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Estimate is not an inspection...should this be disclosed?

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Real Estate Agent with Alain Pinel BRE 01367196

Estimate is not an inspection...should this be disclosed? home inspection

Here’s a situation where the buyer of a Victorian home did not order inspections during his buyer investigation period. Rather, he got an estimate from a foundation contractor who merely did a “walk around” and provided in a brief email how much he would charge to replace the brick foundation.

An estimate is not an inspection

The buyer’s agent said in an informal request via email that the buyers would like a price reduction based on the contractor’s informal email estimate. The buyers are missing their inspection deadline and requested an extension


The sellers felt blind-sided because they were told the buyers were doing inspections on a certain date.

The sellers don’t want to grant an extension unless the foundation assessment is a full inspection. They will not negotiate based on a “walk around” estimate, and want another contractor to provide a detailed estimate and alternatives on how to address the issue of replacing a brick foundation.


What exactly is considered an inspection?  

The new foundation contractor will offer a “free inspection and quote”. But does this qualify as a real inspection?

Searching on line, I found a comprehensive list of what to expect from a foundation inspection.

  • Foundation analysis
  • Interior and exterior observations
  • Conclusions
  • Recommendations
  • Photo file


Estimate, but not an inspection -- should this be disclosed?

An inspection, once completed, becomes part of the disclosure package.

But should an estimate be disclosed to the next buyers if this transaction is cancelled? Is an estimate now considered material information?

Comments (36)

Chuck Mixon
The Keyes Company - Cutler Bay, FL
Cutler Bay Specialist, GRI, CDPE, BPOR

As Kieth said above I think an inspection was done to come up with an estimate, how detail the estimate and the report of the problem is the concern. Lets say the simple walk around is for $5000, I am sure this is an open ended estimate meaning it can be more. If the seller agree to the 5K now and the estimate goes up later the Seller is in better shape.

To look out for your Seller I may suggest a second opinion to make sure the work the Buyer is getting a request on is essential and not cosmetic. The is important if you and the Seller feel that the casual walk around was not as professional as you think it should be.

As for disclosure I disclosure everything because in my state the Buyer can come back after the sale and ask the Seller  for damages if they can prove they were aware of the damages, unless it is disclosed.

Sep 18, 2012 04:50 AM
Dr. Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

No doubt and inspection performed by a licensed inspector is superior for sure.  Disclosure however is a tricky thing.  If you know about something, you should disclose what you know.  I cannot imagine purchasing a property without a proper inspection.

Sep 18, 2012 04:56 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Keith -- because there was no formal inspection and no formal request for repairs or credits, sellers refused to grant extension of inspection and refused to negotiate. Notice to Buyer to Perform was prepared and was a day from being delivered to Buyer. Buyer's agent and his buyers were premature in asking for price reduction and backtracked....now they ordered the whole she-bang. Sellers agreed to extend the inspection period.

Richard -- buyers can negotiate any way they want...but to make their position stronger, don't you think they should negotiate by providing documents to justify their request? Further, they should do it on formal documents that require an answer -- the answer could be yay, nay, or counter.

Glenn -- I didn't think estimates, specially informal ones (no document outlining how the estimate was reached) qualify as material information. But we have a saying, when in doubt, "disclose, disclose, disclose!"

Debbie -- the problem is, many of these estimators also do the work they are estimating. So it's hard to find anyone who can be truly impartial and who are not padding the work (in case they get the job)

Chuck -- the sellers insisted on getting a second opinion and formal inspection from another reputable company.

Paula -- I think the buyer's agent and his buyers were forced to get the inspections after they saw how incredulous their price reduction request was based on a "walk around" estimate.

 

Sep 18, 2012 05:07 AM
Steve Vennemann-Hennepin-Dakota-Anoka contract for deed property-Ramsey-MN
BoardWalk Premier Realty INC - White Bear Lake, MN

Always get an inspection and always disclose everything ..

Sep 18, 2012 05:18 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Steve -- I have to remind myself of the mantra "Disclose, disclose, disclose!" Even when we hear a neighbor say something we can't prove, we should add that info somewhere once we hear of it.

Sep 18, 2012 06:06 AM
Melissa Marro
Keller Williams First Coast Realty - The Marro Team - Orange Park, FL
Jacksonville Real Estate and Home Staging

A very similar problem happened to me last year. It actually ended up costing the deal. 

Sep 18, 2012 06:19 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Melissa -- sorry the deal went south.

One benefit to the seller if buyer gets the inspections: they get receive the reports. Armed with this knowledge, they can act accordingly -- do some repairs, be willing to negotiate, etc.

 

Sep 18, 2012 06:38 AM
Spectrum Inspection Group
Spectrum Inspection Group - Las Vegas, NV

Perhaps you can have a home inspector come out and inspect the home before you get another offer.  It would make the seller fully aware of any issues and then they could disclose those issues to any potential buyer, share the report and complete some repairs beforehand.

Sep 18, 2012 07:02 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Spectrum (do you have a name?) --

It was recommended to seller to get a home and pest inspection. But their position was that the buyer will get their own inspection anyway, so they decided not to. There wasn't anything more they wanted to do to the house -- they wanted to sell AS IS. If there were going to be requests for credits for repairs/replacement, they thought they would address that later.

 

Sep 18, 2012 07:08 AM
David Niles
Niles Real Estate Investments www.NilesREI.com - Hamburg, NY

I would agree with Richard, they are entitled to ask for whatever they want for really what ever reason, licensed contractor / inspector or not.  Whether or not your sellers feel the requests are resonable and grant any or part of them is another story along with the buyers agent not filling out proper paperwork in the proper time, thats the real issue in my opinion. 

Sep 18, 2012 07:10 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

David --- you know what they say....the work isn't done unless the paperwork is done. In a way, the sellers used the lack of proper inspections their reasons not to negotiate. So the buyers are getting those inspections done per their initial plan. At least the seller agreed to extend the contingency period.

Sep 18, 2012 08:15 AM
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Pacita:

The buyer sounds like he was trying to save some money.  A walk through is not an inspection.  It hold no validity as an inspection.  If the buyer wants to ask for repairs he must have valid inspections.  An estimate is not an inspection.

Sep 18, 2012 08:28 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Evelyn -- Buyer and his agent jumped the gun. Buyer was shocked at the walk around estimate, and proceeded to ask for a significant price reduction...and in turn shocked the sellers who were surprised at the ballsy approach without documentation to justify the request which wasn't done on the proper forms either.

Thanks for the reblog.

Aahhhh.... every day there's something new to deal with. Life of a REALTOR!

Sep 18, 2012 08:43 AM
Will Handley
Progressive Inspection Service - San Juan Capistrano, CA
Certified Master Inspection Services

Estimate aside, is there a known structural issue with the foundation? Have any of you, including but not limited to sellers, owners, buyers, agents, contractors and or inspectors seen, observed, noted or felt any cracks, voids, separation, deflection, spalling, degradation and or displacement at any portion of the subject structure and or foundation?

If so, you better include it in the disclosure. I'll play devil's advocate for a moment. If this property were ever to end up in litigation involving its sale and or condition, you better believe a judge would find an undisclosed estimate for foundation repair and or replacement interesting if not highly relevant.

What's the old real estate saying? Disclose, Disclose, Disclose....

Sep 18, 2012 12:05 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Will --- if there are visible imperfections these would be disclosed by the seller and the listing agent. But for older homes, the most common question is, does it have brick foundation? If it hasn't been replaced, the answer is yes. But the untrained eye and the non-professional could/would not offer an estimate for repair. That's what inspectors do. Brick foundation doesn't always equate to a big problem that needs to be resolved, nor is it a requirement as a condition of closing esrow.

The sellers did not hide anything....and were open to having inspections done. But the buyers initially tried to circumvent actual inspections and instead tried to get a price reduction with no justification other than a walk around view.

Sep 18, 2012 01:27 PM
Bart Foster
Keller Williams Realty Boston - Metro - Boston, MA
Boston MA Real Estate

In the state of Massachusetts all home inspectors are fully licensed by the state. That said, however home inspectors are not qualified to appraise the severity of a given problem, are not qualified to fully interpret building codes and absolutely forbidden to give estimates. This is the job of individual contractors in the various trades, be it plumbing, roofing, electrical or general carpentry. My experience is always to suggest a home inspection and then if a significant problems are found to bring in those in the business of the issue. In your case a qualified masonry or general contractor who specializes in foundations would be a good choice and preferably three for complete estimates.  After reading comments here I am almost shocked to learn that general home inspectors are permitted to give estimates of work. Thats scary to me.... real scary. Hire a qualified contractor who knows the issues, what to look for based on experience.

Sep 18, 2012 02:29 PM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Bart ---

In our area, property inspectors can recommend consulting with the appropriate contractors/specialists. They never provide quotes/estimates.

Some pest inspectors are also general/foundation contractors and do provide estimates and bids, as do some structural engineers who are also general contractors

Sep 18, 2012 02:53 PM
Bruce Kunz
C21 Solid Gold Realty, Brick, NJ, 732-920-2100 - Howell, NJ
REALTOR®, Brick & Howell NJ Homes for Sale

Hi Pacita. It's always something, isn't it? It kind of seems like the sellers got caught in their own attempt at cutting corners? If they'd had an inspections initially (as you suggested to them) they would have known the validity of the buyer's request. As Keith #13 noted earlier, the buyer's request may be just based on a 'what-if' scenario, not an actual need. Without a proven need based on facts, I wouldn't think a disclosure is needed.

That said, I would suggest the sellers get their own foundation repair estimate from a reputable contractor. This inspection &/ or estimate should become part of the selling disclosures as it is factual. I would think a few dollars spent here would be worth the whole lot of clarity it would provide.

Just my 2¢  Thanks for sharing and good luck! 
Bruce

 

Sep 19, 2012 12:55 AM
Pacita Dimacali
Alain Pinel - Oakland, CA
Alameda/Contra Costa Counties CA

Bruce -- as it turns out, the buyer went ahead an ordered foundation, home, pest and roof inspection. This is what they had intended to do all along, but instead attempted to circumvent the process by asking for price reduction at once without the benefit of inspections.

Sep 21, 2012 09:57 AM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

In wisconsin...the condition is disclosed by the seller(s)...the cost of the "cure" is up to the buyer.

 

Sep 21, 2012 11:04 AM