Real Estate Agent and Trainer, Robert Rico, explains why home inspections are a crucial aspect to real estate. Do you want to see more video blogs? Subscribe here!


First, let’s ask a very basic question about home inspections: are they even required? The quick answer is: no. But, it’s hard to find a real estate agent who would advise against one. And why? Because home inspectors are trained professionals who have a job and a duty to disclose any problems or potential problems they see. Problems that may go unnoticed by a seller.

From the date of opening escrow, a homebuyer has 17 days to utilize the option to have a home inspection completed. Often, they will make the escrow contingent on the home inspection, meaning that the escrow process will be stopped based on the findings of the inspection report. For example, if there is a major damage, the escrow will be put on hold while the buyer and seller (via their agents, of course) negotiate on how to address the problem.

Home Inspection

They can address the problem one of four ways:

  1. The seller fixes the item or pays for the repair out of pocket.
  2. The buyer accepts the home the way it is and releases the contingency.
  3. Both parties (buyer and seller) come to a financial compromise about who is going to pay what portion of the repair.
  4. For example, if it’s something replaceable like an air conditioner, it might be split 70/30 or 50/50, or whatever terms are agreed upon.

  5. The deal falls through.
  6. Number 4 is the bad one – the deal falls through and the house falls out of escrow completely. In fact – one of every 20 escrow transactions actually does fall through! And, incredibly, one in FOUR is delayed for some reason or another. Out of the 1/20 that fall through, a full one THIRD (1/3) are due to the home inspection findings.

Let’s say it was a real deal-breaker like a cracked slab or a cracked pool. These are things that, in addition to being extremely expensive to repair, can cause all sorts of damage down the line. For instance, if the gunite in the pool was cracked, that would allow water to seep out of the pool and into the ground. Or, in the case of a cracked slab, it could cause the house to shift unevenly and possibly leak water and mold into the walls. It all depends on the extent of the damage and the cost/difficulty of repair, which is why a home inspection is so crucial!

Even if the seller discloses some damage of the house, chances are that it would be cosmetic or outdated. It is important to keep in mind that the seller usually does not go on the roof frequently and inspect the house like an inspector would. Home inspectors go in every attic, attend to every part of the roof, under every eave, check the pool (if applicable), check the foundation, floors, windows, and more.

cracked pool

Hopefully, if any inspection issues come up on the properties you’re involved with, they will be simple ones – like mild termite damage or a few cracked roof tiles. These specific issues are easy (enough) to deal with. An air conditioner can be replaced easily, a garage door opener can be serviced or swapped out in a day, and cosmetic damage is always relatively simple to address.

Now that you have learned a little bit more about the importance of home inspections, would you advise your clients to skip it? Would you make them have the escrow contingent on the inspection findings? What would you do? Please let us know in the comments below!

For more information regarding the challenges of escrow, please visit our blog: 4 Challenges That Can Arise During An Escrow Period


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