When you are buying a home, the first thing you do, after your offer is accepted, is to do a home inspection. Depending on the age of the home, maybe even more than one. Why? Inspections uncover big-ticket items that will be your problems, soon after you close on the home. Depending on what needs to be fixed, as a buyer, you can negotiate a lower price, or a seller credit for closing costs, to reduce your cash due at closing.
I am working on a transaction now where the borrower skipped the inspection all together to save the money. I did not know about this, until the following series of events took place. The home is a $70,000 home in Greeley, and at that price point, it was bound to have some challenges. The appraisal came back with a list of 30+ things that needed to be fixed/replaced. This home was in the worst condition of any home I have ever seen in 11 years. The Realtor, who I don’t know, also happened to be really new at the business. So now it has turned into a nightmare scenario where the FHA appraisal is logged in the HUD system, so anyone who wants to buy that home for the next 4 months, has to use this appraisal. The seller is trying to fix everything, but pretty much, everyone is frustrated. I asked the borrower if he did an inspection, because I found it odd that an inspector would not have raised these 30 red flags.
An experienced Realtor would not have put a contract on that home, and a home inspection would have cost the borrower $200, and uncovered all these major problems. By skipping the inspection, the borrower saved $200, but spent $500 on an appraisal — an appraisal that told him the same thing that the inspection could have told him – essentially STOP moving forward with this home.
Please make sure you hire an experienced Realtor, and never skip an home inspection!