BROKER/AGENT magazine   April 2006

Inspections for a Brand New House - Are They Really Needed?

By Dan Bowers

Many REALTORS® and home buyers believe that a new house does not need to be inspected. They mistakenly think that the local code authority will catch any problems with the newly constructed house, or that the builders warranty will pay to have these problems fixed if they are missed. Nothing could be farther from the real truth.

Some people believe that buying a new home is like buying a new car or a new appliance. Unfortunately, there are very few similarities between these products and a new home. Automobiles and appliances go through stringent quality control checks to ensure that these products meet the manufacturers design criteria. A manufacturer’s failure to meet the specified criteria will often be noticed during the quality control inspection, resulting in the product not leaving the factory until the problem is corrected. Other problems that are not detected in quality control frequently result in product recalls or even class action law suits similar to the recent Ford Explorer/Firestone Tire episode.

Although all reputable builders attempt to provide good quality control during the building process, mistakes often occur. Quality control problems can arise for a variety of reasons, including overloaded construction superintendents, a heavy usage of subcontractors (and even sub-subcontractors), and overworked city or county code inspectors who may have limited time (under 30 minutes) to inspect any one house. As a result, quality control can be very inconsistent from one builder to another, and even among homes built by the same home builder.

With the low interest rates and home building boom the past few years, we have seen the quality of new construction drop dramatically, resulting in increased repairs and maintenance costs to the homeowner in the early years of property ownership. Its becoming fairly common for home buyers to discover that their new dream home has serious defects and that they can have more consumer protections on a $20 toaster than for the biggest investment of their lifetime. As many as 15%-20% of new homes have serious problems, according to industry experts. Many problems only show up months or years after moving day.

Every year in Kansas City, thousands of dollars are spent by homeowners trying to make repairs to a brand new home, that the builder won’t come back and do. These repairs include things like: missing foundation footings, missing window or door flashings, hot and cold water lines that are reversed, floor joists cut in half for utility lines and never braced, improperly installed stucco or roofing, undersized furnaces, miswired electrical outlets, etc. Many of these problems were caused by poor design, shoddy building materials, or a simple lack of attention to detail. Many of these problems could have been easily avoided.

For this reason, many savvy REALTORS® are now urging a home buyer to have an independent review of new construction while the house is being built.

A competent code certified home inspector can set up a basic inspection program that ensures site visits and inspections at critical times during the construction process, to verify that the major systems and components of the new home are properly installed. The REALTOR® or home buyer should ensure that the Inspectors being used in the process have spent many years as home builders, general contractors, or code inspectors themselves. It also helps if the home inspector is a “Certified Member” of ASHI, NAHI or are FHA Approved Compliance Inspectors. An engineer can be helpful if structural design services are needed, but always remember that there are over 40 engineering degrees, and most have nothing to do with a homes many systems and components.

So Why Inspect New Construction?

In the event there is a lapse in quality control, you can be sure that this home will not be the subject of a recall and barring any widespread building material defect, there won’t be any class action lawsuit with hundreds of plaintiffs. Instead, it will be only the buyer against the builder. Assuming that the builder will cooperate, it may be possible to get the problem resolved without too much difficulty. But if this goes farther, the expense of any legal action is the responsibility of the homeowner. In many cases, the builder’s contract prevents a lawsuit from being filed, as the sales contract may call for all disputes to be settled by binding arbitration. This is a private process done outside the courts where a third-party professional hears the case. Although less costly than a lawsuit, the homeowner can be at a big disadvantage in this process.

Why Would a New Home Need to Be Inspected?

• Many things can go wrong during new construction which could take years to surface and prove costly to the homebuyer if left undetected.

• Municipal code inspectors verify the minimum code compliance on a very limited time schedule.

• Bank inspectors only verify each phase has been completed.

• Some builders have quality control personnel who review the project at the final phase: however, many aspects of the subcontractor’s work is not visible at this time

You can contact Dan at (913) 649-8878 or email him at theholmescompany@hotmail.com. Dan is a professional home inspector, as well as being the past President of the state ASHI Chapter for Kansas, Missouri and Iowa. Dan is also the Education Director of the NAHI Chapter (National Association of Home Inspectors). As a past home builder and real estate agent, he teaches continuing education courses to REALTORS®, home inspectors, real estate appraisers and courses on building at a local community college.