When you find a home and enter into a purchase contract, you begin the "due diligence" phase of your contract period. During the due diligence period, you will need to make decisions about which inspections you intend to order. Your agent will guide you about the inspection services that are available and will be there to help you coordinate with the inspection vendors. The following types of inspections and services are available to help you evaluate the property and protect it in the future:
Accountant/CPA/Tax Advisor: Whether you are buying or selling a home, there can be both tax benefits and tax drawbacks, so you just need to be prepared. Not everyone will choose to hire an advisor for a straightforward purchase or sale; however, when the situation is more complicated (like in the case of a short sale or estate sale), it may be more important to explore any tax affects the sale or purchase could have before you find out the hard way. A tax advisor can also help you get the most out of your home purchase expense deductions when you file your taxes.
Appraisal: If you are obtaining a mortgage loan in order to purchase property, you will likely be required to have an appraisal to determine the property value - your lender will order the appraisal and will coordinate with you directly. Even if you are purchasing with cash, you may still want to consider an appraisal to ensure you are paying the right price - your agent can supply a list of local appraisers to you and help order the service when you are ready.
Attorney (Title Exam, Deed Prep, Title Insurance, etc.): Whether you are buying or selling, you'll need a North Carolina attorney to complete the closing. For details regarding choosing an attorney, please visit our prior blog by clicking here. (Your attorney should also discuss the need for title insurance - title insurance covers any defects in title that are not discovered during your contract period/in your title search. Lenders will require title insurance on financed purchases.)
Home Warranty: Home warranties vary greatly in the initial expense, service fees, and coverage limits, so be sure to explore thoroughly and compare apples to apples. You will also need to evaluate the possible value you would receive from the service based on your specific scenario. For example, if you are purchasing a new-construction home, the builder should supply a warranty that would cover many of the same things a third-party home warranty would cover. However, if you are purchasing an older resale home and you are low on cash savings for repairs, a warranty may help offset the expense of an unexpected repair. One thing is pretty common across the board for most warranties - the coverage period - most warranties last for 12 months and then would need to be renewed to continue coverage for another term. There are exceptions to this general rule, so again, just make sure you thoroughly explore all options for your unique situation.
Home Inspection: This is by far the most common inspection chosen by buyers. A home inspection should be performed by a licensed inspector to ensure they are inspecting based on a uniform code prescribed by NC. The report contains items flagged for further evaluation/correction, as well as an overview of all items inspected (even if there were no problems noted). You may also opt to have licensed tradespeople inspect the individual systems in lieu of an overall/general home inspection. Just keep in mind that, while this method may provide more detail than a general home inspection, it may also be more costly since you are paying several different contractors; however, for a home where you expect the home inspection to reveal several items that need further evaluation by a tradesperson, it can actually end up saving you money to skip straight to the tradespeople for the initial inspections. Discuss all options with your agent to determine which method is most ideal for you.
HVAC: A general home inspection will test the heating and air conditioning in a home, but only to see if it is operational. If you desire to have the unit opened up for a more detailed/thorough inspection, you'll need to hire a licensed HVAC contractor. The HVAC person will not only test the system's operation, but will also let you know if there are any potential issues that could cause a break-down in the near future. Many HVAC tradespeople will also give you an estimate as to the expected remaining life of the unit.
Pool/Spa: If there is a pool and/or spa at the property, you may want to consider having those inspected by a pool/spa contractor. The purchase contract should include language to specify which party will pay for any preparation needed prior to the inspection (i.e. filling with water, etc.).
Radon: While certain areas of NC are more prone to have radon, it can be present nearly anywhere. For more details regarding radon and radon testing, please click here to read the informational booklet provided by the EPA.
Septic: Unless the home is connected to city sewer systems, it should have a septic tank connected for proper waste disposal. A general home inspection will often include a very basic dye test to determine if there are any septic issues; however, a more thorough septic inspection is recommended. A septic company will dig down to access the distribution box, and will open the box to check inside. This type of inspection provides a much more thorough picture of the age, size, and condition of the system, as well as the fill level of the tank, and can identify issues that are on the brink of causing problems (even if those problems have not yet occurred). The inspection will also identify the location of the system so you can avoid driving/building/planting trees over the system.
Well/Water Quality: If the property has a well, a water quality test may be required by your lender. Even if you are not financing the purchase, it is highly recommended to test well water for contaminants. If the home is connected to a public water supply, the water quality is monitored and maintained by the city/county providing the water to the home; however, you may still opt for a test if you are concerned about the specifics of the water quality and/or additives.
Wood/Pest Infestation: Another VERY common inspection is a pest infestation inspection (sometimes called a "pest inspection" in short). The official report you will receive is called a Wood-Destroying Insect Report (or WDIR). This report will check for termites, powder-post beetles, and other pests/insects that can destroy the wooden structure of the home. Most reports will also include a moisture reading, and the report will indicate if moisture levels are higher than recommended. This report is required by some lenders.
Insurance: While not an inspection, insurance helps mitigate the risk of loss due to unforeseen events like fires, storms, floods, etc. In our coastal area of NC, policies are split into a few different types: hazard insurance (fire, vandalism, etc.), wind & hail (covers damage from named storms like hurricanes), and flood insurance. Each of these policies cover different hazards and should be reviewed with your insurance provider and your agent in detail. Lenders may require certain insurance coverage, including flood insurance if the home is located in certain flood zones.
Elevation Certificate: If you need/want to purchase flood insurance, you'll likely need an elevation certificate. This can be done by a surveyor, and will show the insurance company the exact level of your home's floor above the base flood level of the area. Sometimes elevation certificates are already on file with the seller's insurance company and many times the policy can be transferred to you, so your agent will check on that before you order a new certificate.
Mortgage Loan:Although not an inspection, most buyers require the services of a mortgage loan officer to purchase a home. We recommend using a local loan officer due to his/her knowledge of local customs and regulations, which can prevent delays in closing (or in some cases, even prevent unnecessary denials).
Survey: Surveys are performed to measure, mark, and verify the property lines, easements, setbacks, and other details of a property. Even when you think nothing has changed since the last survey was performed, encroachments may have occurred. It is highly recommended that you have a survey during your contract period because your title insurance company may not cover future issues if they were not found and corrected during the purchase period.
While this list is lengthy, your Hall & Nixon agent will guide you every step of the way. Your agent can also provide lists of vendors to help you make your decisions. If you'd like a copy of our Hall & Nixon Vendor Source guide, please click here and complete the request form (indicate that you are seeking a vendor guide in your message), or contact your Hall & Nixon agent directly to request a copy.