Home buying tips: Home inspections on new construction and "gut-rehab" houses

Gene Bobrov of Accu-Spection International gives our buyer client tips for their new luxury house.

We've worked with several clients buying new construction or gut-renovated single family homes this past year. All home purchase contracts are different and not all contain a home inspection contingency.  In Chicago there are common practices, customs and protections that should be worked into your home purchase contract.  This goes for new construction as well.

Home inspections work a little differently for new construction or gut-renovated houses. If you purchase a home "pre-construction" or early into construction process you cannot have a thorough home inspection until the house is complete.  This is at the end of the process near closing.  On a re-sale home, the inspection is completed immediately after an offer is accepted and during the attorney approval period.

Make sure you get an inspection and punch-list provision in the contract! Photo Eric Rojas

Your purchase contract should have a provision describing when the home inspection will occur.  It should be agreed that the inspection results will act as a "punch-list".  The developer should agree to fix the punch-list items. Your real estate attorney is critical in making sure these provisions are included in the purchase contract.

In today's Chicago market, most developers out there building new houses have a good reputation after weathering the 2009-2010 lean construction years.  However, there are still some inexperienced developers and shoddy work out there... especially on gut rehabs.  Your real estate broker and any expert advisers familiar with new construction can help you determine if you're working with quality people and craftsmanship.