Key highlights from this article:
- The home inspection usually occurs after the seller accepts the offer.
- The buyer is responsible for arranging and paying for the inspection.
- The buyer can use a “contingency” as a way to back out of the deal.
- Foreclosures, short sales, and auctions are a different story entirely.
The home inspection is an important (but optional) part of the home-buying process. It’s a chance for the buyer to receive a detailed assessment about the property’s condition, from an unbiased and knowledgeable source. It can also help prevent unpleasant surprises down the road.
The home inspection usually takes place shortly after the seller accepts the buyer’s offer. Once the purchase agreement has been signed by both parties, the house goes into escrow. This is typically when the inspection takes place, at least in a standard real estate transaction.
This will make more sense if we zoom out and look at the buying process as a whole.
When the Home Inspection Takes Place
The list below shows when the home inspection takes place, in relation to other steps in the buying process. While the process can vary from one buyer to the next, it usually goes something like this:
- The home buyer finds a suitable property and makes an offer to purchase it.
- The seller accepts the offer, perhaps following some negotiations over the price, closing date, seller concessions, etc.
- The buyers provide a copy of the signed purchase agreement to their mortgage lender (if they’re using a loan to purchase the property). If they’re not using a lender and paying cash, this step is skipped.
- The buyers will then hire a home inspector to perform a thorough inspection of the property, with an emphasis on the roof, foundation, electrical system, heating and cooling, and plumbing.
- The inspector conducts the home inspection and reviews any issues or discrepancies with the buyers. He or she will also provide a detailed inspection report on paper or in electronic form.
- The buyers will decide which items they want to have corrected, and which items they are okay with. They will send their repair requests the homeowner / seller.
- The seller will agree to fix all, some, or none of the requested items. (They are under no obligation to repair any discrepancies noted by the inspector.)
- Home buyers usually have an opportunity to back out of the deal, if they are unwilling to accept any issues noted in the report. This is why it’s important to include an inspection contingency within your purchase offer.
So that’s when the home inspection takes place during a regular real estate transaction. It happens when the house is “in escrow” — the period of time after the purchase agreement has been signed, and before the final closing date.
As a buyer, it would be wise for you to have the home inspected sooner rather than later. That way, if the inspector uncovers serious issues you are not comfortable taking on, you can back out and move on to the next suitable property.
Many buyers include a home inspection contingency within their purchase offers, for this very reason. It gives them a way to back out of the deal without losing their earnest money deposit.
The Importance of the Inspector’s Report
A home inspection usually only takes two to three hours to complete, depending on the size and complexity of the house. When the inspector finishes the process, he or she will write up a detailed report of findings. The inspector will then sit down with the buyers to go over the report, item by item.
This is an important part of the process. It’s the buyers chance to find out the true condition of the house, and to ask questions about any potential repairs.
According to the American Society of Home Inspectors (ASHI):
“The inspector will write a report about their findings, which will go to the homebuyers and homeowners. Based on report, the homebuyer can withdraw the offer, renegotiate the offer or ask the seller to fix specific issues.”
As a buyer, it’s important to slow down and ask questions at this stage. You shouldn’t rush through it or feel like you’re inconveniencing the inspector by asking a lot of questions. You’re paying for this information, so you want to make sure you absorb it all.
Foreclosures, Short Sales and Auctions
Everything mentioned in the previous section pertains to a regular real estate transaction, where the home buyer presents an offer to the homeowner. In such cases, the inspection usually takes place shortly after the offer has been accepted.
But there are other cases where the inspection might occur earlier, later, or not at all.
Distressed properties are a good example. If you are buying a foreclosure home that is owned by a bank (removing the homeowner from the picture entirely), you might not have an opportunity to inspect the property.
The same is true for homes that are sold at a real estate auction. When you bid on a property at an auction, you might not have an opportunity to inspect it beforehand. So the process varies depending on the type of home you are buying, and whom you are buying from.
Brandon Cornett is a veteran real estate market analyst, reporter, and creator of the Home Buying Institute. He has been covering the U.S. real estate market for more than 15 years. About the author