I wrote the following article in September 2016 which was published in the Alaska Journal of Commerce. It is worth reprinting here because of its increasing relevance today as our housing stock continues to age. In my experience, home inspectors are over-reaching beyond health and safety issues. Home inspections are full of ‘recommendations’ that are not related to health and safety. The more items identified on a home inspection report, the more work is created for general contractors or handymen, many of which are the same as home inspectors. But, not all the fault lies with the inspectors. Much of it is also the fault of my own industry. As realtors, we need to dampen the expectation buyers have when purchasing a home that is 20 to 30 years old and counsel them as to what is truly health and safety items. So, here’s the article.
Selling a home is a four step negotiating process. Step one is deciding the asking price in consultation with your realtor. Step two is negotiating the price and terms of any offer that you receive. Step three is negotiating the recommended list of repair items from a home inspection report. Step four is any change in the final sales price as a result of the appraisal coming in less than the agreed upon sales price.
Step three is the sticky part where the buyer, seller and realtors often disagree with what needs to be done as a result of the home inspector’s recommendations. This is a growing issue in our local industry due to Anchorage’s aging housing stock. Buyers want everything fixed or replaced that is identified in the report, often times requesting beyond the health and safety items to include cosmetic and maintenance items. Sellers, on the other hand, see no need for most if any of the items called out on the report because they have lived comfortably in the home during their ownership.
Thus, the home inspector report becomes almost the defining negotiating document in any transaction and becomes as important as a buyer’s credit score or an appraiser’s value. So who are these home inspectors and what are their qualifications? There are seventy-two licensed home inspectors in the state of Alaska. Twenty-two are in Anchorage. Home inspectors must pass significant national exams in order to become licensed in Alaska. They are also required to be bonded and insured by the state of Alaska, according to the Statute and Regulations for Home Inspectors published in January 2015. So what does the license allow them to do? It allows them to do a ’visual’ inspection of an existing or new residence of the heating and air-conditioning systems; plumbing and electrical system; built-in appliances such as stove, hood, dishwashers; roof, attic and visual insulation; walls, ceilings, doors, windows and floors; foundation and basement; visible exterior and interior structures; drainage to and from the residence; and other systems and components as specified by the department of commerce. They must physically inspect the property and write a written report. The statute does not authorize them to address general maintenance issues, lawn care, stained or frayed carpet or any other interior/exterior cosmetic items and should not be noted in the report. That responsibility falls to the appraiser to address the general condition of a home.
It is in everyone’s best interest to sell a home with all health and safety issues clearly identified and repaired prior to closing. Home inspectors should be careful, however, not to extend their comments to items of general maintenance or address items of cosmetic discretion or preference. And first time home buyers need to remember that they might very well be purchasing a home that is older than they are and may need to lower their expectations for a like new home.