Home Inspection – Chicago Home Buyers Guide | Zenlist

Chicago Home Inspection

How Much Does a Home Inspection Cost?

Home inspection costs are generally based on square footage of the property in question. The national average for a 2,000 square foot home is $324, though it ranges anywhere from $277 to $388 depending on the market.

In Chicago, specifically, the average a bit higher. Angie’s List reports an average between $375 and $550, while Home Advisor puts it between $260 and $351.

These averages do not include specific inspection services like:

  • Termites inspections (additional $65 to $100)
  • Asbestos inspections (additional $400 to $800)
  • Radon inspection (additional $100 to $200)
  • Mold inspections (additional $300 to $500)
  • Swimming pool inspections (additional $90 to $130)

The prices on these more specialized services vary based on the size of the property and the company providing the inspection.

How Much Can a Home Inspection Save You?

The total amount a home inspection save you depends on the deficiencies and repairs found on the property. Identifying major issues, like problems with the roof, foundation or mold, can save you significant costs and hassle down the line. More minor issues may save you slightly on your sales price or make no difference at all.

Let’s look at a few of the most common issues found during home inspections for some reference:

  • Foundation issues – These can cost anywhere between $1,852 to upwards of $6,000, depending on the extent of the damage.
  • Mold – Mold problems can run between $2,000 and $6,000 to address and can cause a slew of health problems and allergies.
  • Wiring issues – Problems with electrical systems or wiring often require major repairs costing between $8,000 and $15,000.
  • Roof problems – This is one of the most common issues found during home inspections. If the full roof needs replacement, it can cost $7,000 or more.

HVAC, plumbing and appliance issues are also found often in Chicago home inspections. The costs on these vary depending on the extent of the damage found.

Getting a Home Inspection in Chicago? Follow These- Dos and Don’ts

The home inspection is a vital part of the homebuying process, as it helps buyers ensure they’re making a safe and sound investment – both for their loved ones and their finances.

Not to be confused with an appraisal, a home inspection is intended to evaluate the overall condition of the home, not determine the value of the property.

During a home inspection, the inspector will examine the property’s roof, plumbing, heating and cooling systems, electrical systems, foundation and more in light of local safety and building codes, as well as construction best practices. Once the inspection is complete, the inspector will deliver a report detailing their findings.

Must-have Chicago Inspections

In Chicago, buyers will want to at least have the basic home inspection, which covers things like: appliances, plumbing, foundation, roof, HVAC, plumbing, electrical systems and the overall interior and exterior of the home.

If the inspector notes mold anywhere on their findings report, buyers should also consider a professional mold inspection to ensure the home is safe to inhabit. In some cases, buyers may also want to consider the following inspections:

  • Termite inspections – The Eastern Subterranean Termite is a common sight in Chicago – particularly in the Glenview area. As termite issues can cost around $3,000 or more to address, spotting these before buying a property is vital.
  • Radon testing – The city of Chicago’s health department has recommended residents test for radon in their homes and new properties. Considering the service is on the more affordable side (just $100 to $200, on average), it may be worth it for peace of mind.
  • Asbestos inspections – For buyers considering older properties or homes where asbestos is known to be used, an asbestos inspection is a must.

More specific inspections like those for pools and other systems depend on the exact features and home of the location being purchased.

How to Save Money on a Home Inspection

Though you certainly don’t want to cut corners on something as important as a home inspection, there are a few ways to potentially reduce costs when seeking inspection services.

  1. Go hourly. If the contract doesn’t require a formal report or a full inspection, buyers may be able to ask for an hourly rate or reduced price on their service.
  2. Find an inspector that also does repairs. In some cases, inspectors may be qualified to perform certain repairs. When this is the case, buyers may be able to ask that the cost of the inspection is credited toward any repairs, should they be necessary.
  3. Be prepared to negotiate. By heading back to the negotiating table, buyers can request repairs or credits when deficiencies are found.

In many cases, a comprehensive home inspection can save buyers thousands of dollars. When repairs or deficiencies are found, the report can serve as a bargaining chip to negotiate a lower sales price.

Still, despite these potential savings, it’s important not to overpay for your inspection. Make sure to get quotes from at least three different inspectors before moving forward, and weigh experience, knowledge and price when choosing which inspector to employ.

After the Home Inspection – Three Possible Outcomes

There are generally three scenarios that can emerge from a home inspection.

  1. The inspection can reveal the home is safe, sound and in need of no repairs or fixes. If this is the case, the transaction can move along to the next step in the homebuying process.
  2. The inspection can reveal moderate issues with the home. When minor repairs and fixes are needed, the buyer can negotiate a credit to help pay for the repairs or ask the seller to make the fixes themselves before closing.
  3. The inspection may reveal serious or costly issues. When major deficiencies or problems are found, the seller may opt to back out of the deal entirely. They may also choose to renegotiate the sales price of the home or ask the seller to cover a portion of the closing costs to make up for the financial loss of the repairs.

A real estate transaction isn’t done until the money changes hands and the deed is transferred. Thanks to contingencies and home inspections periods, there are plenty of chances for buyers to safeguard their investment and ensure they’re making the right decision for their household.

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

Many Chicago homeowners, and those who want to be, are about to get run over by a federal tax reform steamroller, and most of them don’t even know it. Fortunately, the real estate industry calls it “an attack on home ownership”, and has lobbied to get some of the more onerous provisions of the bill dropped or modified. While the effect varies from city to city, anyway you look at it many Chicago area home buyers, owners and sellers will be adversely affected by the new tax plan.
For months now, battered GOP Congressmen have been cobbling together new tax legislation at breakneck speed. It’s billed as the biggest middle class tax cut in decades. However, advocates of the new tax plan usually don’t mention that, for many, particularly some homeowners, their taxes will actually go up, and for some, a lot.
One of the more damaging aspects of this tax reform is how it treats deductions homeowners have had for decades. For home buyers it’s a mixed bag.

Overall impact of the new tax reform to the U.S. housing market

Overview

According to Moody Analytics, the bill could cut as much as 7% to 10% off the future value of homes across the country, particularly those in high priced and high tax areas. Homeowners, who live in less expensive neighborhoods, with low state and local taxes, will feel less pain and may even see prices drop. The fact is nobody really knows for sure what will happen to home prices.

In Detail

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

Homeowners will be limited to deducting $10,000 in state, local and property taxes from their federal taxes under the new tax bill. It used to be all state, local and property taxes were deductible. People who live in high tax states like New York, New Jersey, California or high tax urban areas will end up paying more in taxes, not less.
Another gut-punch for homeowners is the lowering of deductions on mortgage interest. As it stands now, you can deduct all of the interest on mortgages that are $1 million or less. The new tax bill reduces that to $750,000.

Home buyers don’t get away clean either because this legislation does not apply to current mortgages. Home sellers, particularly on the coasts where home prices are high, may be inclined to stay put, and not sell because the cost of carrying a new mortgage will rise because of reduced deductions on mortgage interest. This will make the current shortage of housing inventory even worse, driving up prices. However, in states with more modest home prices, home buyers may see prices fall a bit.

Tax Reform: Impact on Illinois Homeowners and Buyers

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

This tax bill will affect many home buyers and sellers in Illinois, as it does the country as a whole. Illinois has the second highest average property tax rates in the country, just behind New Jersey so a lot of folks are going to take a beating.

In 2014, Illinois taxpayers who itemized deducted $11.5 billion off their federal income taxes, according to the Illinois Association of Realtors. By lowering the amount homeowners can deduct off their taxes and mortgages, hundreds of millions, if not a billions of dollars will, in effect, be transferred out of the state and into Federal coffers. Also, Illinois has one of the highest rates of property tax in the nation. Limiting these deductions will hit homeowners hard, especially those in expensive areas.

This wealth transfer is intended to help cover the cost of the Federal government’s revenue shortfall due to generous tax breaks it gives some in the bill. For example, inheritance tax has been changed and some argue could benefit the wealthy disproportionately. More importantly, corporate tax rates will drop dramatically to 21% from 35%.The tax bill also adds around $1.46 trillion, yes trillion, to the national debt over ten years. The proponents of the tax bill are hoping that the corporate tax breaks will have a trickle-down effect that stimulates the economy and in turn, pays for the tax breaks. Opponents point to a lack of historical evidence that this has worked in the past and call it wishful thinking. Many economists believe that the long-term impact of that ballooning federal deficit will drive up mortgage rates over the long term, leaving many aspiring homeowners on the sidelines because they can’t qualify for a mortgage loan.

Tax Reform: Impact to Chicago Homeowners

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

Because the average person who owns a single family home in Cook County paid, on average, $5,660 in state, local property and income tax, this legislation will not get whacked by the change in deductibility levels of local taxes. Home owners in Lake County who pay, on average $8,800 in state and local taxes, are also below the $10,000 deduction limit in this bill.

However, homeowners in both these counties and elsewhere will see a lowering of their home’s market value and thus the equity they’ve been socking away for years. A study done by Moody’s Analytics forecasts the gap between what home values would be in 2019 without changes in the current tax code, and what they would be with the GPO’s new tax changes. In other words, the proposed changes would result in lost growth in the following Chicago area counties:

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

This is important because, like most Americans, many Chicagoans treat their home as a piggy bank or retirement fund. The equity built over decades of mortgage payments can, it was assumed, be cashed-in at retirement time, or used for college tuition. The new legislation will still allow homeowners the ability to sock away money; it’s just that the piggy bank will have fewer coins in it.

Those in the Chicago area who could really feel the impact are homeowners who live in Oak Park, for example. On a $400,000 home, the average homeowner pays around $15,000 in property taxes. When this bill takes effect, that homeowner can only deduct $10,000. The rest has to be eaten. It is, in effect, a tax hike for these residents, and others in similar high property tax areas.

Impact to Chicago home buyers: some win, some lose.

Home buyers in expensive or high property tax areas in metro Chicago are going to get hammered once the new tax plan will take effect.  The reduction on the amount a home buyer can claim on their Federal taxes are making buying and paying for a home more expensive, particularly if that buyer chooses to live in an area with high property taxes (which often means in neighborhoods with good schools). In less expensive areas, if home values decline as many economists predict, the cost of buying a home should be cheaper. However, the current shortage of homes on the market may only get worse, driving up prices.

If you are a home buyer and take out a mortgage for over $750,000 the cost of maintaining that home will be much higher, especially at the outset. For example, the first years of home ownership sees mortgage payments that are almost all interest, and very little principal. Given that most Americans move every seven years or so, new home buyers and owners will get hit hard by the lowering of mortgage interest deductions.

New Tax Reform Hits Some Chicago Real Estate Home Buyers & Sellers Hard

So How Will the GOP Tax Reform Bill, also known as Tax Cuts and Jobs Act affect Chicago’s real estate market? Jury is still out

It remains to be seen if home prices will fall, as the NAR claims, or rise because sellers refuse to put their homes on the market because they will loss mortgage interest deductions on a new home purchase, thus driving prices up and inventories down.

It’s not all doom and gloom. The tax reform legislation contains other key changes whose impact is still being analyzed but also has the potential to increase or decrease tax burdens based on individual factors.   These could offset some of the more disadvantageous parts the bill that target some homeowners, sellers, and buyers.  Accountants and IRS agents alike are scrambling to understand and clarify the details.

One thing is for sure; this bill tax reform is becoming law, and a whole bunch of people are going to be angry in Chicago, and across the U.S.