What Happens If You Fail a Home Inspection?

A home inspection is a critical part of any Evergreen or Conifer real estate transaction. Here are the details:

What is a home inspection?

A home inspection is a comprehensive examination of a home’s condition performed by a certified inspector. It’s done as part of the home purchase process and is a critical part of the due diligence in the process of buying and selling in Evergreen inspection contingency. The Colorado Real Estate Commission's approved form for buying and selling includes a very subjective inspection contingency, a buyer has a certain amount of time to have the home inspected and based on the results, either move forward with the purchase, renegotiate the contract, or back out of the purchase agreement based on their sole subjective discretion.

What’s included in a home inspection? The Colorado contract calls out a few conditions but doesn't limit buyers' ability to object to the physical condition of the home.

• roof
•  walls
• structural integrity of the Property
• the electrical, 
• plumbing, 
• HVAC 
• and other mechanical systems of the Property
• the physical condition of the Inclusions and Leased Items, 
• service to the Property (including utilities and communication services), systems and components of the Property 
• any proposed or existing transportation project, road, street or highway, or (5) any other activity, odor or noise

What’s not included? There's a big difference between what a buyer can object to and what a professional home inspector willl inspect.  Generally, an inspector won’t examine anything that’s hidden or not easily accessible. If the property has a swimming pool or a hot tub, that most likely won’t be inspected, and neither will landscaping, fencing, or outbuildings on the property (like sheds and detached garages) unless they affect the condition of the main building (for example, a tree disturbing the integrity of the home’s structure). Additionally, you might be surprised that during a standard inspection, a home inspector generally doesn’t check for:

• Building code violations
• Lead paint
•  Mold (although I have seen them call it out when they see any)
• Asbestos
• Radon gas- unless you pay for the additional test
• Poor indoor air quality
• The presence or absence of pests-- (also will call out evidence of them)
• Sewer line and/or Septic systems- those are usually analyzed independently

A home inspection also doesn’t attempt to comment on the cause of damage usually and doesn’t include a recommendation on whether or not to purchase a home. It’s also different from a home appraisal because it doesn’t include the value of the property. An inspector’s job is to provide a picture of a home’s overall condition so that a buyer has all the available information before moving forward with a home purchase.

Buying a home soon? I recommend you be present for the home inspection to ask questions so you can feel completely confident about the property before you purchase it.  An additional benefit is to learn about typical service intervals and best practices that an inspector will frequently offer.

Can you fail a home inspection?

Technically, no! A home inspector examines and reports on a home’s condition, but they don’t give a pass or fail that determines whether a home can or even should be sold.

What about the bank? Isn’t a passing inspection required to get a mortgage? Nope—and the truth is, while home inspections are highly recommended, they’re not typically required. An appraisal, however, is required before you can get a mortgage from the bank, and if a home is in poor condition, it won’t appraise high. That means that the amount a buyer can get from a bank to purchase a home is tied to its condition—just not through the home inspection.

Additionally, some consider an inspection “failed” if it turns up something that causes the buyer to back out of the purchase. For those reasons, it is important to repair and maintain your home for a smooth and top-dollar sale.

It’s important to recognize that every home inspection is likely to turn up something—and that home inspection reports can be long and overwhelming. The report will include a lot of details, and every “problem” that the inspector sees will be noted—from huge issues like a cracked foundation to tiny details like chipped exterior paint. Whether you’re the buyer or the seller, you can eliminate some of the stress attached to this by going over it unemotionally and categorizing issues by their importance to you. I've helped clients navigate 100's of inspection contingencies and let me tell you--there is a huge difference between an inspection report and an inspection objection!  Many times the report seems very picky and calls out many immaterial issues, that's fine.  The objection is what determines the appropriate resolution.

What are common home inspection dealbreakers?

Selling soon? These issues can cause buyers to renegotiate contracts or leave purchase agreements altogether:

• Foundation issues
• Major roof repairs
• Flooding
• Bad plumbing- 
• Old electrical systems- many home in Hiwan were built during the aluminum wiring era
• High Radon levels-very common in Evergreen and Conifer.
• Failed or inadequate septic and leach fields

Why are these frequent dealbreakers for buyers? Those elements can cost tens of thousands to fix, not to mention the time it will take to fix them. Even if the problem doesn’t ruin a sale, these and other issues can cause a buyer to renegotiate, including asking the seller to make repairs before the purchase goes through or reducing the offered purchase amount or a concession, reducing the net to the seller..

How do you prevent this? Your best bet is to make sure your home is in its best possible condition before putting it on the market. Additionally, try getting a pre-listing inspection to find out exactly what buyers will see when they inspect your home.