DEAR BARRY: Why do you repeatedly recommend home inspectors? In my opinion, this is bad advice, and here’s the reason why. Home inspectors limit their liability to a refund of the inspection fee. When they miss major defects, all you get is your money back. A home inspector misses a $5,000 problem, and you get $300. Well, no thanks. I have a better solution: Hire a general contractor instead.
General contractors are more qualified than home inspectors, and they have an incentive for finding defects. They can contract to repair what they find. Frankly, you can have your home inspectors. I’ll bet my money on a qualified contractor. –Buck
DEAR BUCK: Your complaint is understandable. A simple refund for a faulty home inspection is clearly unfair. But your alternative, hiring a contractor, does not solve the problem. So let’s examine the issue.
A thorough inspection provides buyers with important purchase information. But suppose your home inspector overlooks defects that were visible, accessible and within the scope of the inspection. What if these defects include faulty wiring in the attic, rusted pipes under the house, blackened burners in the furnace, deteriorated roof shingles or an inoperative dishwasher? What if the repairs cost thousands of dollars, but all you get is a few hundred? To anyone with a sense of justice, this arrangement is untenable and unfair. So why do home inspectors take this position?
The problem, in a nutshell, is the fear of frivolous claims and lawsuits. A cynical axiom declares that there are two kinds of home inspectors: those who have been sued and those who will be. With rare exceptions, this prediction proves to be true; not just for home inspectors, but for nearly everyone in business. To ward off this threat, many home inspectors have limited their liability to a refund of the inspection fee. As a defense against frivolous claims, this is not an unreasonable approach. But when applied to valid claims of negligence, the policy casts home inspectors in an unfavorable light and needs to be reconsidered.
A more fair approach would be to limit the inspector’s liability to multiples of the inspection fee. Three times the fee, for example, would not bankrupt most home inspectors and would convey a greater sense of fairness. For larger claims, the inspector should carry errors and omissions insurance. Some home inspectors, however, refuse to carry E&O insurance, fearing that "deep pockets" can attract lawsuits. This view is not without merit, but it involves considerable risk.
Aside from the liability refund debate, it is a big mistake to transfer the home inspection process to people who are not full-time inspectors. Most home inspectors were once general contractors who transitioned into the inspection field. In making that change, many years of inspection experience and continuing education were needed to develop and refine their inspection skills.
It is also a mistake to allow inspectors to contract for repairs on homes they inspect. Rather than providing an incentive to perform thorough inspections, this would be a serious conflict of interest. The findings of an inspection would be suspect if money could be made repairing defects.
Rather than look to contractors for the answers to home inspection problems, homebuyers should look for the most qualified and experienced home inspectors available. That is the path to a more thorough inspection. And when you interview potential inspectors, let them know that you are not comfortable with a simple refund as a limit of liability.
To write to Barry Stone, please visit him on the Web at www.housedetective.com.
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