The consumerism revolution of the 1970s and 1980s may have changed the rallying cry from "let the buyer beware" to "let the seller beware," but the savvy home buyer in the 1990s must still be on guard.
Home inspections, home warranties, termite inspections and title insurance are tools that help protect home buyers in the biggest purchase most will make in their lifetimes. They can also be useful marketing tools for a home seller.
Termite inspections and title insurance are required by custom and by lenders; home inspections and home warranties are not required under custom or law, but are highly desirable, according to real estate experts.
Home Inspection When you've found the house you've been looking for and submit an offer to purchase, make the offer subject to the house passing an inspection by a professional home inspector. If the seller or his agent refuses, resume your search.
By custom, the buyer commissions -- and pays for -- the inspection.
A new coat of paint can hide a lot of defects from the average home shopper, but a professional inspector knows where to look for leaky roofs, crumbling foundations, substandard plumbing and the multitude of problems a house is heir to.
Here are some pointers for choosing a home inspector, along with suggestions on how to interpret and use the inspection report:
Ask if the inspector is a member of the American Society of Home Inspectors (ASHI), or is in the process of becoming a full member of the organization.
Check to see how long the inspector has been in business.
Ask if the inspector is experienced in residential construction, through education or the possession of a contractor's license. There is no license for a home inspector, but most authorities say a licensed contractor makes the best inspector.
Find out if the inspector runs a repair business on the side or has a close tie-in with a realty firm. These are considered conflicts of interest by ASHI and are banned by the organization.
Ask to see sample inspection reports. Some inspectors use a checklist, while others supplement the checklist with a narrative report. The latter is easier to interpret.
The typical inspection should take 1 1/2 to 2 1/2 hours to complete and cost $150 to $300 or more, depending on the size of the house, according to John Heyn of ASHI. Many inspectors allow -- even encourage -- the client to accompany him or her on the inspection.
Once you have chosen the inspector, you must make arrangements with the seller or the seller's agent to conduct the inspection.
Depending on physical aspects related to the house, such as soil conditions or hillside site, you may decide to have a professional engineer or a geologist inspect the property. In many cases, your home inspector can tell you if additional inspections are required.
When you get the completed report, don't panic if the inspector lists many minor items that need fixing: This is to be expected in just about any house -- existing or new.
The idea of an inspection is not to uncover every minor flaw and problem with a house, according to Peter G. Miller and Douglas M. Bregman, authors of "The Common- Sense Guide to Successful Real Estate Negotiation."
"What a buyer really wants to know is: What needs to be repaired or replaced? How much will it cost? What steps can be taken to make the house run more efficiently? What repair bills can be expected in the next few years? Should I make an offer requiring the seller to make certain repairs, or should I make a smaller offer or no offer?" according to Miller and Bregman.
Home Warranties Home warranties are one-year service contracts that cost $220 to $300 and go into effect when you settle on a house purchase. They cover all major mechanical systems of a house: heating, plumbing, electrical and built-in appliances for the period of the contract. Optional coverage is usually available for central air conditioning and swimming pool and spa equipment.
A deductible or service fee -- which varies from contract to contract but averages $35 -- applies to each service call. Companies usually have a toll-free telephone number to make claims and obtain repairs or replacements.
Warranties can usually be renewed at the end of the year. Home warranties can be purchased through a real estate broker or from a warranty firm.
Termite Inspections According to Harvey L. Logan, executive vice president of the Pest Control Operators of California, a consumer ordering a termite inspection should expect that he or she will have a "full and complete investigation of and a report on any termites or other wood destroying organisms" in the house.
Logan suggests the following when choosing a termite inspection firm:
Ask friends or neighbors if they have used pest control services and if so, were they satisfied with the firm they hired.
Once you've chosen a pest control firm, Logan says, use the following guidelines to ensure a good working relationship:
Follow all recommended preparation procedures before the treatment begins. Pay special attention to instructions regarding food preparation areas, pets and children.
Always ask for a written estimate before any work begins and discuss the specific terms of any guarantee provided.
Discuss the method of payment before the job begins. Is payment due at the time of application or will you be billed?
Discuss your expectations with the pest control professional before treatment begins. Do you want pest control or a pest-free environment? Different expectations may require different treatments.
Logan also suggests that you check to make sure that alternative methods -- freezing, heat, nematodes, electro-guns, for instance -- are acceptable to lenders.
Title Insurance A title insurance policy insures the buyer and lender -- that's why lenders require it -- against loss, except for noted defects in the chain of title, such as liens, mortgages or other known encumbrances.
Issuance of a title policy means that a thorough examination has been made of all public records affecting the property in question and that the owner has acquired ownership free from title defects of public record.