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Monday, October 8, 2007

Get an inspection on new-builds

I read an article today in one of my real estate news sources about getting inspections on new-build homes. That's a really good idea. Many new-home buyers spend quite a bit of time with the builder, picking out colors or cabinets or light fixtures or whatever; but, some just wander in after a builder spec-home is built and decide to buy it. Either way the typical home buyer is not qualified to inspect the workmanship and materials him/herself.

The builder will tell you that the new-build home is inspected as it is built by local building inspectors and that they would catch any problems. That's just not necessarilly true. Typically, local building inspectors are looking for infractions of the local building codes and may not even look at many areas that could involve, or lead to, other issues. In many areas they are also overworked and may do just cursory inspections; although, that is less the case in the current building slump.

The American Society of Home Inspectors (ASHI - one of several professional organizations for home inspectors; two others are NACHI and NAHI - you can google any of them to get to their Web sites) 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 ask 2-3 home inspectors in your area to tell you about their experience and ability to do a new-build home inspection and what they will be looking for in those inspections.

You should tell the developer/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 this out in clear terms. Expect heavy push-back from the builder and be ready to stand firm on this request. Builders typically don't like to have home inspectors looking over their shoulders during the build. Many builders consider home inspectors to be unqualified nuisances; however, smart developers and builders will realize that catching a problem early can actually save them money later.

Builders typically provide a "home warranty" with the sale of the new-build home. These warranties typically cover the materials and workmanship on the home for one or more years. The builder will point to this warranty as one reason that the buyer shouldn't get an inspection - after all any issues are likely covered by the warranty. While that's true, it is also true that it is a much bigger hassle to get issues resolved after you've moved into the home, especially if the problem is in one of the major systems in the house and may involve opening the walls again.

There is also the chance that a very real issue with the build won't even be noticed by the first owner and will only come up when he/she tried to sell, sometimes years later. Once the builder's home warranty expires there is little the home owner can do to get issues resolved by the builder. So, if a home inspector of your buyer's choice comes in on the sale of the house and finds issues that should have been resolved by the builder under the warranty, you are usually left holding the bag.

The amazing thing is that buyers often spend much more time inspecting and "kicking the tires" of a new car that they might be purchasing than they spend on the largest single purchase that they will ever make - a new home. Buyers get caught up in the emotions of the moment (see my post of 2 days ago) and maybe the choices that they have to make for the house and forget their responsibility for due diligence in the build process. That's especially easy to do, if the developer/builder is a friendly, seemingly trustworthy type, who keeps assuring you that he'll make everything right if there are any issues. How will you know if there's something that needs to be fixed? Get it inspected as it is built and you will feel better about it when it's done; even, if you don't end up making a friend out of the developer/builder.

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