Just the other day I overheard a story about first time home buyers. Because they thought it wasn't really necessary, they did not heed the advice of their Realtor to hire a professional home inspector.

They thought they could save a few hundred dollars normally charged by a home inspector. Money was scarce to begin with. So they asked their dad to inspect the house.

After all thirty years of climbing ladders had taught him most everything about houses.

In order to protect their privacy I am going to call this couple Jim and Meg. As I was saying, Jim and Meg recently bought a house and thought they could save some money by asking Meg's dad to look the house over before they closed on the purchase of their new home.

Meg's dad worked in construction all his life. He knew all anyone needs to know about houses, Meg and Jim assumed. Their expectation that her dad could spot anything troublesome seemed reasonable.

So Dad took a look at the house and confirmed they were getting a good deal. He had inspected a pretty sturdy house, Jim's father-in-law reported.

It turned out to be a big mistake and a costly one. Sure, Jim and Meg saved the price of hiring a professional home inspector but it was insignificant compared to what followed, repairing the electrical panel and replacing electrical wiring.

Here is a mistake home buyers often make. The terminology is strange and they skip over the importance of home inspection.

A lot of people wonder if they pay for an appraisal why would they also need a home inspection. The answer is simple really.

According to Barron's Dictionary Of Real Estate Terms a house appraisal is an estimate or opinion of the value of a property. Appraisers can use 3 methods to estimate the value of real estate, the cost approach, the income approach, and the market comparison approach.

When buying a house for your personal residence, an appraiser normally uses a market comparison by comparing the subject house with other homes in the area.

In other words, a licensed real estate appraiser determines if the price you are paying for your new home falls with the market value of other homes in the area. The real estate appraisal does not normally look in depth at plumbing, heating or electrical systems for example.

In contrast, a home inspector's job is to zero in on safety and soundness aspects of your new home. A home inspection will determine if the structure, construction, and mechanical systems are safe as well as working correctly. In addition, your professional home inspector will point out immediate and future repairs with the associated estimate of cost.

Assistance from real estate agents is instrumental at this point. Benefit from their judgment. Trained and experienced in writing purchase and sale agreements, they know how to guard against unexpected repairs.

When you find a house you are serious about buying, request that your real estate agent show you how to write up the offer subject to inspection. That way there is an acceptable exit if a home inspection unveils any major problems.

You can also ask your real estate agent how to accommodate a price adjustment if necessary. An inspection clause in your offer can also specify that the seller fix any repairs before close.

Don't end up like Jim and Meg. Because Dad wasn't equipped to properly inspect the house and wasn't systematic in his approach, he missed a problem with the electrical panel which they eventually had to replace. They saved $400 on the inspection but paid more than $2,000 for a new electrical panel and updated wiring.