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Can I Fail A Home Inspection?

Can I Fail A Home Inspection?

A home inspection only has two specific benefits. It is to reassure a home buyer that the existing property being purchased meets all code requirements and is considered in good condition. In addition, if the home is being purchased with a mortgage then the lender will need a guarantee that the home will not fall apart after purchase. That's not to say that a home will not have defects but the home buyer and mortgage lender need to be made aware of any cosmetic or structural damages which may be pre-existing.

In all reality there is no such thing as a pass fail for a home inspection. For example, if an investor is purchasing multiple properties and looking to flip them for quick profits then they may actually be expecting or looking forward to certain defects during a home inspection. If an investor has cash available and will not be taking out a mortgage then there is no requirement that the home meets certain standards. In this situation, a home inspection with multiple areas of concern could actually be to the investors advantage by using it as a negotiation tactic to hopefully significantly lower the purchase price. If the investor has done this for a number of years then they may know that to fix all the defects may only cost $5,000 but are able to negotiate the price down $15,000 therefore netting a $10,000 additional profit which they've already calculated.

When a mortgage is required to purchase an existing home the lender may not issue the loan if the house does not meet certain requirements for quality or certifications. This is because the homeowner actually doesn't own the home yet. The lender will technically own the title until the debt is paid in full. If the homeowner defaults on the loan and the home is subsequently foreclosed by the bank or financial institution then they will want to make sure that the property they are now responsible for successfully passed a thorough home inspection.

Since there is no way to fail a home inspection, all the inspection does it outline certain areas of concern or whether or not there are structural deficiencies or cosmetic damages. Most potential home buyers get a home inspection strictly for peace of mind to make sure that when they sign on the dotted line and own the home that the roof doesn't need replacing or the foundation is falling apart. It is common, during the negotiation process, for home buyers and home sellers to haggle over whether certain inspection points will be replaced or repaired and who will pay the costs. When buying or selling a home, use the home inspection as part of the overall process of negotiation and to protect yourself from stepping into a bad situation that could cost you tens of thousand of dollars after the fact.

Image by: Scott Beale