How to Choose a Home Inspector

Independent home inspectors are the target of a growing number of insurance claims and lawsuits filed by disgruntled buyers who claim the examiners did not discover costly defects in the homes.

The increase in claims is not huge. Nor is it surprising, given the explosive growth of the largely unregulated, easy-entry business. According to one estimate, half the homes sold today are inspected before the transaction closes. Nevertheless, it should serve as a warning to buyers.

In some cases, the inspectors clearly dropped the ball. In others, they were hoodwinked by sellers and/or real estate agents who filled out defect-disclosure forms inaccurately or dishonestly. But in many instances, buyers were expecting more than they were paying for.

While an inspection involves more than a simple walk-through, some buyers, especially first-timers, rely too much on it, says Michael Simkus, a Chicago attorney who follows the business. ``They treat it as though it's a warranty, but it's not.''

A walk-through is typically a cursory probe involving little more than flipping on lights, running the hot water, opening windows and peeking around a few corners.

Home inspectors, on the other hand, take a more methodical, thorough audit, both inside and out, to determine if the house is structurally sound and if all systems are in satisfactory working order.

It should take at least two hours for a professional to inspect a house properly. And the written report should describe the actual condition of the property at the time of inspection and identify any items that need major repair.

Some examiners will offer their best estimate of the remaining life of the roof, appliances and heating and air-conditioning systems.

But most inspectors are ``generalists who identify visible existing conditions,'' says Thomas Byrne, president of the American Society of Home Inspectors. ``They are not acting as specialists in all of the different disciplines that go into the construction and maintenance of a home.''

Inspectors know how a home's systems and components operate, both independently and together, and they know how and why they fail. They don't look for minor or cosmetic flaws - those should be to even an untrained eye. They aren't county inspectors looking for building-code violations either, and they don't do any destructive testing.

An inspector can only examine what is accessible and visible. Their pre-purchase evaluations are only a snapshot of conditions prevailing at the time of the inspection.

In other words, they can't peer through walls.

If a serious problem is discovered, however, the inspector should bring it to your attention. He may even recommend a specialist. But then it's up to you and the seller to address the issue.

With this in mind, how do you find a qualified home inspector?

For starters, be sure the examiners you are considering are either licensed by the state or certified by their trade association.

Most states don't license home inspectors, but they do license professional engineers.

While there are many committed and dedicated inspectors, engineers are accountable for their actions. If they fail to perform their duties or go beyond their capabilities or competency, they risk losing their licenses and their livelihoods.

Still, engineers are usually more expensive than inspectors. So if money is an issue, look for an inspector who is either licensed or is a member of a recognized trade association like ASHI or NAHI.

Only 14 states currently have some form of regulation on the books, but regulatory and licensing bills have been introduced in 16 others.

ASHI's standards are the generally recognized guidelines for the home-inspection business. The society requires its members to pass two comprehensive written tests and perform at least 250 professional, fee-paid inspections. Also, candidates for membership must adhere to the organization's strict code of ethics, which promotes fairness in dealing with consumers and prevents conflicts of interest.

To be sure the inspector is ethical, be certain in advance that he will not offer to make any repairs on the property. Neither ASHI nor NAHI permit its members to make repairs on houses they examine.

Another critical factor in choosing an inspector is whether or not he carries insurance.

Not just liability coverage (if the house is damaged) and workers' compensation (if the inspector falls off the roof), but also errors-and-omission insurance.

Trained or not, experienced or not, everyone is capable of making a mistake, and E&O coverage, a form of malpractice insurance, is what will protect you from major blunders. It's expensive and difficult to come by, and many inspectors think having it is an invitation to be sued.

But the lack of coverage could be an indication that the inspector has no formal training or a poor track record in the industry, warns Kathleen Kuhn of HouseMaster, a New Jersey-based franchiser serving nearly 250 cities.

E&O insurance is especially important if you should encounter a problem. Most inspectors try to hold their liability to the cost of the inspection - about $250 nationally. And some courts are upholding the limited-liability provision of their contracts. But if a court rules otherwise, the inspector can simply shut down to avoid the claim. If he has an E&O policy, though, you can take action against the insurer.