What goes around comes around, sometimes sooner than you think. I was just reminded of this with a buyer / borrower who instructed his inspector to find every minor flaw in the property and to be at his rhetorical best when drafting the inspection report. Makes for good drama in the negotiations and may actually win your client a few dollars in concessions, not to mention lots of style points with all concerned.
But here's the rub - the more involved the inspection negotiations, the bigger the trail left for underwriters to follow. Underwriters generally don't ask for inspection reports and I certainly don't volunteer them. But, when the trail becomes too big to ignore, the underwriter has no choice but to take it up. And God help your deal when the underwriter starts reading about the frightening list of deficiencies in the proposed collateral, as told by Stephen King.
Of course, the possibility for an inspection report to intrude upon an otherwise smooth lending process is not really news to anyone who has been in industry for longer than 5 years or so (which is basically all of us now). It is newsworthy, nonetheless, because, along with all the new lending guidelines, we are also experiencing a heightened emphasis on some of the older neglected rules as well. And the last thing any of us need is Hollywood-style drama to interfere with our Seattle-style real estate market.
The views expressed in this article are entirely my own and not necessarily shared by Guild Mortgage Company.
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