Are You Asking for a Pre-Inspection?
The Seattle Home Inspection Problem
With record-low levels of housing inventory, historically low interest rates and swarms of eager buyers in bidding-wars over the same house, there is a lot of pressure on home inspectors in the Seattle area to cut corners. The problem is, home buyers have no time and little incentive to complete a thorough home inspection; in the midst of a bidding war, buyers are now forced to do inspections during a short window of time prior to making an offer and then waiving the inspection contingency on the offer. Despite spending money on home inspections and sewer inspections, a prospective buyer might have only a one in ten chance of actually getting the house. Some buyers pay for more than 5 inspections before they get an offer accepted! This creates a strong demand for a less expensive and even more cursory version of a home inspection.
A Little History
As a home inspector I first encountered the, “pre-inspection,” in the roaring 2005-6 market; it was not long before buyers grew weary of paying for complete home inspections on homes for which they were getting out-bid.In response to the demands from buyers and Real Estate professionals, there developed something commonly called the “verbal walk-through.” This was not a real home inspection, just a cursory look at the property so that a buyer could waive their inspection contingency without paying for the full inspection fee.
Then the great recession hit, the real estate market tanked, many home inspectors went out of business and the verbal consultation disappeared for while. At the same time, the State of Washington began a new licensing program for home inspectors.
The idea of licensing seemed logical; to insure the public that state -licensed home inspectors would be performing inspections to meet or exceed a set of standards: All home inspections performed in the state should meet these standards and come with a written report. The problem for consumers is, the state law also allows for verbal consultations, and for these types of services, there are virtually no standards.
According to the home inspection licensing law: WAC 308-408-010, Washington State Licensed Home Inspectors are allowed to do a pre-offer verbal consultation as defined below:
- (10) A “Pre-offer consultation” is a verbal report that is limited in scope performed by a licensed home inspector. A pre-inspection agreement must be signed by the client and describe the limited scope of the consultation. This pre-offer consultation is conducted only prior to mutual acceptance.
State law contrasts this pre-offer consultation with a standard home inspection.
- (14) A “Standard Home Inspection” is a prelisting or presale written report that contains all or most of the components listed in the standards of practice. The components must be listed in the pre-inspection agreement. This standard home inspection report cannot be delivered verbally and must be in writing.
The important thing for home buyers to understand is that the state does not define the scope of this pre-offer consultation. The scope of this inspection is defined by the pre-inspection contract; it’s unknown what you will receive or what you should expect for your verbal consultation dollars.
Some Real Life Experience
About a year ago, I had the uncomfortable experience of being one of two inspectors inspecting a house for sale at the same time. My competitor was doing a pre-offer verbal consultation and I was doing a standard home inspection. The other inspector informed me that he had been inspecting for over twenty years and proceeded to spend an hour with his clients talking about the house while I also met with my clients and spent almost three times the amount of time inspecting the same house.
After he left his clients were loitering about measuring and evaluating the house when they overheard me discussing the abandoned oil tank in the back yard with my clients.
My client’s wife had a previous experience with buried oil tanks.
“She is not going to like this one bit,” my client said rather loudly.
When the other buyers over-heard this tone of voice they came over and started asking about abandoned oil tanks and my client launched into a horror story about his wife’s $40,000 experience and when their complexion lost a few shades of color it became apparent that they had no idea about buried oil tanks nor the one that was lurking in the backyard of the house they were measuring to buy.
I tell this story not to disparage this other home inspector but to point out the discrepancies in what we were paid to do. I was paid to spend 2-3 hours looking at a house. I was paid to follow 40 years of carefully developed national standards regarding the scope of a home inspection and he was paid to come out and spend an hour looking at the house and talking to his clients.
When I hear things like, “Just check the big stuff,” I become alarmed.
That is what a standard home inspection is! The idea that a standard home inspection can be arbitrarily cut in half because the fee is inconvenient is shortsighted and does not respect the complexity of the houses we are living in. It will work often, but not as often as a standard home inspection. Verbal consultations will lead to more frequent mistakes, big problems will be overlooked and buyers will feel fleeced; this is inevitable and it is built into the process of a real estate transaction in Washington State by a home inspector licensing law designed to protect consumers.
Are Home Inspectors Insured for Verbal Consultations?
Not according to my insurance agent. In his opinion, it is unlikely any home inspection insurance would cover a home inspector if they do not write a report, this includes errors and omissions insurance as well as general liability. This means, if you burn the house down by accident during verbal consultation, you are not insured. It also means that the state licensing law allows home inspectors to perform a scope of inspection service for which they cannot be insured, yet at the same time, the law requires home inspectors to carry insurance.
This is Such a Rough Time for Home Buyers
I wish I could offer a magic solution for this problem. In my opinion, the state law should be changed to protect home buyers, but this seems unlikely to happen and I know a lot of inspectors who like verbal consultations. I do not like them and I generally do not perform them and I would like to share a few reasons why.
I can think of dozens of homes where I was staring at a big problem but I did not see it the first time. It took several perspectives and points of view before looking brought me to understanding. A quality home inspection takes time; it is a journey into discovery and the discipline involved in preparing a quality written report facilitates that discovery.
Not all big problems in homes are obvious; they don’t come with neon signs.
My advice to home buyers, though it is unrealistic for the hectic lives and tight budgets most of us face, is contained in this sequence below:
- Your house is the place you will live the rest of your life; if not this house then another house or 5 different houses.
- Your house is likely the most expensive thing you will ever buy in your life and maintaining a home is almost as expensive as buying a house.
- Take some time out of your busy schedule to be with your home inspector and learn about houses.
- Use the home inspection as an educational opportunity that will make you an informed home buyer and homeowner.
- Make each inspection you do a part of your educational journey. See the inspection as a class about how to look at or understand houses.
- The total sum that you invest in this education will be a small pittance compared to your university education and it will prepare you to be more informed about the most expensive thing you will ever buy and the place where you will spend most of your time in your life.
If you are reading this and you are a home inspector, I would love your opinion on how the verbal consultation works for you or does not. If you live in other states, please chime in: are home inspectors doing verbal consultations where you live? Is this a Seattle phenomenon?
If you are a home buyer in the Seattle market and you have been through this or you are going through this, please comment in this thread and let everyone know how your home buying process has been as regards a home inspection.
If you are requesting inspections please learn to use the correct terminology:
- A verbal consultation means no report
- A pre-inspection means a full inspection when not under contract.
I hope this helps. Happy home buying everyone!
Dylan Chalk is the owner of Seattle-based Orca Inspection Services LLC – www.orcainspect.com. He is the founder of ScribeWare inspection report software offering innovative and simple report-writing solutions – www.getscribeware.com. He is also the author of The Confident House Hunter – a book to teach home buyers how to look at and understand houses: Cedar Fort Press Due out August 2016 – www.dylanchalk.com