No house is perfect. All houses have problems and blemishes (called defects in the industry). However, not all defects significantly affect the value of a house. A crack in a window pane is a defect but not a significant one. A leaking roof that is beyond the end of its useful life is a defect that will significantly alter the value of a house. Both defects should be reported. It is the job of the inspection report, and therefore the job of the home inspector, to identify and document the many defects and designate which significantly affect the value of the house and which do not.
The home inspection report performs five main functions.
1. It is a Guide for the Home Inspector:
The Home Inspector is paid by the prospective home buyer to carefully look over a home and report its condition. An inspector’s use of a premade reporting format serves as a checklist of areas of the home to be examined. A reporting format should have a predetermined group of sections by which the home is divided.
These sections have a list of criteria that must be examined. For example the Electrical System should be included as a section of any proper Home Inspection Report. The electrical system has many components that need to be examined. Some of these include the service type; overhead or underground? The outlets; grounded? GFCI protected? These sections have subsections with their own data points to check. Within the Electrical System one subsection is the main electrical panel; Is it properly rated? Is there a double tapped breaker? Are all the breakers protecting the proper sized wires? Is there aluminum branch wiring? And so on. The more criteria listed in the section the more thorough the report will be.
The Home Inspector needs to answer each one of the “Data Points” during the process. While filling in the data points the inspector will determine if any system or component is in poor condition, is unsafe, or does not operate properly. With a good reporting format the inspector merely has to follow the sections and the criteria step-by-step to complete the report. This report process is the guide for the entire Home Inspection.
2. It is a Record of Data:
The report records all the necessary data about the condition of a home. The report is a legal document that captures data for a particular point in time. Most homes are bought and sold over time and some may change hands many times. All homes deteriorate over time, and are subject to improvements and upgrades. Conditions that change over a 20 year period, both good and bad, will be easily discernible by looking back at a report. Things such as appliances, heating systems, floor coverings, etc. The Home Inspection Report provides a snapshot in time.
3. It provides guidance for the buyer and the bank:
Buyers will look at a prospective home from a particular perspective. “Location, location, location. How good is the school district? How many bedrooms? A garage?” The inspector, however, is not influenced by these types of criteria or wants. He or she will look at the home unemotionally and provide objective information about that home purely regarding its condition.
Often prospective home buyers find a home that they love, and seems to be “perfect” (according to the criteria they set as important). With the Home Inspection Report they can now see through the eyes of the Home Inspector, and may fall out of love with that house. The existence of conditions requiring expensive repairs or that present safety issues can bring the buyer back to reality or inform them in a way that helps them decide to buy the house despite the additional work that needs to be done.
The bank also wants that unbiased Home Inspectors’ guidance because the bank doesn’t make decisions about lending money based on the buyers’ “love” of the house. If the defects are such that the additional expense will be too much for the buyer to afford the bank wants to know.
4. It is a Marketing Tool:
A Home Inspector, in most cases, runs an individually owned small business. The inspector succeeds or fails on the impact of the Home Inspection Report. The client and the realtor judge the quality of the Home Inspector not by the inspector’s fancy tools, expensive marketing, or winning personality but, in general, they judge solely on the thoroughness, accuracy, and readability of the report. Ultimately it is the quality of their report that is the Home Inspector’s strongest asset toward growing his or her business.
When a home buyer clearly understands the Inspection Report and finds it informative and useful, the realtor will likely recommend that inspector to other prospective buyers. The realtor wants to look good by being associated with a competent Home Inspector.
5. It Protects the Inspector:
Home inspectors are guided by a set of standards that are called “Standards of Practice”. These Standards of Practice are set forth by the State; if the Home Inspector is doing business in a state that requires licensure; or by the National Professional Association or Associations to which the inspector belongs.
The Standards of Practice, or SOP’s, detail what elements must be included in a Home Inspection Report. If the report does not fulfill the requirements listed in the SOP’s the inspector could be found negligent in a court of law. A Home Inspection Report that covers all of the required standards is a document that can prove the home inspector was not negligent.
For example: A home owner might sue a home inspector because there is later found to be aluminum branch wiring in the home they purchased. The home inspector must be able to prove he or she removed the cover of the main panel and looked at the branch wiring and was unable to detect the presence of aluminum branch wiring within a reasonable expectation.
If the inspector can provide written (and hopefully photographic) evidence that shows he or she removed the main panel cover then the court likely cannot find the inspector negligent. (This is one good reason why many inspectors are currently using pictures in their reports). A good report is the best defense in a court of law.
The Home Inspection Report also provides different services to different people.
1. To the Client –
The client obtains an unbiased, objective and unemotional evaluation of the house and an overall view of the house that will either inform his purchase plans or change the decision to buy. The report also provides information useful to any homeowner about the systems of the house and a punch list of repairs to be made should the client buy the home.
2. To the Bank –
The bank is provided with a report that assures the house is not a bad investment because of hidden costs or safety issues.
3. To the attorney –
The attorney gets a legal document that ensures that proper due diligence was performed when regarding the condition and safety of the home. The report is the legal document that assures the client is protected.
4. To the Home Inspector –
The Inspection Report ensures that the Home Inspector has fulfilled the obligation to the client according to the Professional Standards of Practice and can help prevent loss in law suits that claim negligence.
A quality inspection report, by its ease of understanding and thoroughness, is a great marketing tool to generate new business.
Remember, even though the report holds critical information and provides service to several different parties associated in the process of home buying; the home inspection report and all of its contents belong solely to the client. This is not a public document and cannot be disseminated by anyone without the consent of the property buyer.
If there are significant defects found in a house it is typical for the buyer’s attorney or realtor to share only the selected pages of the report with the seller’s attorney. These pages will contain only the information on the aspects of the house that the Home Inspector found deficient. It is unusual for the seller’s agent to receive the complete report and only by the buyers’ permission.
In the Home Inspection industry there are currently multiple options of format by which to produce a Home Inspection Report. There is no Standard Report or report format, and no reporting system even considered the industry leader. The three basic report styles are; checklist, narrative, and combination of both.
Available within the Home Inspection Industry are paper reporting systems, computer programs and online reporting systems. Costs for these systems range from no-cost, to cost in excess of $2,000.00.
Home Inspectors have a lot of choices when it comes to reporting systems and no one particular system or style is the clear favorite. The main problem associated with this lack of Industry Standard or leading system is that it hurts the consumer. The consumer (or the prospective home buyer needing a Home Inspection Report) may have no idea what they should be receiving for a quality report; especially if they are first time home buyers.
The client who hires a Home Inspector has no expectations about the final product, except that a home inspection is a necessary step in the home buying process and the report will tell them ‘something’ about the house. They expect the Home Inspector will advise them about issues with the house, but from that point on there is no basis for expectation as to the quality of the product in the form of the report. Every home inspector has the option of using their own style of reporting. The buyers may never know whether they are receiving an inferior report because there is no Home Inspection Report Standard with which to compare at this point in time.
Home Inspection Reports are the cornerstone of the Home Inspection Industry, but even experienced inspectors cannot decide on a standard. The complex functions and myriad services a quality report performs deserve a careful selection as to the form an inspector chooses. Most Home Inspectors stick with the type of report they know and are comfortable with, despite superior systems that may be available. Home Inspectors should evaluate and choose their reporting style and system according to the best way to serve all the parties involved.