A home's physical condition greatly affects its value. You'd feel horrible if you paid top dollar for a home that you thought was in tip-top shape and then discovered after you bought it that the house was riddled with expensive defects. And yet, unless you're a professional property inspector, you probably won't have the faintest idea how much corrective work a house needs simply by looking at it.
Most states (but certainly not all) now require that sellers and real estate agents make full, immediate disclosure to prospective buyers of all known mechanical, structural, and legal problems associated with owner-occupied residential property.
Patent and latent defects
Property defects come in two general categories -- patent and latent:
Patent defects are right out in the open for all the world to see. You don't need a professional property inspector to point out glaringly obvious stuff (like water stains on the ceiling, cracks in the wall, or a flooded basement.) You do, however, need a trained professional to tell you whether these defects are signs of major problems or merely inconsequential blemishes. Learn more about Patent-defect red flags.
Latent defects can be even more financially devastating than patent defects because they're hidden and out of sight -- behind walls or concealed in inaccessible areas. Faulty wiring, termite damage, a cracked heat-exchanger in the furnace, and health and safety-code problems (such as lead in the water pipes and asbestos insulation) are some examples of latent physical flaws. Legal blemishes, such as zoning violations and fraudulent title claims, illustrate another kind of invisible latent defect that only experts can detect.