Podcast: Play in new window | Download
Subscribe: RSS
Back To Basics – “Four Point” Inspections
The “Four Point” inspection is a basic inspection that is required by insurance companies in order to bind coverage on a property. It is required for any residential property regardless of the intended use (investment versus moving in yourself).
There's a big difference between a general home inspection and a “Four Point” inspection. A ‘Four point” is generally just to satisfy your insurance company’s requirements, it should never be considered as a substitute for a full home inspection. The home inspector you choose to complete the full inspection can also provide a “Four point” inspection form once they finish the full inspection. There is no need to hire two inspectors.
A four-point encompasses roof, electrical, plumbing, and HVAC. HVAC stands for heating, ventilation and air conditioning. That's H-V-A-C, H for heating, V for ventilation, A for air conditioning.
It does not matter whether you're buying a house to live in or you're buying a house for a rental property, it's important that you hire a licensed inspector. If they don’t have licensed inspectors in your state, at least find one that's certified or adapts to some sort of inspection standard. Don’t just hire anyone who calls themselves an inspector, make them prove their proficiency by providing proof of training or accreditation as a professional in the field.
The roof is a major item for many homeowners and to keep insurance companies happy there should be at least 3-5 years of remaining life in the roof. If the roof is in need of replacement, the insurance company may require it be replaced prior to extending coverage, this could delay your closing. It is times like this where a good insurance underwriter will “condition” the requirement, which means to provide coverage to allow closing and simply require repairs to be made within a certain time frame. Often they may not extend roof coverage while the waiting period is in effect, however, they will usually cover the rest of the home (provided any claims did not come from a roof issue)
A little short story about roofs; I sold a property a couple of years back, probably 2014, to a nice couple here in Holiday, Florida, a little town north of us. We had a roof inspector go by to basically give a quote for a replacement of the roof since we knew the roof was original to 1967. The roofer was up there for a while, came down from the roof and declared the roof good to go. Needless to say, I was shocked, this was an original roof!
The roof lasted this long because the home had the same owner since it was built new. That owner went up on the roof every 6 months and inspected it for issues. If he saw anything wrong, worn or deteriorated he would fix it right away without delay. His diligence towards maintaining his roof allowed it to last 47 years!
The problem was that the insurance company still required a roof replacement.
Since the housing crash of 2008 lenders and insurance companies are laser-focused on reducing the risk of default. One big reason for default in the past was the issue of home repairs causing an owner to be overwhelmed or “give up” on the house. When they give up, not paying the mortgage can be next on their plate.
Be sure to take good notes during this episode, there is a ton of information here to be put to use.