copper wiring, for example) can result in a reduction in your home insurance rates.
Whether the property requires renovation or not, it’s important to select a home insurance provider that’s flexible and can account for your needs. With Square One, it’s easy to protect your home even if renovations are taking place at the property. You can get a quote, buy a policy and even submit a claim, all online from the comfort of your own home. And you can customize your coverage, limits and deductibles to suit your specific needs.
Homeowner’s policies start from just $40/month. To get a quote, click the button below.
Frequently Asked Questions
Are home inspection fees tax deductible?
In most cases, no. However, you may be able to deduct the value of tax on a home inspection that’s completed on a property that you purchase with the intention of renting. Speak to your accountant or financial advisor for more information.
Are home inspections part of closing costs?
Generally, yes. The term ‘closing costs’ relates to all miscellaneous expenses associated with purchasing a property, other than the property itself. These include mortgage application fees, appraisal fees, home insurance, property taxes and home inspection fees.
Are home inspections required?
Most mortgage providers require an appraisal of a property’s value and proof of insurance before they’re willing to release the funds for a home, though each mortgage provider decides upon their own requirements. Keep in mind that most mortgage providers will want a market value appraisal, which is very different from an actual home inspection. A market value appraisal is not as detailed and will not make recommendations about potential problems with the home.
Although home inspections may not be mandatory, they remain a great idea that could save you money in the long run.
Do I need a home inspection if I’m renting my home?
No. Unless you’re renting a property that you’re considering purchasing, there’s no need for a renter to pay for a home inspection.
What’s the difference between a home inspection and a home appraisal?
An appraisal is an assessment of a property’s current market value, whereas an inspection is an assessment of its condition. Appraisals are often done for the peace of mind of the lender, where inspections are completed for the peace of mind of the buyer.
Do new homes need inspections?
While new homes in Canada will often come with some degree of warranty protection, it’s always possible that some of the thousands of elements that comprise a new home are faulty. Getting a home inspection for your new build allows the chance for buyers to get ahead of any potential issues.
For more information, or to get a home insurance quote, contact Square One at 1.855.331.6933.