Tag: home buying process

Key takeaways

• Renting vs buying depends on your finances, long-term goals, and lifestyle.
• Buying a home helps build equity, has tax benefits, and gives you pride of ownership.
• Renting gives you flexibility to move, stable monthly payments, and no repair costs. 

Making the leap from renting to buying is a big decision that depends on factors like your long-term goals, finances, and lifestyle. Whether you’re moving to a new city or your lease is coming to an end, you may be wondering if you should rent or buy a house.

In this Redfin article, we’ve partnered with Kinda Frugal, a veteran-owned personal finance and lifestyle brand, to help weigh the pros and cons. If you’re moving to San Diego, CA, or looking at homes for sale in Richmond, VA, here’s what to consider when renting vs buying a home this year.

Renting vs. buying: pros and cons

As you decide whether you should rent or buy a house, consider the pros and cons of each.

Andreas Jones, from Kinda Frugal, says the biggest difference comes down to flexibility and control. “Renting gives you flexibility; you can move without the headache of selling, and if something breaks, you just call the landlord,” he explains. 

“Plus, you’re not dropping tens of thousands upfront. The downside? Your rent money disappears every month instead of building equity. And your landlord can raise rent or decide to sell whenever they want.”

5 pros of renting a house

1. Home repairs: If something breaks in a home you’re renting, it’s typically the landlord’s responsibility to fix it. So when the air conditioning unit stops working in the middle of summer, you don’t have to spend thousands of dollars to fix it.

2. Monthly housing expenses: For the most part, when renting a house or apartment, your monthly housing costs will stay the same, aside from minor fluctuations in utility costs. Your base rent doesn’t change month to month after you’ve signed a lease, and you likely won’t need to budget for any emergency repairs, maintenance costs, or property taxes.

3. Flexibility: You can move out when your lease is finished or relocate to another city without having to worry about selling your home. Renting a house also allows you to see which home styles you like, which floor plans you don’t like, and if a neighborhood is the right fit, before buying a home.

4. Investment opportunities: Renting can free up some of your income, since you won’t be spending it on repairs or upgrades. You may have extra funds, also called disposable income, to invest in building your finances or saving for a down payment.

5. Time to improve credit: Renting also gives you the opportunity to pay off debts and help improve your credit score. A better credit score can give you better loan terms, so doing this can help you in the long run.

5 cons of renting a house

1. Temporary: As Andreas points out, “the biggest pro of renting is also the biggest con.” If you’re planning to live in a city for years to come, renting may not be the best option. Most leases last for only a year.

2. Uncertainty: There’s no telling when the property’s owner may decide they don’t want the responsibility of being a landlord anymore. They may decide to sell the property, which means you’ll need to relocate. Similarly, when your lease is up, your rental may not offer you the option to renew your lease.

3. Possible rent increases: As a renter, it’s possible that your rent will increase every time you renew your lease. Depending on whether you negotiate rent, the new cost may be out of your budget. In that case, you’ll likely need to find a new rental.

4. No home equity: As a renter, you don’t build any equity. Home equity is the percentage of the home’s value you’ve paid for, rather than what your lender still owns. When you pay your rent each month, you’re helping someone else build equity.

5. As-is home: You usually don’t have the option of modifying a rental to suit your needs. Some landlords may allow you to make small changes like painting the walls in your living space, but you’ll probably have to paint them back to the original color when you move out.

5 pros of buying a house

1. Building equity: When it comes to homeownership, Andreas says, “buying means you’re building equity with every payment, and it’s yours to paint, renovate, whatever you want.” You have the opportunity to potentially increase your home’s value over time. More equity can mean greater profits when selling and the ability to borrow for major expenses.

2. Customizable: Buying a home means it’s yours. You can paint it, remodel it, and customize the space to your liking without having to follow a landlord’s rules.

3. Stability: You won’t have to worry about a landlord who may decide to sell the home once your lease is up. You have the freedom to decide how long you want to stay in the home, and ultimately, if or when you want to sell.

4. Mortgage payments: When you own a home, you’ll have stable mortgage payments each month, as long as you have a fixed-interest mortgage. This stays consistent over time, and you won’t have to worry about a landlord raising your rent each year.

5. Tax benefits: There are several tax benefits of owning a home. Some homeowners qualify for tax breaks, which are reductions in federal or state taxes. Many first-time buyers can receive tax deductions, such as on their mortgage interest, which can save money at tax time.

5 cons of buying a house

1. Closing costs: Buying a home comes with closing costs, like inspections, title insurance, lender fees, and other costs, typically 2%–5% of the home’s purchase price. There are downpayment assistance programs that may help you cover these costs.

2. Home value: Ideally, your home’s value will increase between the time you buy and the time you sell, but it doesn’t always. Events outside of your control, such as a change in the economy, can potentially reduce your home’s value.

3. Home maintenance expenses: With owning a home comes the responsibility of home maintenance. If there’s a leak in the roof, it’s up to you to deal with and pay for repairs. You’ll also need to be prepared for emergency repairs, such as a burst pipe or broken heater.

4. Investment limitations: Buying a home ties up most of your money in one asset, leaving fewer funds for other investments. However, some home improvements can add value and pay off when you sell.

5. Property taxes: As a homeowner, another important cost to factor in is property taxes, which can be substantial depending on where you live. If you’re renting an apartment, you won’t pay property taxes (however, they may be factored into your rent).

Should I rent or buy a house? 4 questions to ask yourself

Everyone has a unique lifestyle, financial situation, and set of long-term goals that impact their decision whether to rent or buy a house. Consider the following four questions to help you decide:

1. Does renting or buying work with your timeline? If you’re not sure how long you’ll stay in one place, renting may make more sense. Andreas shares a practical guideline: “If you’re planning to stay somewhere for at least five years, buying usually makes sense financially. You’ll have time to recoup those hefty closing costs. 

However, if there’s a decent chance you’ll move in the next few years, renting is probably smarter (selling a house quickly can actually lose you money).”

2. Where do you see yourself in 5 years? Do you want to move to a new city or state? Or are you looking to stay in your city for the foreseeable future? Answering these questions can help you determine whether to stay renting or consider buying. “If you’re in a settle-down phase, buying works,” Andreas says. “If everything still feels up in the air, don’t lock yourself in.”

3. How much can you afford? The costs of renting and buying vary, and your budget plays a big role in deciding which is right for you. “Don’t just compare mortgage to rent,” Andreas advises. “Factor in property taxes, insurance, and repairs as they add up fast. You’ll want 20% down plus a solid emergency fund, because homeownership throws curveballs.”

• Buying a home requires upfront costs like a down payment and closing costs, which depend on your loan, lender, and housing market. You’ll need to budget for mortgage payments, maintenance, utilities, and homeowners’ insurance.
• Renting typically has lower upfront costs, like an application fee, security deposit, and first and last month’s rent. You’ll need to budget for rent payments, utilities, and renters’ insurance.

4. Will renting or buying a home fit your lifestyle? Beyond finances, renting vs. buying is also a lifestyle choice. “Do you dream of renovating a kitchen, or does staying flexible sound better?” Andreas asks. “Can you handle surprise $5,000 repair bills? There’s no wrong answer; it depends on your priorities.”

• Buying a home is a long-term commitment that allows you to build wealth over time. You can customize your space, whether that’s remodeling, painting, or making upgrades. If you want stability and to put down roots, homeownership may be the right move.
• Renting offers flexibility and fewer responsibilities. You don’t have to worry about maintenance or unexpected repair costs. It can be beneficial if you move frequently or have a busy lifestyle.

Is it better to rent or buy a house?

Whether you make the decision to rent or buy a house, it’s a personal decision and one that means taking a look at different aspects of your life. From your finances to lifestyle, job situation, and long-term goals, many factors influence whether you should rent or buy a house. If you’re still unsure, calculate the cost of both options and speak with a mortgage lender or real estate agent who can help you understand what’s realistic for your budget and goals.

You would think once your homeowners policy is active, the hard part’s over. But more and more homeowners are finding that’s not the case, whether they’re buying a condo in Miami, FL or a starter home in Detroit, MI. Many insurers are ordering inspections, or even driving by homes, and requiring repairs before they’ll continue or renew coverage.

These days, you might be able to get homeowners insurance without an inspection — at first. But the reality is, most insurance companies require some form of inspection when applying for a policy or even renewing an existing one. Whether that’s done through drone imagery, a drive-by inspection, a 4-point inspection, or even a virtual visit, most policies have an inspection requirement — even if you don’t always see it coming. 

Why do insurers usually require a home inspection?

When you apply for homeowners insurance, you’re protecting your home—but your insurer is taking on the financial risk of anything that could go wrong.To manage that risk, a lot of insurance providers require an inspection before finalizing your policy, during the policy period, or if your policy is up for renewal. 

Sometimes the insurance company will ask for a copy of your home inspection report to assess risk. Other times, they will conduct their own 4-point inspection, which focuses on your roof, electrical, plumbing, and HVAC.  The goal is to understand the age of the home, overall condition, any potential hazards, and how any issues might impact your eligibility for insurance or your premiums.

Assessing risk based on age and condition

A new construction home carries very different risks than one that’s 70 years old. Inspections help insurers understand the overall condition of your property and whether it’s been well-maintained, needs updates, or has issues that could become a claim sooner rather than later.

Identifying potential safety hazards

Homeowners insurance companies are also looking for red flags that might increase the likelihood of damage or accidents. Common high-risk areas are the roof (for leaks or storm damage), electrical systems (fire hazards), plumbing (water damage risk), and the foundation (structural stability).

Determining insurance eligibility and premiums

What the inspector finds directly impacts how much you pay for your insurance, or if you even qualify for coverage at all. Recent upgrades and a home that’s been well-maintained could equate to a lower premium. Finding repairs like outdated wiring, a worn-out roof, or even missing handrails might raise your rates or mean coverage is denied or delayed until the issues are fixed.

When insurance companies don’t require an inspection

More and more insurers are tightening their rules and requiring inspections before issuing or renewing policies. Still, there are some situations where you might be able to get coverage without someone coming out to look at your property.

The home is new or recently renovated 

Older homes come with more risks like aging plumbing, outdated wiring, worn roofs that insurers want to check before offering coverage. But if a home is newly built or has just gone through major upgrades, insurers already know those systems are less likely to fail. For example, a new construction home in a suburban neighborhood with modern safety features is less likely to have a surprise claim than a fixer-upper from the 1960s. In those cases, some insurers are comfortable issuing a policy without an inspection.

The home is lower in value

Insurance is about risk and replacement cost. If your home would be less expensive to rebuild, the financial risk to the insurer is smaller. That sometimes means they’ll ease up on inspection requirements. A 1,200-square-foot bungalow in the midwest may not get the same scrutiny as a large historic home in Boston with custom finishes, simply because the potential payout is lower.

The property is low risk

Where a home is located can be just as important as its age or condition. A modest house in a safe neighborhood with low exposure to natural disasters or theft may not raise the same level of concern for insurers. On the other hand, that same house in a wildfire zone or within an intercity zipcode would likely provoke an inspection. The lower the overall risk, the more likely it is that an inspection might be skipped.

There has been a recent inspection

If the home has already been inspected within the last year or two, insurers sometimes accept that documentation instead of requiring a new inspection. For example, if you just bought the home and had it professionally inspected during the sale, an insurer may consider that report “good enough” to proceed. But if big issues were found on the inspection report, they would likely still need to be fixed before getting approved for coverage.

Using digital, remote, or delayed inspections

Instead of sending someone in person, insurers might rely on satellite imagery, tax records, or photos you upload yourself. Some even issue coverage right away and schedule an inspection within 30–90 days to confirm your details. This is convenient if you need proof of insurance quickly, like to close on a mortgage, but it also means the company can change your rate, require repairs, or even cancel coverage if issues show up later.

What to expect from a home insurance inspection

When an insurance company inspects your home, the goal is simple: to identify risks that could lead to future claims. Depending on the insurer and your property, the inspection might be quick and simple or more detailed. Drive-by inspections and 4-point inspections are the most frequently used methods insurers use to determine coverage.

• Drive-by inspection: An exterior review where the inspector checks the roof, siding, and overall upkeep from the street. They’re looking for signs of neglect, like missing shingles, peeling paint, or overgrown trees that could be risky. You may not even know it happened until you get a notice in the mail.
• 4-point inspection: Focuses on four major systems: the roof, plumbing, electrical, and HVAC. These inspections are especially common for homes that are around 20-30 years or older. Inspectors want to know if the home’s systems are safe, in working order, and that liability is limited.
• Full interior and exterior inspection: The most thorough option, covering everything from the foundation to the attic. Inspectors check for structural issues, water damage, safety features like smoke detectors, and exterior condition. This gives insurers the clearest picture of your home but can reveal issues to fix before coverage is finalized.
• Virtual or photo inspections: With the rise of online-first insurers, virtual inspections are becoming more common. Homeowners upload a series of photos or do a live video walk-through with a representative, instead of having an inspector come out to the home. These inspections are convenient and quick, but the insurer may still follow up with an in-person visit if something seems unclear or in need of a more thorough inspection.

What home insurance companies are looking for:

• Condition of the roof: the age, any leaks, storm damage
• Electrical safety: outdated wiring, old or faulty panels
• Plumbing risks: leaks, outdated pipes, water damage
• Foundation and structural soundness: cracks in the foundation, rot, decay
• Fire risks or visible hazards: wood stoves, missing safety equipment, proper ventilation, etc

How to get homeowners insurance without an inspection

Most insurers want to inspect your home before or soon after issuing a policy, but there are ways to improve your chances of getting coverage without a full in-person review. 

Be upfront with basic home details

Before you start insurance shopping, pull together the essential information: home age, square footage, construction type, and any upgrades or renovations. Being able to point out things like a new roof, updated wiring, or a modern HVAC system helps show insurers your home is a safer bet.

Shop online or call insurers offering instant coverage

Many online-first insurers and some traditional carriers offer “instant coverage” or “same-day policies” relying on public records, satellite images, and your application details instead of a home visit. Checking online platforms and calling insurers directly can uncover options that aren’t always obvious, but you might pay a premium or have more limited coverage.

Ask about conditional coverage policies

It’s not always possible to skip the inspection, so ask whether the company offers conditional or provisional coverage. These policies work by starting coverage right away, but allow the insurer to schedule an inspection within the first 30 to 90 days. For example, you might close on a house and get coverage immediately to satisfy your lender, but the insurer will still schedule an inspection after you have moved in. Use that window to prepare your home and avoid surprises that could affect your rates or coverage.

Tips for passing an insurance inspection

Insurers want to know that the home is safe, maintained, and ready for the long haul. The more proactive you are, the fewer surprises you’ll face when your policy is finalized. A little prep work could even help you lock-in a better rate.

• Tidy up the exterior: Clear away debris, trim overgrown trees or bushes, and make sure gutters are clean. Inspectors often notice signs of neglect first, and first impressions are important.
• Check the roof and gutters: Replace missing shingles, fix leaks, and make sure gutters are properly attached and draining. A roof in good condition is one of the biggest factors in passing an inspection.
• Update safety features: Test smoke detectors, install carbon monoxide alarms, and replace expired fire extinguishers. Missing or broken safety devices are easy fails.
• Review electrical and plumbing systems: Take care of obvious issues like leaky pipes or outdated wiring. If you’ve had recent upgrades, keep documentation handy to show the inspector.
• Take care of small repairs: Patch cracks, secure loose railings, replace broken steps, and address any visible water damage before the inspection. Problems that look small can actually be a sign of bigger issues.
• Document recent upgrades: Save receipts or permits for major improvements like a new HVAC system, roof, or electrical updates. This evidence can support your case for lower premiums.

FAQs: Home insurance inspections

What happens if your home is uninsurable?
If an insurer decides your home is too risky to cover, you may have to make repairs before reapplying. In some cases, you can turn to state-run FAIR Plans or surplus-line insurers, which provide coverage when standard companies won’t. The trade-off is usually higher premiums and fewer coverage options.

Can I refuse a home insurance inspection?
You can say no to a home insurance inspection, but most insurers will cancel or deny coverage if you won’t allow an inspection. Since inspections are how insurers confirm the home’s condition and risk level, declining the process leaves them with too many unknowns. If you’re worried or don’t want the hassle, you can ask about alternatives like providing recent photos, repair receipts, or a past inspection report.

Is it normal for home insurance to take pictures of your house?
Yes. Inspectors will take photos during a drive-by or walk-through to document the home’s conditions. Sometimes insurers also use satellite images or aerial photography to aid in their inspection. The goal is to confirm that the property matches what’s listed in your application and to identify any risks that could lead to claims later on.

What is considered high-risk for home insurance?
“High-risk” can mean different things, but it usually includes older homes with outdated or damaged systems, properties in disaster-prone regions (like wildfire, hurricane, or flood zones), or houses with a history of frequent claims. Even cosmetic issues like missing shingles, peeling paint, or overgrown landscaping can flag a property as higher risk because they can suggest deferred maintenance.

Will an inspection raise my premiums?
An inspection can raise your premiums, but it can also lower them. If the inspector finds problems like a worn-out roof, old wiring, or signs of water damage, the insurer may adjust your rate upward or require repairs. On the other hand, if the inspection confirms your home is well maintained with modern upgrades, you could actually qualify for a discount. The inspection’s goal is to make sure your premium matches your home’s real level of risk.

Buying a home comes with its fair share of stress, but building one adds a whole new layer of moving parts. Whether you’re building your dream home in Boise, ID, or watching a new construction rise in Atlanta, GA, one thing stays the same: you want confidence that it’s being built right.

When building a home, you’ll still want to get your new home inspected—not just before move-in, but at many different stages in the construction process. That’s where phase inspections come in.

What are phase inspections? 

A phase inspection is specifically for new construction homes, when an inspector goes through the house at specific stages during the building process. Also known as a 3-phase inspection, this inspection process is used when building a home to catch problems early and while they can still be addressed. 

Each inspection phase ensures that what is being built meets building codes, follows approved plans, and avoids mistakes that could get hidden as construction moves forward. Even brand-new homes can have issues with the framing, electrical, plumbing, or drainage that are harder to catch once drywall and flooring go in. 

What are the phases in a new construction phase inspection?

Phase inspections are broken down into 3-4 phases, depending on if you’re buying a custom-built or production build home. 

Phase 1: Pre-pour/pre-foundation
Before pouring the foundation slab, an inspector will look at the site prep, footing trenches, rebar, pipe sleeves, drainage, and plumbing stub-outs. This phase is meant to make sure the foundation is built correctly before the concrete hides any defects.

Phase 2: Framing/pre-drywall
After framing and mechanicals, but before insulation and drywall, you’ll want to get another inspection. This time, the inspector is checking the framing, structural connections, plumbing and electrical rough-in, HVAC ductwork, roof structure, fire blocking, and flashing. Ever wish you could open the walls of your home and see what could be wrong? Now is the time to get the behind-the-wall parts of the home inspected.

Phase 3: Final/pre-closing
When the home has mostly been completed, but before move-in, an inspector will do a full-system check, similar to a regular home inspection. They’ll be checking what is visible and operable, like the plumbing, electrical, HVAC, appliances, site grading, and exterior components, while also making sure everything is up to code. This inspection is separate to the blue-tape walkthrough you’ll do with the builder to check finishes and the final build.

Phase 4: 11-month warranty
This optional but valuable one-year warranty inspection takes place near the end of your builder’s warranty period. By this point, you’ve lived in the home long enough to notice small issues that might come up as the house settles. A licensed home inspector will perform a full review, similar to a standard home inspection. If they uncover any problems related to the original build, you’ll still have time to request repairs under the builder’s warranty before it expires.

How much does a phase inspection cost?

New construction phase inspections vary in price depending on the location, size of the home, and the number of inspection phases you schedule. On average, you can expect to pay between $100-$500 per phase, or around $800-$2000 for a full three or four phase package that covers your build from start to finish.

When to schedule each inspection

It’s a good idea to book your inspector early (ideally before construction starts) and share your builder’s timeline so they can pencil in tentative inspection dates. Inspectors often get busy during peak building seasons, and missing your inspection window can mean important areas get missed (like foundation footings or the systems behind the walls).

• Pre-pour inspection: Schedule before the foundation concrete is poured (usually a one or two day window).
• Pre-drywall inspection: After framing, plumbing, electrical, and HVAC rough-ins are complete, but before the insulation and drywall go in.
• Final inspection: Schedule when the home is nearly finished, before your final walkthrough or closing.
• One-year warranty inspection: Get the inspection between 10-11 months after the build has been completed, before the builder’s warranty expires.

What inspectors look for during each phase

A good phase inspector knows that every stage of construction reveals different potential issues. Their job is to make sure each part of your new home is built correctly, before it’s covered up or becomes expensive (or impossible) to fix later. 

Pre-pour foundation phase

Before concrete is poured, the inspector looks at the groundwork that supports your entire home. The aim of this inspection phase is to help prevent long-term problems like foundation cracks or drainage issues.

They’ll look for:

• Proper footing depth and width
• Correct placement of rebar and post-tension cables
• Plumbing and electrical conduit set and secured in the right locations
• Adequate grading and drainage to prevent water pooling under the slab
• Signs of poor soil compaction or improper vapor barriers

Pre-drywall framing phase

Once the framing, roofing, and systems are in place, but before the walls are sealed, inspectors will look at everything that lives within the frame of the house that can be expensive and complicated to fix later.

They’ll check for:

• Framing quality: Straight, level, and properly braced walls and beams
• Structural connectors: Missing or misaligned hurricane ties, joist hangers, or fasteners
• Plumbing and electrical rough-ins: Proper placement, labeling, and support
• HVAC ducts: Correct sizing, sealing, and routing
• Fire blocking and insulation prep: Ensures code compliance and energy efficiency

Final completion phase

As construction wraps up, inspectors will do a full walkthrough of the finished home, similar to a standard home inspection to confirm the house is move-in ready and everything works as it should. 

Inspectors will look over:

• Major systems: HVAC, plumbing, electrical, and appliances
• Roofing and exterior elements: Gutters, flashing, siding, and grading
• Interior finishes: Doors, windows, flooring, cabinetry, and paint
• Functionality checks: Outlets, switches, water flow, heating and cooling performance
• Safety items: GFCI outlets, handrails, smoke detectors, and ventilation

One-year warranty phase

Before your home hits the 12-month warranty expiration, it’s a good idea to have an inspector return to evaluate how your home has settled. If they spot any defects linked to the original build, you’ll still have time to request warranty repairs before coverage ends.

They’ll look for:

• Cracking or shifting in walls, ceilings, or foundations
• Leaks or drainage issues that developed after seasonal weather changes
• Mechanical wear in HVAC or plumbing components

How to use phase inspections during construction

Once each phase is complete, you’ll receive a detailed report with photos, notes, and recommendations for any issues found at each step. 

1. Coordinate with your builder early

If you’re working with a builder or general contractor, share your inspection plans upfront, ideally before construction starts. Most builders are accustomed to third-party inspections and will schedule work around them. Confirm that your builder will pause work, if needed, to address any problems that were identified during inspection before proceeding to the next construction phase.

2. Include inspection contingencies in your contract

When you’re under contract for a new construction home, consider adding inspection contingencies that allow you to review findings and request repairs before closing.

• For custom built homes, include a clause that lets your inspector access the site during the key construction milestones mentioned earlier.
• For builder developments or spec homes, your contract may specify when new construction inspections are allowed; review this carefully with your agent before signing.

3. Use inspection findings to request repairs or holdbacks

Once your inspector delivers the report, it’s important to communicate the findings with the builder. Some processes are similar to when requesting repairs from a seller in a regular real estate transaction, but in the case of a custom home, you have the right to address everything on the report—ideally in a collaborative manner. In some cases, you can also use the findings to negotiate a holdback, setting funds aside in escrow until the builder completes specific repairs.

• Start with the facts: Reference specific items in the inspection report and share photos or page numbers, so there’s no confusion about what needs attention.
• Keep everything in writing: Follow up verbal conversations with a quick email recap. This creates a paper trail of what was discussed, agreed on, and when fixes are expected.
• Prioritize major issues: Focus first on safety, structural, or code-related concerns. Builders are more likely to act quickly on items that clearly affect performance or compliance.
• Ask for realistic timelines: Most builders will need time to coordinate subcontractors for repairs. Confirm when each issue will be addressed and how it may affect your build schedule.
• Stay professional: Avoid emotional language or placing blame. Approach your builder as a partner on a project with the goal being you both want the home finished correctly.
• Request confirmation: Once repairs are complete, ask for photos or documentation showing the fix, or schedule a short site walk to verify it in person.

New doesn’t mean perfect

Just because a home is new, it doesn’t mean it’s perfect. Mistakes happen all the time, and the best way to protect your future home is to use phased inspections to check in at crucial points during the build process. The cost of getting your home inspected at each phase is minimal compared to the amount of protection it offers. Plan inspections ahead of time with your builder and inspector, and then rest easy knowing that your home has been thoroughly looked over—from the foundation to the finishes.

FAQs about phase inspections

Do phase inspections replace the municipal building inspections?
No. Municipal inspections are required by your city or county to ensure the home meets local building codes. A phase inspection is an independent, third-party check that goes beyond minimum code requirements to verify quality and workmanship. It’s an extra layer of protection.

Can a builder refuse a phase inspection?
Most reputable builders won’t (and shouldn’t) refuse a phase inspection. But it’s best to discuss your plans before construction begins and include inspection access in your contract. Some builders may require advance notice or request that inspections occur at specific stages to avoid delays in construction.

Are phase inspections mandatory or optional?
Phase inspections are optional but highly recommended for new construction homes. While municipal inspectors check for code compliance, a private inspector works solely for the buyer, identifying issues that could affect quality, safety, or long-term performance.

“What can cause a house to fail an inspection?” is a question both buyers and sellers might have during a home sale. The truth is inspections don’t end in a simple pass or fail, but certain issues on the report can indicate trouble and lead to buyers walking away. 

A clean inspection report—or a “passing” inspection—will only note minor issues that are either just cosmetic or won’t be too expensive to fix. On the other hand, a “failing” report often points to expensive, complicated, or time-consuming repairs that might be red flags to buyers.

9 things that fail a home inspection

Whether buying a home in Austin, TX or selling a house in Portland, OR, these are the things many buyers might consider “failing” the home inspection — and sellers should expect negotiations around these repairs.

1. Structural or foundation repairs

“When we flag structural issues—cracks in the foundation, shifting walls, or sloping floors—it often sends buyers running, especially if it’s the first home they’ve considered seriously,” shares Curt Kloc, founder of nationwide inspection franchise Inspections Over Coffee.

But what is considered “normal” or “concerning” can vary by region, Kloc says. 

“In places like Texas, expansive clay soils can cause seasonal shifting, and minor movement might be common—but in areas like Colorado or the Pacific Northwest, even small signs of settling raise big red flags.”

Common structural red flags

• Foundation cracks or settling: Small hairline cracks are common, but wide, horizontal or stair-step cracks can mean shifting or instability
• Bowed or leaning walls: Indicates pressure from soil, water, or poor construction.
• Uneven or sloping floors: Can mean underlying foundation or support beam problems.
• Doors and windows that stick: Not always bad, but could be a sign of shifting frames.

National cost ranges:

• Minor crack repairs: $250–$800
• Average foundation repair: $2,200–$8,100 (national average around $5,100)
• Severe cases (bowing walls, underpinning, major settlement): $10,000–$20,000+

So are structural notes just cosmetic, or a money pit? Either way, Kloc says, “structural repairs usually require engineers, permits, and deep pockets. That’s not the kind of surprise people want when buying a new home.”

2. Aging or damaged roof

The roof can be another expensive repair that can snowball into further issues—and put many buyers on high alert. Since it protects the home from the elements, even small issues can turn into major water damage, mold growth, or a reduction in energy efficiency.

Common roof red flags

• Missing or damaged shingles: Leaves the home vulnerable to leaks.
• Worn or curling shingles: A sign the roof is nearing the end of its life.
• Poor flashing around chimneys or vents: A leading cause of hidden water intrusion.
• Sagging rooflines: Could point to structural weakness or prolonged water damage.
• Improper drainage or clogged gutters: Often overlooked, but can funnel water toward the foundation.

National cost ranges:

• Minor roof repairs: $150–$1,500
• Average roof replacement: $5,800–$12,000
• Premium materials (tile, slate, metal): $15,000–$30,000+

3. Outdated or failing plumbing

Sewer issues are one of those hidden problems that can turn into huge expenses, and they’re often the last thing buyers think about until it’s too late, says Kloc. 

“Even though it’s not included within the scope of a normal home inspection, most smart home inspection companies offer sewer scopes as an add-on service, even on brand new homes, where we’ve found the sewer line leads to a dead end.”

Plumbing problems can range from minor annoyances to major hazards. Leaks, outdated piping materials, and poor water pressure may not always be visible, but they can cause significant hidden damage like mold, wood rot, and even structural issues.

Common plumbing red flags

• Leaky pipes or fixtures: Can lead to water damage and mold growth if left unaddressed.
• Outdated materials: Galvanized steel or polybutylene pipes are prone to corrosion and failure.
• Low water pressure: May signal clogged pipes, leaks, or failing supply lines.
• Slow drainage or backups: Often linked to clogs, damaged sewer lines, or tree root intrusion.
• Water stains on ceilings or walls: Visible signs of leaks that may be more extensive behind the surface.

National cost ranges:

• Minor leak repair: $150–$350
• Pipe replacement (per section): $500–$2,000
• Whole-home repiping: $4,000–$15,000+
• Sewer line repair/replacement: $3,000–$7,500+

The biggest expense in re-plumbing isn’t just the pipes themselves, Kloc mentions. “Roughly half the cost is plumbing work, but the other half comes from repairing everything you had to open up—drywall, paint, tile, and other finishes. So a $10,000 re-plumb can easily turn into a $20,000 project.”

4. Old electrical systems

Kloc says that buyers can be blindsided when outdated electrical panels like Zinsco or Federal Pacific (FPE) are flagged during the inspection.

“These were widely used in the mid-20th century, and while they may ‘look’ fine, they have a well-documented history of failure—including not tripping when overloaded, which can lead to fires,” he explains.

But remediating electrical issues isn’t just a matter of replacing the panel. “In many cases, the entire system needs to be evaluated,” Kloc says. “Some homes still have aluminum branch wiring, and depending on the region and the insurer, remediation options vary.”

Common electrical red flags

• Outdated panels: Fuse boxes or old breaker panels that can’t handle today’s electrical loads.
• Exposed or frayed wiring: A serious fire hazard.
• Lack of GFCI outlets: Missing in kitchens, bathrooms, and outdoor areas.
• Aluminum or knob-and-tube wiring: Older wiring types that are no longer considered safe.
• Overloaded circuits: Signs of frequent tripped breakers or unsafe DIY work.

National cost ranges:

• GFCI outlet installation: $130–$300 each
• Electrical panel upgrade: $1,200–$3,500
• Rewiring a home: $6,000–$20,000+

“It’s an expensive fix that comes with zero excitement—nobody walks into a home saying, ‘Wow, I love what you did with the upgraded service panel,” Kloc says. “Unlike a kitchen or bathroom reno, electrical remediation is a cost that never feels ‘worth it,’ but it’s absolutely necessary.”

5. Old or failing heating, ventilation and air conditioning (HVAC)

Heating and cooling systems aren’t always as critical as some of the other items on this list, but when they’re old, poorly maintained, or unsafe that’s when an HVAC might “fail” the inspection.

A system with no maintenance records, dirty filters, or uneven heating and cooling can indicate looming repair costs, even if it’s technically working the day of the inspection. A cracked heat exchanger in a gas furnace, for example, can lead carbon monoxide into the home, and if the unit is “at or near the end of its service life” it could be thousands of dollars to replace.

Common HVAC red flags

• Old or outdated units: Typical lifespan is 15–20 years
• Poor maintenance: Dirty filters, lack of service records
• Uneven heating or cooling: May indicate ductwork or system issues
• Unusual noises or smells: Signs of mechanical failure or mold in ducts
• Improper installation: Systems that don’t meet modern efficiency standards

National cost ranges:

• Annual servicing: $150–$500
• Furnace replacement: $3,000–$7,500
• Central AC replacement: $4,500–$12,000

6. Water damage and mold

Excess moisture can be one of the biggest red flags in a home inspection because even small leaks can cause major problems. Inspectors will be looking for stains on ceilings, warped floors, or bubbling paint often that can mean hidden damage behind the walls, and buyers worry that what they see is only part of the story. Without being properly addressed, water can weaken framing, rot wood, and put the entire structure of the home at risk.

Mold is also a “nope” for buyers that can stem from water inside the home. More importantly, mold can point to ongoing issues, like a roof leak, bad ventilation, or drainage problems, that need to be fixed to prevent mold from coming back. Because of the health risks and potential for even more damage, water and mold issues can be common home inspection “fails.”

Common moisture red flags

• Water stains on ceilings, walls, or floors
• Musty smells: Often a sign of hidden mold
• Warped or soft wood: Indicates prolonged water exposure
• Mold growth in bathrooms, attics, or basements
• Salt residue/deposits or dampness in basements/crawlspaces

National cost ranges:

• Water damage cleanup: $1,200–$5,000
• Mold remediation: $1,500–$6,000+
• Severe cases (widespread structural damage): $10,000+

7. Drainage and grading

When yards are sloped toward the house instead of away from it, or when gutters and downspouts aren’t doing their job, water can pool around the foundation and seep into basements or crawlspaces. While drainage issues may not sound as urgent as a cracked foundation or failing roof, they can cause just as much long-term damage if ignored. 

Luckily, fixes can be as simple as cleaning gutters or extending downspouts, but sometimes, full yard regrading or installing a French drain is required to fix the issue.

Common drainage red flags

• Pooling water near the foundation
• Improper slope of yard or driveway
• Clogged or broken gutters and downspouts
• Basement leaks linked to exterior water flow

National cost ranges:

• Gutter cleaning: $150–$350
• Gutter replacement: $1,000–$2,500
• Regrading a yard: $1,500–$5,000+

8. Pest and insect damage

Pests like termites, carpenter ants, and rodents may be small, but the damage they cause can be massive. Termites can be the most destructive, and are estimated to cause billions of dollars in property damage each year in the U.S.

Because pest activity can go largely unseen, the potential extent of the damage can make buyers nervous. Treating an infestation is only part of the cost. Repairing structural damage can run into tens of thousands of dollars, and buyers will want to know that the problem has been resolved and won’t come back and cause even more damage. 

Common pest red flags

• Mud tubes or termite tunnels on foundations
• Hollow-sounding wood or visible damage
• Frass (sawdust-like droppings) from wood-destroying insects
• Evidence of rodents in attics, basements, or crawlspaces
• Seeing carpenter ants inside the home

National cost ranges:

• Termite inspection: $75–$150
• Termite treatment: $600–$2,500
• Structural repairs due to pests: $2,000–$8,000+

9. Safety and code violations

Many inspections uncover safety hazards or unpermitted work that doesn’t meet building code, but it’s more common than buyers realize. “What we often find in the field are creative shortcuts that may not be failing today, but won’t pass inspection for future upgrades,” Kloc says.

Even if the issues seem small or insignificant, they can affect financing, insurance approvals, or future renovations. “That means what looks like a small fix today can become a big bill later, especially when it comes time for a kitchen remodel, a basement finish, or a home addition.

It’s not always about immediate failure—it’s about how unpermitted work can snowball into higher costs down the road,” Kloc warns.

Common safety red flags

• Missing or non-functioning smoke/CO detectors
• Broken or missing stair railings
• Unpermitted additions or DIY electrical/plumbing work
• Windows that don’t open properly for egress
• Improperly vented appliances
• Missing attic insulation

National cost ranges:

• Smoke/CO detector installation: $50–$200 each
• Adding railings: $500–$2,000
• Correcting unpermitted work (varies greatly): $1,000–$10,000+ 

What happens if you fail the home inspection?

If big or intimidating repairs come up on the inspection report, buyers might balk at the cost and either request credits at closing to address the issues, or walk away all together if an agreement can’t be reached.

“Most reasonable sellers will agree to handle smaller, safety-related fixes: things like a leaking faucet, a missing handrail, or a GFCI outlet upgrade,” says Kloc. “Those are the kinds of issues that don’t cost much but bring peace of mind to the buyer.”

Where negotiations often get tricky, says Kloc, is if big-ticket items are old or outdated but still technically working—“like a 20-year-old roof, a 15-year-old AC unit, or a water heater well past its expected lifespan. Buyers see these as near-term expenses, but sellers argue, ‘It works today, why should I replace it?’”

>>See More: What happens after the home inspection for sellers?

While no one loves spending thousands of dollars on a new roof or plumbing, the truth of the matter is that what’s found on the inspection report can be critical both to the safety of the future homeowner and their budget. 

“Buyers and sellers both need to weigh whether a credit, price adjustment, or shared cost makes more sense than letting the deal fall apart,” Kloc advises. And in the end? While complex and expensive repairs are the likely reasons a home inspection might “fail,” the reality is different repairs matter to different buyers—and both buyer and seller should come to the table prepared to compromise.

You can’t change your mind on a home after closing, but you can rethink the deal after the inspection. When a report turns up more than you planned for, it’s normal to wonder if this is still the right house at the right price.

But when to walk away after a home inspection can be personal. We’ll help you weigh the risks of repairs, factor in your budget and timeline, and ultimately, decide when it’s best to trust your gut — whether you’re buying a home in Madison, WI or Sacramento, CA.

First, protect yourself with a home inspection contingency

A home inspection contingency is the safety net for homebuyers. It says, in writing, that you can inspect the property within a set window and either renegotiate repairs/credits or cancel and recover your earnest money if you want to walk away after the home inspection. 

In a lot of markets, buyers have between 5-10 days to get the home inspected and get back to the seller. If you want the option to walk away after the inspection without legal or financial risks, a home inspection contingency is highly recommended.

What should your contingency cover?

• Clear response deadline. Your contract will state how the “days” are counted (calendar vs. business days). Note this and set reminders.
• Buyer’s sole discretion to cancel. Strong inspection clauses let you withdraw after the home inspection and keep your earnest money, as long as you give notice on time and as the contract states.
• Right to seek further evaluation. If the inspector notes foundation, roof, electrical, plumbing, or moisture issues, you may want to bring in specialists and get repair estimates.
• Repair/credit options. Ask your real estate agent to include that you may request seller credits at closing (they can be cleaner than pre-close repairs) or a re-inspection if the seller completes the repairs. 

Know when to walk away after a home inspection

A home inspection is when a licensed inspector thoroughly goes through a home, flagging any visible issues both inside and outside of the property. Most of the time, minor maintenance and cosmetic items will be jotted down and aren’t anything to worry about. But when big repairs come up in the home inspection report, it can give many buyers a reason to pause and reconsider the deal. 

Home inspection red flags — like structural issues, septic problems, HVAC replacement, and more — can be dealbreakers for a lot of buyers, but there are often other clear signs it might be time to walk away.

1. Needed repairs are out of your budget

Updating outlets to meet current code could be a minor financial inconvenience, but when issues start to stack up, like needing to upgrade both the electrical and the roof, it might mean the home you’re buying is suddenly out of budget. If going into the deal already puts you on the top end of your budget, there might not be any money left for repairs — and negotiations could be out of the question if it’s a seller’s market and there are back-up offers waiting.

2. Repairs feel like too much to take on

Even if you can negotiate repair credits with the seller or have extra money budgeted for home maintenance, sometimes it just might be too much work. If the foundation needs to be repaired, it could mean delaying move-in by weeks or months. If the septic system is due for replacement, that can involve having the water shut off or potentially even financing issues with your lender, all of which is extra time, stress, and money.

3. Researching the property turned up more than you bargained for

While it’s best to research a home as much as you can before putting in an offer, sometimes timelines don’t allow for it. That’s why during your due diligence period, you should be doing as much as you can to learn about the property. Whether that’s finding out someone passed away in the house, or that power outages in the area can be frequent and you work from home, knowing as much as you can about a home before sealing the deal can save you from unpleasant surprises after closing.

4. Seller dishonesty or a bad gut feeling

Finally, as much as we want to see the best in people, the reality is sometimes sellers won’t tell you (or their listing agent) everything they know about the home, even items they might be required to disclose. If a note turns up in the home inspection report that raises personal alarm bells, it can be best to trust your gut feeling. If something doesn’t feel right, it’s ok to walk away, even if it seems minor in the moment. There will always be another house — maybe one that’s an even better fit.

Other reasons a buyer might walk away

Home sales can fall through for reasons not just related to the home inspection. Buyers could also walk due to:

• Not liking the neighborhood at certain times of the day.
• The home isn’t listed in a flood zone but still prone to flooding or other climate risks.
• The home not meeting individual buyer needs (i.e. number of outlets, capacity of water heater, etc).
• Disagreements or conflicts with neighbors before closing.
• Repairs or fixes were not done or up to buyer standards during the final walkthrough.

Homebuyer due diligence tips:

• Drive by the property at different times of day and in various weather conditions.
• Research the property as much as possible.
• Make sure the home is meeting your needs and expectations; and if not, that it can be reasonably addressed.

How to back out after the home inspection

If your report reveals deal-breakers, or the fixes, timeline, and stress exceed your comfort, you want to make sure you can exit the transaction cleanly and protect your deposit.

1) Confirm your deadline. Recheck the inspection contingency deadline and how days are counted. If you need more time for bids, have your agent request a short written extension, or addendum, before the deadline; the seller must agree in writing. 

2) Decide whether to negotiate or cancel. If you want to try negotiating first, send a single written request bundling the largest items and asking for a closing credit or specific licensed repairs. If the seller refuses or offers too little, you can still walk away, as long as you’re within the contingency window.

3) If you’re canceling, give notice in writing. Your agent will typically deliver a contract form or written notice that cites the inspection contingency and states you’re terminating based on the report. Keep proof of delivery through both email and the brokerage system. When you cancel properly and on time, you should recover your earnest money. 

4) Release the deposit. Escrow may require a mutual release or specific instructions from both parties. Ask your agent which form your state uses and how long it typically takes. 

5) Close the loop with your team. Notify your lender and insurance broker that you’re canceling so they can stop their orders. If the seller made repairs or you negotiated briefly, keep your inspection, bids, and notes as they might come in handy with the next home.

How to walk away if you waived the inspection contingency

If you waived the inspection contingency, your only clean exits are usually another clause like financing, appraisal, title/HOA review, or a negotiated mutual release. Otherwise, you can still back out of the contract but will likely forfeit your earnest money, so it’s best to talk to your agent and a local real estate attorney first.

When to walk away after the home inspection: bottom line

Not every problem found on an inspection report will be a deal-breaker, but some items on the list could mean it’s time to move on. It might be in your best interest to walk if you’re experiencing:

• Immediate and major safety hazards.
• A water/structure combo like active leaks plus foundation/roof issues.
• Opening up walls.
• First-year costs that drain your cash reserve.
• Friction with financing or insurance lenders due to issues.
• A seller who won’t budge on credits, repairs, or a brief timeline extension. 

If you’re already at the top of your budget and your gut says “not at this price,” trust it.

If you’re on the fence, get a few estimates for the biggest items, prioritize safety over cosmetic fixes, and ask for a closing credit or a short inspection extension to finish your due diligence. If the numbers still don’t work, or you can’t get the answers you need within your timeline, use your inspection contingency to cancel in writing before the deadline and protect your earnest money. The right home will fit your budget, risk tolerance, and timing.