When Should a Home-Buyer Retain an Engineer?

A new home is a major investment for most people and increased demand for a limited supply of existing homes has made home shopping even more challenging. In some markets, the available housing stock, especially at lower price points, is aging and does not reflect modern lifestyles. Consequently, a lot of homes need maintenance, repairs and upgrades to fulfill buyers expectations. Given the costs of purchasing a home, along with the costs of maintaining, operating and potentially repairing an aging property, buyer due diligence is perhaps more important than ever.

Before closing, most buyers obtain a home inspection, which is an economical way for the typical home-buyer to identify potential issues with a property. However, home inspections are very limited as home inspectors are trained in identifying certain problems, but cannot offer solutions. Licensed design professional, like architects and engineers, can provide a more holistic approach to due diligence. Architects can help home-buyers consider the full range of limitations and possibilities with a purchase, while engineers can provide detailed assessments of issues in their respective disciplines.

Engineers are commonly retained to assess the conditions of commercial and institutional properties in real estate transactions. Some large owners manage their facilities in a very systematic way and need to understand the maintenance demands of any new purchase. Other buyers approach purchases with the intent of altering or redeveloping a property and need to understand whether their plans are technically feasible given the existing conditions.

While commercial and institution buyers may need engineers to help them with due diligence, when should a home-buyer retain an engineer? Actually, the circumstances in which a home-buyer should retain and engineer are parallel to the cases in which a commercial or industrial buyer would seek engineering assistance with due diligence.

Alterations and Improvements: Just as a commercial buyer might intend to reposition an office building or redevelop an industrial site as luxury condos, many home-buyer seek out “fixer-uppers”. But buying a property based on what you might be able to do with it is a risky proposition. Opening up a floor plan or building an addition might require strengthening of existing structural systems. New construction might trigger environmental restrictions or require upgraded infrastructure. An engineer can help you explore these issues and reduce the risk that your expectations cannot be met.

Maintenance and Repair: A large facility owner needs to know how a new purchase will impact their capital improvement and maintenance budgets. Similarly, a home-buyer needs to go into a purchase confident that he or she keep their new home in a state of good repair. A home inspection is the first step toward understanding likely maintenance issues, but certain issues warrant further evaluation. If the home inspection identifies structural distress, an engineering assessment may be justified. While distress often does not signify an imminent failure, it may be a sign that a system is defective or has reached the end of its useful life. Also, issues related to foundation movement, retaining wall failures and slope instabilities can lead to serious damage that may not be covered by insurance. These probably warrant an engineering assessment.

Financing and Insurance: Lenders and insurers underwrite loans and policies based on their assessment of the risks involved. Sometimes an engineering assessment can help better define risk, thus reducing uncertainty and potentially leading to more favorable underwriting decisions. In addition, owners may have to decide whether to retain or insure certain risks, for example, by deciding whether to buy flood or earthquake insurance. An engineer’s assessment can help guide these decisions.

As with other professionals, the services of an engineer is a significant investment. Not every home-buyer needs an engineer for their purchase, but sometimes an engineering assessment useful for making a fully-informed purchase and avoiding buyers’ remorse.

The information and statements in this document are for information purposes only and do not comprise the professional advice of the author or create a professional relationship between reader and author.