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What is a 4-point Inspection?

One of the steps in buying a home is the home inspection. Buyers usually have 7-15 days to inspect the property and cancel the contract without penalty. Most buyers hire an inspector, so they know up front if the property has any issues or is in need of any repairs. The inspector provides an inspection report, which details (with photos) every issue they find with the property. They also provide a 4-point report, which details specific problems with the big-ticket items:

1. HVAC (Heating, Ventilation, Air Conditioning): AC systems can be costly, and they last between 10 and 20 years. My first two homes had ACs less than 10 years old, though, and both had to be replaced within one year. One was $3,000 and one was $5,000.

2. Electrical: The codes for electrical change all the time, and so does the technology. It’s hugely important to know what kinds of wires and panels are in the home. Some wiring and panels are excluded from insurability. And rewiring a building is costly.

3. Plumbing: Much like electrical, plumbing materials have changed over time. Buyers and insurers need to know if there are pipes running through walls that could rust or burst. Running new plumbing in a home costs a pretty penny too.

4. Roof: The building’s roof protects the home and everything inside it by keeping the elements out. Defects in a roof can lead to water intrusion, and there’s nothing more damaging to a home than water. Here in Florida, it’s especially important to have a roof that can withstand a hurricane. An inspector can tell how much life a roof has left, and for shingles that’s about 25 years total. Roofs can cost into the tens of thousands.

If a, inspector finds extensive issues with 4-point items, there are a few difference courses of action the buyers can take:

  • Cancel the contract altogether

  • Ask the seller to fix the problems

  • Re-negotiate the purchase price

I’ve done all of these things. I have not been willing to re-wire or re-plumb a property to this point and have canceled a contract for not having newer electrical and plumbing systems. As I mentioned earlier, having to replace an AC has not stopped me from purchasing properties. I’ve even gone through with a purchase with an uninsurable roof, even closing in the middle of hurricane season. In that case, though, I asked for $20,000 of the purchase price and got it.

Inspectors may find a host of non-4-point items during inspection, and buyers can ask for concessions for these items as well, but my experience has been that sellers are most receptive to remedying or re-negotiating for 4-point items because these items affect the insurability of the home and thus the likelihood of selling it.

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