By John Martino
Home Inspector with LookSmart Home Inspections, LLC
After performing more than 8,000 NJ home inspections since 2002, I have noticed a trend that many home buyers do not fully appreciate until they are deep into the transaction.
In today’s Northeast real estate market, buyers are often willing to accept conditions that insurance companies may not.
The buyer may be comfortable with an older roof.
The buyer may be comfortable with an older electrical panel.
The buyer may be comfortable with signs of past basement moisture.
The buyer may be comfortable with oil heat or an underground oil tank.
The insurance company may have a different opinion.
That does not mean the buyer is wrong.
It does not mean the insurance company is wrong.
It simply means they are evaluating the property from different perspectives.
The buyer is deciding whether they want to own the home.
The insurance company is deciding whether they want to insure the risk.
One reason I find this topic particularly interesting is that many years ago, while training to become a New Jersey home inspector, I performed third-party property inspections for insurance companies. That experience taught me something that has stayed with me throughout my career.
A home inspector and an insurance company may inspect the exact same home and focus on completely different things.
As a NJ home inspector, I am primarily concerned with helping my client understand the condition of the property they are purchasing.
Insurance companies are often focused on risk.
That distinction is becoming increasingly important in today’s real estate market.
Condition Versus Risk
When I perform a home inspection, I am trying to determine the condition of the home.
I am asking questions such as:
- Is it functioning properly?
- Is it safe?
- Does it require maintenance?
- Is it nearing the end of its service life?
- Does it require repair or further evaluation?
Insurance companies are often asking different questions.
- How likely is this condition to result in a future claim?
- How expensive could that claim be?
- Does this condition increase liability exposure?
- Does additional documentation need to be obtained?
Neither perspective is necessarily wrong.
They simply serve different purposes.
Unfortunately, many buyers do not discover this until they are already approaching the finish line of the transaction.
Older Roofs
One of the most common examples involves roofing.
I frequently inspect roofs that are older but still functional. They may not be leaking. They may not show signs of active water intrusion. They may still have useful life remaining.
Many buyers are comfortable accepting an older roof.
Insurance companies may have a different idea.
Their concern is often not whether the roof is leaking today. Their concern is the likelihood of future claims.
A roof that appears serviceable during a home inspection may still attract additional attention from an insurance company.
This is one reason I encourage buyers to discuss older roofs with their insurance representative early in the transaction.
Electrical Systems
Electrical systems are another area where buyers and insurance companies sometimes view risk differently.
Examples include:
- Federal Pacific electrical panels
- Zinsco electrical panels
- Older service equipment
- Aluminum branch wiring
- Improper electrical modifications
- Missing modern safety devices
Many buyers are willing to accept these conditions and budget for future improvements.
Insurance companies may not share the same level of comfort.
In some situations, repairs, upgrades, additional documentation, or further evaluation may be requested.
Again, the issue is often not whether the system is currently operational.
The issue is risk.
Water Intrusion and Moisture Concerns
Water damage remains one of the most expensive and common problems affecting homes.
As a result, insurance companies often pay close attention to signs of moisture intrusion.
Examples include:
- Basement seepage
- Water stains
- Drainage concerns
- Mold remediation
- Sump pump systems
- Evidence of prior leakage
A basement may be completely dry on the day of the home inspection.
A buyer may be comfortable with the condition.
An insurance company may have a different idea.
The concern is often future claim potential rather than what happened on the day of the inspection.
Oil Heat and Underground Oil Tanks
This topic is particularly relevant in New Jersey.
Many buyers are comfortable purchasing homes with oil heat.
However, underground oil tanks, older oil systems, and missing documentation can create additional concerns.
Environmental claims can be extremely expensive.
As a result, insurance companies often pay close attention to these conditions.
Removal permits, closure reports, testing records, and service documentation may become just as important as the physical condition of the system itself.
Decks, Stairs, and Liability Hazards
Many buyers focus primarily on the house itself.
Insurance companies often focus on liability exposure as well.
Items that may attract attention include:
- Decks
- Handrails
- Exterior stairs
- Walkways
- Retaining walls
- Pools
- Trip hazards
- Tree conditions
A buyer may look at these conditions and decide they can address them over time.
An insurance company may decide they represent an elevated liability risk.
Again, different perspectives.
The Insurance Surprise
One of the biggest misconceptions I encounter during NJ home inspections is the belief that once the inspection is complete, the difficult part of the transaction is over.
Sometimes the insurance review becomes the next hurdle.
A buyer may discover:
- Additional documentation is required
- Certain repairs are requested
- Premiums are higher than expected
- Coverage limitations may apply
- Further evaluation is necessary
The home has not changed.
The insurance company’s assessment of risk is what changed.
What Home Buyers Should Do
My recommendation is simple.
Contact your insurance company early.
Do not wait until the final days before closing.
If the home has an older roof, older electrical equipment, evidence of prior water intrusion, oil heat, an underground oil tank, or significant liability concerns, discuss those items with your insurance representative before the end of your inspection contingency period.
The sooner potential concerns are identified, the more options buyers typically have.
Final Thoughts
After thousands of NJ home inspections, I have learned that condition and risk are not always the same thing.
Many buyers are willing to accept certain conditions in a home.
Insurance companies may have a different idea.
A roof can be functional and still concern an insurance company.
An electrical panel can be operational and still concern an insurance company.
A basement can be dry and still concern an insurance company.
A deck can be usable and still concern an insurance company.
The home inspector is evaluating condition.
The insurance company is evaluating risk.
Understanding both perspectives may help buyers make better decisions, ask better questions, avoid surprises, and navigate today’s Northeast real estate market with greater confidence.
John Martino is a Board-Certified Master Inspector and the owner of LookSmart Home Inspections, LLC. Since 2002, he has performed more than 8,000 NJ home inspections for home buyers throughout New Jersey. John performs one inspection per day, allowing him to spend the time necessary to thoroughly evaluate each property and educate his clients.
In addition to home inspections, John provides radon testing, termite inspections, mold testing, sewer line inspections, thermal imaging, and drone roof evaluations. Earlier in his career, he also performed third-party property inspections for insurance companies, providing him with a unique perspective on how homes are evaluated from both a condition and risk standpoint.
John’s goal is simple: help buyers understand the home they are purchasing so they can make informed decisions and avoid costly surprises after closing.