Report Writing and Defect Definitions

General Inspection Topics General Inspection Discussion
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I am re-evaluating for probably the tenth time in my career how to rate defects. Changes in report software, changes in our industry, legal decisions and our SoP all evolve. And then, I had a long conversation yesterday evening with an agent about a shared client who seemed to be a literalist about the inspection report. It reminded me that being careful about what we say is important. How we report is as important as how we inspect in my not so humble opinion. I know all about the many opinions including legal opinions from Nachi’s own team regarding rating defects for severity (I’ll slightly over state and say they are against rating defects) but Nachi’s new software rates defects as does everyone else’s. So, I spent a few hours working on refining how I rate defects using Nachi’s new software ratings (which actually do not have comprehensive definitions included). So, I wanted to bounce what I’ve come up with off of you guys. And full disclosure, I did run it past what AI thinks and got some good input from AI.

Understanding Defects and Creating Your Priorities

The opinions and concerns expressed in this report are based on the inspector’s knowledge, experience, and the guidelines established by the InterNational Association of Certified Home Inspectors (InterNACHI). These findings represent a professional assessment of the home’s condition at the time of inspection and are intended to help you understand the home’s condition clearly and accurately.

Your knowledge, experience, DIY skills, personal priorities, budget, plans for the home, and tolerance for risk ultimately determine which items are most important to you. You are encouraged to seek additional opinions, advice, and cost estimates from qualified contractors or specialists.

Inspection severity ratings are not based on repair cost, and inspectors are not required to estimate repair costs. Many factors can influence pricing.

Defect Classification Policy

This inspection report uses a multi‑category classification system to clearly communicate the nature, severity, and functional impact of observed conditions. Each classification is based on safety, system performance, and likelihood of damage, not on the cost of repair.

The categories below explain how different types of findings appear in the report.

Informational

Informational items provide descriptions, disclosures, limitations, or disclaimers. These statements give context about systems, components, or inspection conditions and do not represent defects.

Observation

Observation items describe conditions that do not materially affect the performance or use of a component. Terms such as “Appears Serviceable,” “Operated,” or “Functioned” indicate that the component performed as intended at the time of inspection. The overall condition and performance appeared appropriate for its age and use. Components may show cosmetic wear or minor imperfections that do not materially impact their function.

Severity and Cost Do Not Equal Importance

Severity describes the condition, not your decision.

A $40 repair can be a Material Defect (e.g., a defective smoke alarm).

A $3,000 repair can be a Minor Defect (e.g., an aging but functional water heater).

Your personal situation determines what matters most.

Minor Defect

A Minor Defect is a condition that does not affect the safety, function, or habitability of the home. These issues are typically cosmetic or maintenance‑related and do not pose an immediate risk to occupants or the structure. Some Minor Defects may be expensive to repair or replace.

Characteristics

  • Cosmetic in nature
  • Routine maintenance or wear
  • Does not impair system function
  • Unlikely to worsen rapidly or cause damage if deferred

Major Defect

A Major Defect is a condition that affects the proper function of a system or component, may lead to damage if not corrected, or significantly impacts the home’s performance. These issues warrant timely repair but may not represent an immediate safety hazard. Some Major Defects may be inexpensive and simple to repair.

Characteristics

  • Functional failure of a system or component
  • Likely to worsen or cause secondary damage
  • Impacts habitability or intended operation
  • Not immediately dangerous but requires prompt attention

Material Defect

A Material Defect is a condition that poses an unreasonable risk to people or may have a significant, adverse impact on the value or habitability of the property. These defects represent the highest level of concern and require immediate correction or professional evaluation. Cost of repair or difficulty of repair is not a consideration in determining whether a defect is material.

Characteristics

  • Safety hazard or life‑safety failure
  • Significant impact on habitability or structural integrity
  • Failure of a required system to perform its intended function
  • High potential for injury, fire, flooding, or structural damage

Using the Report as a Decision‑Making Tool

This report is not a list of required repairs—it is a roadmap for informed decision‑making.

Most clients use the report to:

  • Identify safety issues to correct immediately
  • Prioritize repairs over the first year
  • Budget for upcoming maintenance
  • Negotiate repairs or concessions
  • Understand the home’s condition before closing
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What is this for? Introduction to a report? Blog? Inspection agreement?

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This is great Lon. NC just released an updated SOP last month so I’m in the process of revising our report intro. We have a lot of the same stuff but what you have looks tighter. I have not run mine through AI, but I’m gonna do that to clean up some things and make sure it jives with our updates. I’ll post what I come up with this week. I may borrow a few things you have. Thanks for sharing this.

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That’s it. At the top of the report.

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Personally, I would remove all the commentary and define the defect categories. A statement excluding cost from the definition is an important distinction I would leave in.
__________________________________________________________________

For example. This is enough. No need for Characteristics.

A Minor Defect is a condition that does not affect the safety, function, or habitability of the home. These issues are typically cosmetic or maintenance‑related and do not pose an immediate risk to occupants or the structure. Some Minor Defects may be expensive to repair or replace.

My version is even shorter.

A Minor Defect does not affect the safety, function, or habitability of the home. It is typically cosmetic or maintenance-related, although some Minor Defects may be costly to repair or replace.

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Good thoughts. As someone prone to be wordy, I am constantly trying to discipline myself when writing reports to keep it lean and mean.

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Same here. On more complicated defects, several revisions are usually required to reduce word count from novel to paragraph. LOL.

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You bring up a good topic, rarely seen on this forum, a topic focused on improved inspection writing.

Unfortunately, it seems that buyers don’t read the introduction. Instead, they go directly to the Summary section of the report that contains the categorized findings. Then, they may go back and read the definition of the categories. I think the observation definition area is the place to capture and properly focus the client’s understanding of the importance of the observations.

That’s where I struggle, because sometimes I see buyers asking the seller to repair issues that IMO should not be on the buyer Request List. Your post motivates me to review the definition section of my categorise and make another attempt to improve it.

One comment: My Summary section does not include Information items. Those items are in the main body of the report.

On the topic of categorizing findings, my opinion is that this is central and crucial to providing my clients with a good inspection report. When I chose my report software, the categorizing component of the software was a critical component to my choice.

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And the Inspection Agreement. (Bad analogy time) All we can do is lead the horse to the water. But we still need water there for those thirsty horses.
I try to keep the boiler plate stuff brief and to the point so that maybe it’ll get read.
The ratings definition got longer than I intended, but AI pointed out that to be defensible, I needed more than a simple one-line definition. When I did the deeper dive, I realized that I was also redefining my own interpretations of the importance of defects. Frankly, after 26+ years, I am doing a bit of a reboot on how I report defects, to get more in line with today’s industry standards. Our SoP is a bit behind, imo, but we still have to pay attention to that, also.
So, I’ve also refined my introduction at the beginning of my report, ahead of the definitions. I say this all the time, “Setting our client’s expectations is crucial for their understanding of what is a home inspection.”

About This Inspection and Report:

This inspection report documents the findings from the visual‑only inspection described in your Inspection Agreement. Portions of this report may have been written during or after the inspection.

Do not rely solely on this report to make final decisions.

Any comments or opinions about defects do not replace the need for further evaluation by qualified experts or licensed contractors. When the report recommends additional evaluation, the purpose is to have the appropriate professional perform a more exhaustive examination than is possible during a home inspection.

This inspection provides a snapshot view of the condition of the readily visible components of the property and how they performed at the time of the inspection. It is your responsibility to follow up on any observations and recommendations in this report.

The Summary is intentionally limited to Major and Material Defects.

You must read the full report.

Descriptions and photos in the report are not a comprehensive list of all defects. In some cases, they represent examples of repetitive conditions. Observations, conclusions, and recommendations are based on the inspected samples.

The inspection attempts to identify every major and material defect, but it does not—and cannot—identify every defect, condition, or concern.

For most people, buying a home is the largest purchase they will ever make. Getting expert and second opinions for anything you still have questions about can be helpful and important in fully understanding the property and this purchase.

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That’s an interesting comment. I’ve considered reducing the number of comments in my Summary. I consider Major and Safety as my two most important items. Currently I have all of my other categories in my Summary too. If I were to pare back the items listed in my Summary, I’d include the above two plus Needs Further Evaluation.

The unresolved problem I have is that some items in what I call Moderate Concern are relevant. Example; “Extensive shingle granular loss due to snow removal. The shingles are functional but will need to be replaced in the next 5 to 10 years.” I do want my client to be aware of observations like this, but they are not an immediate concern that needs to be addressed right away. The same with decks, especially ledger board fastening defects, a common observation. I do call ledger fastening issues and railing issues a Safety item but lump all the other deck issues into the category Moderate Concern.

Do those type of issues go into your Summary?

A lot of clients don’t read the detail section of the report until after closing or maybe never at all. This is where liability issues can develop. Currently, I error on the cautions side. You have a lot more experience inspecting than I do, although I have decades of construction experience. I’m all ears on how you handle this.

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One more thing about our SoP and our inspections. Fences are excluded from our SoP. In my report, I specifically note that our SoP excludes fences and any observations reported are at the discretion of the inspector and will be limited.

In the last year, I’ve had two clients zero in on the fence as a really big deal to them, including a client last week. That is one of those places where our SoP should be updated.

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That statement right there is one of the most important aspects of a professional Agreement AND Report!
IMO, the only way to provide an accurate and pointed report for any given Client, is to have an
in-depth conversation with them, to fully understand what is important to THEM, and how your report will address such issues.
When booking an inspection, I have an actual conversation with the client. I am on the phone with them for nearly 25-35 minutes. I learn as much about them as possible, and they learn about me and how I will be providing my service to them, and what to expect. Very often, by the time the conversation ends, they have all but forgotten their initial question of “How much?”

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Exactly, relevant to my previous post. I’ll exceed the SOP and report about a fence issue, but if it doesn’t make it into the Summary and instead is buried in the Detail Section of the report, where do we stand? Like you point out, clients have different priorities than what we as an inspector might have. From several bad clients during my construction time, I tend to exceed the SOP. However, my report can be overwhelming for some clients.

I have been considering reducing the extent of my Summary. I like your statement, "The Summary is intentionally limited to Major and Material Defects.

You must read the full report." I’d post it prominently above the Summary section. The fence issue you mention, or my shingle granule loss item would then be in the Detail Section only. Hidden???

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Many “Old School” inspectors, (like myself) have stopped providing Summaries altogether!
(I haven’t provided one since 2009). Clients NEVER ask about them, (they don’t even know they exist), and only the occasional pissy Agent ever gripes about NOT receiving one. Perhaps it is because I insist they are present with the Client at the Walk-through for my “LIVE SUMMARY” which allows for a full on-site conversation so there is full understanding of what we are all looking at!

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Very good point, but the majority of the time, client presence at the inspection doesn’t work in my market. I do request that the client be present, but more often than not, the client is not a local resident and lives far away. Maybe it’s a good idea to insist on a phone conversation, a day or two after publishing the report. I do encourage my clients to call me post report publishing, and often they do.

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I’ve had a few Clients insist that their Agent show up and perform a LIVE video call for the walk-through.
I’ve even gone so far as suggesting to my Client that they discuss this scenario with their Agent… considering that I DO NOT offer the service, (too much liability if they think something is missed in the call).

As do I, and will call them if they don’t call me within 2 days/end of contingency period.
I find that the more contact I have with them from the day of inspection, the fewer calls (if any) that I receive with stoopid questions!

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I salute in your general direction. I tried to do away with the summary a few years ago, and the agent pushback and some from experienced buyers was enormous. Here, the market told me they want to see a summary. So, I have a summary, but I have always limited the content in it to the big problems and repeatedly post the demand that they read the entire report.

Gotta say, I have had very few complaints over the years about my reporting. Many years ago, one guy complained that his last inspection had more photos than mine. I have never bloated a report with filler photos, but I’ve darn seen reports loaded with photos of empty rooms and long boiler plate disclaimers and advice and just BS. So, I am sympathetic to an agent who has seen too many of those and doesn’t want to slog his/her way through it. One agent sent me a 155-page report, begging me to interpret it for her.

I am not a guy who likes a lot of regulation, but I think I might add a reg saying no summaries in reports if I was writing a license law for home inspections. :angry_face_with_horns:

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Why not just update your agreement? They are fine on a postage stamp lot, but what about acreage?

Personally, I would consider them as an opportunity to upcharge. Perhaps Ben could add some training and we get a badge for it :slight_smile:

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Here’s what I came up with our standard NC report. Borrowed a few ideas from you, Lon, and had Perplexity give it a once over to remove some of the redundancies I had, and trim it down a touch. (I’m not including the required NC paragraph for the summary page here)

This inspection was performed in accordance with the NCHILB Standards of Practice. The “Standards” tab in each section lists the applicable requirements and exclusions.

Building Orientation
Unless otherwise noted, right and left are referenced as viewed from the front yard, facing the front of the building.

Comment Key
Information: Observations about the home at the time of inspection, such as shut-off locations, estimated system ages, and components no longer in use. Cosmetic conditions are outside the scope of this inspection. Any cosmetic comments are a courtesy and are not comprehensive.

Recommendation: Items that were functioning as intended at the time of inspection but warrant maintenance, monitoring, or improvement. Examples include normal wear and tear, components at or near the end of their typical service life, prior repairs, past moisture evidence that did not appear active, typical shrinkage cracks, and upgrades that may not have been required when the home was built. “Recommendation” does not mean minor; some of these items may carry significant cost.

Defect: A system or component that did not function as intended, appeared not to based on visible evidence, or presented a safety hazard. These items warrant repair or evaluation by a qualified specialist. Conditions that allow water entry are reported as defects even when no active leak was observed.

Material Defect: A defect that, in the inspector’s judgment, poses an unreasonable safety hazard or may require substantial correction. Defects and Material Defects range from simple to extensive corrections. We recommend evaluating both with a qualified specialist before your due diligence period ends.

  • Understanding Observations
    Categories are not ranked by cost. A working HVAC system near the end of its life (Recommendation) may cost more than correcting a miswired receptacle (Material Defect).
  • The number of observations does not indicate the overall condition of the home.
  • Observations are not diagnoses, repair specifications, or repair requirements.
  • This is not a code-compliance inspection, and the home is not rated or graded.
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I did a quick scan of NC SoP. I’m not sure that I found the final version, but I only saw one defect designation

Harmful" means conditions that cause damage to systems and components of the home.

Since, you are under NC SoP, you might want to confirm the defect classifications in it.
My Material Defects definition is straight from Nachi’s SoP. If the NC SoP has “Material Defects” or any other defects designations, then you should use those and definitions. If you are using Material Defects as Nachi describes it in their SoP, then I suggest to you to use my definition.