How to Decipher a Home Inspection Report So Small Issues Don’t Turn Into Big Bucks

A heavy packet of papers lands on the table in front of your buyer. It’s the dreaded home inspection report. Everything that’s wrong with your house, laid out for them to see.

Now, the ball is in their court. As you sit and wait for your real estate agent to call, insecurity washes over you. Did you do everything you were supposed to over the years? Did major issues happen right under your nose?

Home inspectors don’t just visually inspect your home and walk away with a “thumbs up” or “thumbs down.” Every. Little. Thing. Is. Documented.

You need to understand the home inspection report to differentiate between small potatoes and issues that will cost you thousands of dollars in profit.

We asked the founder of one of the nation’s largest inspector associations, a certified professional home inspector, and a top-performing real estate agent what goes into a home inspection report for your house and what to make of it after the fact.

Home inspector in kitchen gathering data for report.
Source: (Federal Emergency Management Agency via Wikimedia Commons)

Every component of a home inspection report, explained

A home inspection report is no small task––a complete report can be anywhere from 15 pages for small homes to 70 pages for larger homes. Every page is chock-full of factors that can affect the outcome of your home sale.

Before closing, almost every buyer will get a home inspection to make sure there aren’t any issues with the property. While home inspectors follow the same general format to make sure every inch of the home is covered in the report, no two home inspection reports are the same.

“[Home inspectors] should not have a bunch of pre-printed material,” says Nick Gromicko, founder of InterNACHI, the International Association of Certified Home Inspectors. “They should include photos of the home and the defects found.”

A typical home inspection takes 2 to 4 hours, depending on the size of the home. Then, it takes a few more hours to write up the exhaustive report. According to Bill Hirsch, a highly-acclaimed certified home inspector and owner of Total Home Inspection in Fairfield County, Connecticut, the entire process takes about at least one full day to complete.

“Most buyers will request 10-15 days to get an inspector out to the property. To do the inspection takes about a few hours and then 1-3 days to write the report up and get it to the buyer,” says Thomas Day, a top real estate agent in Pompano Beach, Florida who’s sold over 65% more properties in Pompano Beach than the average agent.

All this work comes at a cost. Home inspections typically run about $300 to $500, which includes the visual inspection and the written report. Typically, the cost of a home inspection comes out of the buyer’s pocket. You can have your home pre-inspected before you put it on the market, but you’ll have to cover the cost yourself and disclose the results to potential buyers from the get-go.

Here’s everything that you can expect to find within the inspection report for your house.

home-inspection-report
View Full Sample Report Here (Credit: Nick Gromicko, interNACHI)

 1. General information about the house and the inspection conditions

The first few pages of the report introduce the property address, information about the inspection according to the state’s standards of practice, home inspector information, and a comment key or definitions.

The home inspector will provide information to help the buyer (or seller if it’s a pre-inspection) understand what each different element of the report means. They’ll give a key of symbols or codes which they’ll use throughout the report to identify the severity of each issue.

Codes abbreviations explained in home inspection report.
Source: (interNACHI)

For example, most home inspection reports will include but are not limited to a variation of the following codes:

  • I = Inspected. This item was inspected.
  • NI = Not Inspected. This item was not inspected.
  • NP = Not Present. This item was not accessible or locatable.
  • S = Safety Concern. This item poses a safety concern and should be addressed immediately.
  • R = General Repair. This item requires repair but is not causing immediate harm or damage.
  • D = Defect. This item is non-functioning and requires repair or correction by a licensed tradesman.
Sample home inspection report.
Source: (HomeCert, LLC)

The inspector will also include the weather conditions on the day of the inspection, who was present, and what areas were inaccessible.

2. A detailed assessment of systems and components

The grunt of the report covers every inch of the property, from the branches around the exterior to discoloration in the corner of a ceiling. This is where you’ll find the most detailed information about each issue, why it’s an issue, and the inspector’s recommended course of action.

“Anything and everything that has anything and everything to do with the house, we observe and evaluate and then report on,” says Hirsch. The main priority of the home inspector is to look for things that affect the overall function and safety of the home.

Diagram explaining tips to help improve home inspection report.
Source: (Total Home Inspection)

“The roof, the HVAC system, the A/C system, electric and plumbing are the top things they’ll look at. In addition, termites and wood destroying organisms are things they’ll also look for,” says Day.

Since a home inspector isn’t a qualified, licensed expert in each home system, they can’t speak to the specific action that is necessary for each individual issue. However, they will point out which observations pose a safety concern, create more damage, or need basic repair.

3. Annotated pictures of reported problems

When an inspector spots an issue, they will take a photo to document it in the report.  The buyer and their real estate agent will refer to the photos when they review the inspection report and prepare negotiations.

“They should include photos of the home and the defects found,” says Gromicko.

They’ll also use a thermal imaging radiometer to survey portions of the interior and exterior of the structure. This is used to indicate issues with moisture, electrical components, ventilation, or insulation.

Diagram showing issue zones in home.
Source: (HomeCert, LLC)

If an issue needs to be repaired, the homeowner, buyer, or a hired professional can look at the photo and immediately identify it. Following any requested repairs, the photos serve as a reference to make sure the task was completed.

4. Summary and rating for each issue

In the last pages of the report, you’ll find a summary of the identified issues accompanied by a symbol or rating. It makes it easier to refer back to a reported issue without having to dig through dozens of pages.

The summary is important to refer to during negotiations. Safety concerns and defects give the buyer more negotiation leverage, whereas general repairs are a lower priority.

Woman in coffee shop reviewing home inspection report.
Source: (Bonnie Kittle/ Unsplash)

How to analyze a home inspection report for negotiations

Once the inspection is complete, the buyer will receive the report and determine their next move. Depending on what the home inspector reported, a buyer could drop out of the sale completely, reconsider their initial offer, request repairs or repair credit, or (in rare cases) move forward without any action.

Unfortunately, unless you pay for a pre-inspection, the buyer is the only one who receives a copy of the home inspection report. However, since the buyer will use statements in the report as leverage for negotiations, they’ll often provide a copy of the section to support their requests.

You can request a copy of the home inspection report, but it’s up to the buyer to decide whether or not they want to give it to you. After all, they did pay for it. In the event that the buyer walks away from the sale completely, they’ll often hand the report over so you can make the fixes that sent them running in the first place.

There are ways to prepare and things to keep in mind to help you negotiate the home inspection report without actually seeing it for yourself. Here are some things you can do while you await your fate.

Be ready for negotiations.

It’s virtually impossible for a home inspection report to come back clear of issues. Expect there to be at least some defects listed, some that matter and others that are more or less inconsequential. To get through the negotiations with your pride, dignity, and profit intact, work with a real estate agent who is an experienced negotiator and has a prepared strategy for post-inspection setbacks.

“[The buyer] would either walk away or renegotiate the contract, i.e., they would either ask for repairs to be done or get a repair credit. There will definitely be back and forth in that situation,” says Day.

Be present for the inspection.

Anyone is allowed to be present for the inspection. Day says he always goes to the inspection and recommends his sellers do, too. It’s your chance to ask questions and get details on whether issues are severe or minor.

“If I’m working with the seller, I know exactly what he’s looking at and I can either rebut it or find an expert to look at it,” he adds.

Get estimates from trusted professionals.

Before you issue repair credits to the buyer or take on a repair project, get a second opinion and a free estimate from a trusted professional. Day recalls a recent sale he worked on where the home inspector noticed an issue with the electrical panel.

“I had my electrician go out there and look at it. He goes, ‘There’s nothing wrong with this. The parts are still readily available and it could last another 10-20 years,’” Day says. “We were able to squash that problem just by having our own experts.”

Inspectors are human––they make mistakes. If they see something that looks like a safety concern, they are going to write it in the report. It’s up to you to hire a professional to confirm the extent of the issue.

Real estate agent helping client with pre-inspection in home.
Source: (Photographee.eu/ Shutterstock)

Avoid the stress of the unknown with a pre-inspection.

The home inspection is one of the most stressful parts of a home sale, mostly because you don’t know how it’ll turn out.

“The week or two after a property goes under contract can, unfortunately, be pretty nerve-racking,” Day says. “If it’s being financed, you wonder if it’s going to appraise, wonder if the issues are going to be expensive to repair or not and whether the contract will stick together.”

“That’s why, going back to get an inspection prior, can make the whole thing a lot less stressful,” he says.

While you’ll have to disclose the issues that turn up in a pre-inspection, you can price your house accordingly. Buyers know upfront what they are getting into and you can save a lot of time towards the end of the sale.

find a real estate agent

Find a top agent in your area