Home inspection came back bad? What to do, in order

What should you do when a home inspection comes back with issues?

When a home inspection comes back bad, send any gas, carbon monoxide, electrical hazard, active leak or structural finding to a licensed specialist first, before your inspection deadline. Then put a price on every other line. The total, not the page count, tells you whether to ask for repairs, a credit, a price cut, or to walk away. Your contract sets that deadline and whether you can cancel, so confirm both with your agent or attorney today.

Key takeaways

• An old system isn't a defect by itself, but it still costs money to replace. Price it anyway.
• A line marked "further evaluation" has no price until a specialist writes the scope.
• Send the seller the sum of your priced lines, not a round number.

What does a bad inspection report actually mean?

A bad report is a long list of what the inspector saw, not a verdict on the house. The International Association of Certified Home Inspectors (InterNACHI) says in its standards that an inspection doesn't decide whether you should buy. That call is yours. The same standards say a system at or past the end of its normal life isn't, by itself, a defect.

Read each line for what the inspector saw, not the adjective. Words like "good" or "adequate" mean little unless the report states the condition. A note about a water stain below the bathroom tells you more than "fair."

For how to read the severity wording on each line, see major vs. minor findings on an inspection report.

What are the biggest red flags on an inspection report?

Sort your findings into three buckets, from most serious down:

• Safety: gas, carbon monoxide, an electrical hazard, an active leak, or anything structural. A lower price doesn't make any of these safe.
• Big-ticket: the roof, heating and cooling, a water heater. Old isn't broken, but it's a bill.
• Small and scattered: gutters, downspouts, loose trim, a leaky faucet. Each is cheap. Together they add up.

A National Association of Realtors (NAR) guide to common findings quotes an inspector: a horizontal foundation crack with a bulge may need review "right away by a foundation expert." The same guide says a furnace flame that isn't blue can point to a cracked heat exchanger and "even a possible carbon monoxide leak."

If anyone smells gas in the house, they should leave, then call 911 and the gas utility from a safe distance. If a carbon monoxide alarm sounds, the Consumer Product Safety Commission says to move outside to fresh air and call 911. A licensed professional comes after that.

For any line marked "further evaluation," get an electrician's, plumber's or structural engineer's written scope. Until then, that line has no price.

How much will the repairs cost?

A few big lines drive the total. For a rough first look, NAR's 2023 guide lists national averages for some of them:

Say your report says the heating and cooling system needs replacing, flags a dated electrical panel, and notes missing gutters with water pooling at the foundation. At those averages, that's $5,000 to $12,000, plus $2,400, plus $624 to $1,705: $8,024 to $16,105. That range is too wide to send.

Narrow it line by line. An HVAC contractor's written quote replaces the widest number. For the rest, Kept prices your report line by line for $79, usually under 4 hours. It flags any line that needs an engineer to define the repair.

What should you ask the seller for?

Match the ask to each line.

• Repairs for safety lines you want fixed by a licensed pro before you move in.
• A credit when you'd rather hire your own contractors after closing. On a Fannie Mae conventional loan, the cap for a main or second home is 3% to 9% of the price, set by how much of its value you borrow. The credit also can't be more than your closing costs. Fannie Mae deducts any excess from the sales price for your loan math, so it never reaches you as cash. Other loan programs set their own limits, so ask your loan officer for yours.
• A price cut for whatever a credit can't cover.

In the example above, that could mean asking for the panel to be replaced by a licensed electrician before closing, and a credit for the HVAC and gutters at your contractors' quotes. The full comparison is in repairs vs. credit vs. price reduction, and what to ask for after a home inspection covers which lines to leave off.

Put the priced lines in writing, and ask for their sum. The buyer repair request letter template shows the wording.

What if the seller says no?

You have three choices: rework the ask, take the house as is, or walk away. Offer the same priced total as a credit or a price cut instead of repairs. If the seller won't move on a big line, or the total is more than you can carry, when to walk away after a home inspection covers that call.

Can a home inspection miss problems?

Yes, it can miss what the inspector can't see. A home inspection is a visual check, and anything behind walls, ceilings and floors, or in locked or blocked spaces, is left out. Conditions can also change between the inspection and closing. Check the big systems again at your final walkthrough.

How many items on an inspection report is normal?

Don't judge the report by its length. NAR's guide notes that buyers may balk at a long report, but not every item is an emergency. Three safety lines matter more than thirty small ones. Only a price on each line tells you what the whole list is worth.

If your report came back long and your deadline is days away, upload it to Kept and send the seller a total built from real line items.

Sources

• InterNACHI, Home Inspection Standards of Practice
• InterNACHI, Inspection Reports: Engage Your Senses
• InterNACHI, The Limitations of a Home Inspection
• National Association of Realtors (NAR), 8 Common Home Inspection Issues: Fix Now or Later?
• Pennsylvania Public Utility Commission, Gas Emergencies
• Consumer Product Safety Commission, Carbon Monoxide Questions and Answers
• Fannie Mae Selling Guide B3-4.1-02, Interested Party Contributions