Nothing in the escrow process will kill a deal faster than a failed house inspection. Even issues with the mortgage lender can usually be solved, unless of course you are totally rejected for a loan in which case you should have had this figured out before house hunting.
Having an inspection done on your new home is imperative. Think of it like this: You saw the house perhaps twice? How much did you notice? The lovely new kitchen counters? The spotless two car garage? Maybe the large deck out back absolutely clinched the deal. But did you notice the water spots on the bedroom ceiling? Did you check the bathroom window to see that it was literally falling away from the framework? Or did you even see those pesky little bugs crawling around under the kitchen sink? Probably not
All states require your real estate agent to provide you with a fact sheet filled out by the homeowner. This sheet is meant to disclose any problems with the property. These problems include anything from "paranormal activity" (this is not a joke) to water pressure issues. However, in defense of most homeowners, they aren't always aware of the serious issues that might be discovered during a thorough home inspection done by an experienced team.
What could an inspector possibly find that would cause you to cancel the deal? For one, if you are buying an older home, building codes are frequently updated and even though the current homeowner isn't required to know about or correct these violations, homes can't be sold until the home is brought up to code. This type of problem typically falls on the home owner's shoulders to repair unless you are willing to negotiate something different.
Next on the list of deal breakers is a termite infestation. These little buggers do an excellent job of hiding all evidence of destruction until the damage is so severe that the entire house may need to be demolished. Many pest control experts won't even look for termites until the homeowner suspects their presence, and in many cases termite damage is mistaken for carpenter ant infestations. Find someone who knows the telltale signs and gives you a written guarantee they don't exist in your new property.
And last but definitely not least, faulty wiring can not only be a deal killer, it can be a people killer as well. Too many homeowners think they know everything they need to know about changing out circuit breakers, adding an outlet, hanging outdoor lights, etc. They come to find out that their DYI expertise, or lack thereof, has turned the house into a fire trap, only to be discovered by a qualified home inspector.
All homes, new and old, should have a complete inspection. This includes the roof, wiring, plumbing, construction, windows, attic, basement, outside structures, heating and AC units, ducts, and fencing. Some inspectors are able to check for pests (especially termites) and some aren't. They will check each room thoroughly, take pictures, and provide a detailed report. This is where the report could make or break the deal you have in place - depending on how the actual Purchase and Sale Agreement is worded.
First, make sure you find a qualified, experienced and fully licensed home inspector. Some states don't require home inspectors to be licensed, so check the regulations in your area. Without needing a license, anyone can set up shop and refer to themselves as a home inspector when they have no experience in the industry at all.
You, your real estate agent, the listing agent, and the homeowners are usually on site during the inspection. The location and size of the property, and whether it's one or multiple floors, will determine how long the inspection can take. The buyer usually picks up the cost of the inspection simply because you are the one who will ultimately benefit from the results, even if it means backing out of the deal.
Make certain your Purchase and Sale Agreement has the appropriate wording in there to allow you to back out of the deal, AND recoup all deposits you made if the inspection uncovers problems that you and the seller cannot resolve to your satisfaction.
In other words, even though the default language in these documents usually claims the property is being sold "as is", that doesn't mean you need to buy it "as is" with any significant defects. An experienced agent will hopefully be able to help close the deal to everyone's satisfaction.