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Buying & closing

Home Inspection

Also called property inspection, buyer's inspection

In short

A home inspection is a professional visual examination of a home's structure and systems, ordered by the buyer to find defects before closing. It usually happens during the inspection contingency period.

Who pays
The buyer
Typical time
2 to 4 hours on site
When
Right after offer acceptance
Not covered
Hidden or specialty issues

What an inspector checks

A general inspection covers what can be seen and safely reached: roof, foundation, framing, plumbing, electrical, heating and cooling, water heater, windows, doors, attic and crawl spaces. The report lists defects and safety issues, often with photos.

Specialists are separate: sewer scope, mold, radon, pests, septic, structural engineering and lead paint.

Using the results

Under an inspection contingency, you can ask for repairs, a price reduction, a closing credit, or cancel. On an as-is sale, the seller won't repair, but the inspection still tells you what you're buying and whether to walk away.

Inspecting distressed properties

Foreclosed and vacant homes often have issues an ordinary resale doesn't: winterized or shut-off utilities, missing fixtures, water damage, mold and code violations. Ask the listing agent to have utilities turned on for the inspection. At a foreclosure auction you usually cannot inspect the inside at all.

Example

Turning a report into a credit

A buyer under contract at $210,000 pays $450 for an inspection. The report finds a 20-year-old furnace near failure and a leaking drain line. Contractor quotes total $7,500. The buyer asks for a $7,500 closing credit; the seller agrees to $5,000. The buyer's effective price drops to $205,000 and they know about the repairs before closing.

Home Inspection vs. Appraisal

Home Inspection

A home inspection is a professional visual examination of a home's structure and systems, ordered by the buyer to find defects before closing. It usually happens during the inspection contingency period.

Appraisal

An appraisal is a licensed appraiser's independent estimate of a property's market value. Lenders require one to make sure the home is worth at least the amount being borrowed.

The differenceAn inspection evaluates condition for the buyer; an appraisal estimates market value for the lender. A home can appraise well and still have serious defects.

Frequently Asked Questions

Related terms

ContingencyBuying & closingA contingency is a condition in a purchase contract that must be met for the sale to go through. If it isn't met by its deadline, the buyer can usually cancel and keep their earnest money.As-Is SaleBuying & closingAn as-is sale means the seller will not make repairs or offer credits for the property's condition. The buyer accepts the home in its current state, though inspection rights and required disclosures may still apply.REO / Bank-Owned PropertyForeclosure processAn REO (real estate owned) or bank-owned property is a home a lender took back after it failed to sell at foreclosure auction. The lender then sells it, usually through a real estate agent.After Repair Value (ARV)InvestingAfter repair value (ARV) is the estimated market value of a property once planned repairs and renovations are complete. Investors use it to decide how much to pay for a fixer-upper.Earnest MoneyBuying & closingEarnest money is a deposit a buyer puts down when an offer is accepted to show good faith. It is held in escrow and usually credited toward the down payment or closing costs at closing.FHA 203(k) LoanMortgages & financingAn FHA 203(k) loan is a government-insured mortgage that combines a home's purchase price and the cost of repairs into one loan. It lets owner-occupants buy and fix up homes that need work.Title SearchTitle & legalA title search is a review of public records to confirm who legally owns a property and to find any liens, judgments, easements or other claims that could affect ownership.Short SaleForeclosure processA short sale is the sale of a home for less than the amount owed on its mortgage, with the lender's approval. The lender agrees to accept the reduced proceeds to avoid a foreclosure.

Learn more in the knowledge base

Inspection, Appraisal and Underwriting: Clearing Contingencies Before ClosingGuide · 7 min readOnce your offer is accepted, a short window opens to check the home's condition, its value and your loan. This guide explains how the inspection, appraisal, underwriting and title review run side by side, and how to clear each contingency before its deadline.Inspecting and Negotiating on a Bank-Owned (REO) PropertyGuide · 7 min readBank-owned homes are sold as-is, often after sitting vacant, so a thorough inspection is the most important step in the purchase. This guide covers how to get the home ready to inspect, what to look for, what banks will and will not negotiate and how to handle appraisal and title issues before closing.Researching a Foreclosure Property Before the AuctionGuide · 6 min readAt a foreclosure auction you usually buy as-is, unseen and without contingencies, so research done before the sale is your only protection. This guide covers how to confirm the sale details, check title and liens, estimate value and repairs from the outside and turn it all into a maximum bid.
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Disclaimer: The information on this page is for general educational purposes only and is not legal, financial, tax or investment advice. Laws, lending rules and market conditions vary by state and change over time, and any figures shown are estimates. Before you buy, sell, finance or bid on a property, consult a qualified attorney, financial advisor, lender or licensed real estate professional about your situation.