Should You Arrange a Professional Inspection Before Buying a Property?

Yes. Make your offer contingent on a professional inspection with a written deadline, hire an inspector who works for you, have every unit inspected, and add specialist tests the property calls for. If the report turns up problems, you can ask the seller for repairs or a credit, or cancel the purchase before the deadline without penalty. A lender's appraisal does not replace an inspection: HUD's notice to buyers explains that an appraisal estimates value for the lender, while an inspection reports the home's condition for you.

How do you protect yourself in the purchase contract?

Write an inspection contingency into the offer. This is a clause that lets you cancel, or renegotiate, if you are not satisfied with the inspection results. The CFPB notes that with this clause you can cancel the sale without penalty if you are not satisfied with the inspection.

Set these terms in writing:

1. The deadline. State the number of days you have to complete inspections and respond. The length is negotiated, so ask for enough time to schedule specialists after the general inspection.
2. How you respond. Spell out how you deliver a repair request or a cancellation notice, and to whom.
3. Access to every unit. If the property has tenants, require the seller to arrange entry to each occupied unit during the inspection period.
4. Lead testing for older homes. For a home built before 1978, federal rules require the seller to give you 10 days to have the home tested for lead-based paint, unless you and the seller agree in writing to a different period or you waive it.

Book the inspector as soon as the seller accepts your offer, because the contract deadline keeps running while you wait for an appointment.

What does a general inspection cover, and what does it miss?

HUD's inspection notice says a qualified inspector evaluates the structure, construction, and mechanical systems, identifies items that need repair or replacement, and estimates the remaining useful life of the major systems. Before you hire, confirm that the report will cover the roof, foundation, attic, heating and cooling, water heater, plumbing, electrical panel, windows, and visible signs of water damage.

The inspection is visual. Inspectors do not open walls, and they may not report on areas blocked by furniture, stored items, or locked rooms. Ask the inspector for a sample report and the list of what their standard inspection leaves out, so you know which specialist tests to add.

For a rental, add these checks:

• Every unit. Inspect each unit of a duplex or fourplex, including occupied ones. Each unit usually has its own kitchen and bath, and may have its own water heater and heating system.
• Smoke alarms. The U.S. Fire Administration recommends alarms inside and outside each sleeping area and on every floor, including the basement, and replacing any alarm 10 years after its manufacture date.
• Carbon monoxide alarms. The Consumer Product Safety Commission recommends alarms on every level and outside sleeping areas.

Your state or city code sets which alarms a rental must have, so confirm the local rule and budget to add any that are missing.

Which specialist tests should you add?

EPA's radon guide says each test should run at least 48 hours and that a buyer can ask for a new test even if the seller already tested. If you buy a pre-1978 home, you will also have to give each tenant a lead disclosure and EPA's lead pamphlet before they sign a lease. See whether to test for lead for what testing involves.

How do you choose an inspector?

1. Check the license. Licensing depends on where the property is; the CFPB notes that home inspectors may not have to be licensed in some areas. Where they are licensed, look up the inspector with the state agency. In Texas, for example, the Texas Real Estate Commission licenses inspectors, requires them to follow written standards of practice, and offers an online license lookup. Texas Occupations Code section 1102.1141 requires qualifying liability insurance, a bond, or other security accepted by the commission.
2. Hire someone who works for you. The CFPB warns that an inspector paid by someone else, or paid only if the sale closes, might underemphasize problems. Pay the inspector yourself.
3. Ask about rentals. Ask whether the inspector has inspected 2- to 4-unit buildings and how they price additional units.
4. Get the price in writing. Fees depend on the size, age, and number of units, and specialist tests are billed separately. Get quotes before you sign the purchase contract so you can schedule everything inside your deadline.
5. Attend. The CFPB recommends going to the inspection so you can ask questions and understand the report.

How do you use the report?

Sort the findings into three groups: safety problems, major systems near the end of their life, and minor repairs. Get written contractor quotes for the first two groups. Then decide, before your contingency deadline, on one of four responses:

• Ask the seller to make repairs before closing, and have the work checked before you close.
• Ask for a credit or a lower price based on the repair quotes. For a financed purchase, any seller credit needs lender approval and must meet the loan program's limits on amount and use. Fannie Mae investment-property loans limit seller credits toward closing costs to the lesser of actual closing costs or 2% of the lower purchase price or appraised value.
• Accept the property as is if the findings fit your budget.
• Cancel in writing, following the contract's notice terms.

The CFPB notes that the seller may or may not agree to pay for repairs, depending on the contract and the local market. Your lender may also require major repairs to be finished before closing. After you close, the repairs are yours, and so is the legal duty to keep the rental habitable for tenants; see how much maintenance and repair the law requires.

In a foreclosure or other as-is sale, the seller may refuse all repairs, so the inspection is how you price the work into your offer; see whether to buy a foreclosed property. For problems that should end a deal, see the red flags to watch for when buying a rental. The inspection is one of several checks in our overview of what qualities to look for in a rental property.