Let The Buyer Find Repair Issues When They Have Their Own Home Inspection

By
Real Estate Agent with Keller Williams Realty

Let The Buyer Find Repair Issues When They Have Their Own Home Inspection

Pre-Sale home inspectionThis is something that I have often heard sellers say when I recommend that they get a home inspection prior to putting their home on the market.

Actually what they say is more like this:  Why should I pay to have a home inspection? If there are any problems, let them find out on their own.

Whether they know of any issues or not, the primary reason for their rationale is that they want to save the cost of the home inspection.

I say I'd rather have you pay for a pre-sale inspection rather than let the lack of one cost you a sale.

I don't bother to go into 5 or 10 reasons a seller should have a pre-sale home inspection because in fact, there really is only reason that they should and here it is:

Anything, big or small, that the buyer's home inspector finds, runs the risk of running the buyer off and costing the seller a sale.

Think about it.  Is that reason enough? 

Of all the money that a seller can spend getting their home ready for sale, a pre-sale home inspection would probably be the money that is most wisely spent.

Sellers can spend $250 or $300 upfront or lose a sale on the back end.  Do the math.

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Rainer
171,030
Robert Butler
Aspect Inspection - Montreal West Island, QC
Montreal Home Inspector | Aspect Inspection

Charita, I too was directed to your blog by Barbara's, and while I tend to agree with you generally, you are missing something. 

Barbara, your arguments are reasonable and budget minded clients (and there are plenty of those) would tend to take your advice. But I have to question are your clients best served by that advice.

Here's what neither of you are thinking about:

Why is a buyer having an inspection done? What is the legal imperative?

They are exercising their right to do due diligence on the home, so that should they need to seek redress in the courts at a future point they will have the right to do so. Effectively maintaining their right to sue the sellers if they ever need to.

Period.

 

If immediate issues are found then it is a surprise, seemingly to all, and it has to be dealt with, negotiated for or otherwise resolved.

Sometimes the sale collapses or brakes down at this point. The inspector didn't cause the problem, but of course it isn't the first time, nor will it be the last time, the news bearer is blamed (figuratively of course). It is stressful. Your hard work could be for nothing. It has happened. And it stings.

Charita’s position is to be proactive, check first and move forward without worry, no risk.

Bardara is saying there may be nothing, so why spend. The odds favour this, but her clients are exposed to some risk.

They are both reacting to the risk of there being immediate issues, but immediate issues are not why an inspector is hired. The due diligence legal requirement is.

Full disclosure does not come into play only after an inspection. It is always in play. Full disclosure is the law, period. You are obligated to disclose everything known or suspected and you must look. You are not allowed to turn a blind eye, ignore symptoms and pretend not to know. You are even required to report past problems that have been corrected, no matter what their nature or how effective the correction has been.

Caveat emptor (Let the buyer beware.) This is not law! Although once a common attitude, it is no longer legal in the building-housing construction industry as well as home renovation, property improvements and real estate transactions.

 

In fact courts treat this behavior on the part of professionals in the real estate and building industry as an offence, a kind of white-collar crime. No you won’t be in handcuffs, but you will be paying a lawyer for your defense.

You, as a property seller, are not allowed to cover a problem and sell the property to get rid of it.

 

There is one exception. Make it known. Tell all, upfront, before offers are made. Full disclosure of known, suspected, or past problems and defects with a history of corrective repairs. Full disclosure gets you off the hook. So why wouldn’t you? Don’t you think it’s in the sellers’ interest?

 

One final thing you should know; there is no time limit, forward or backward. Forward – doesn’t matter when an issue shows up, past sellers are liable, in some cases even through estate succession transitions.

Backward – liability responsibility extends back from the immediate seller though prior sellers, even as far as the original builder. Only the dead get to duck the issue. (If there is real justice though, it might get hot for some.)

 

Even if both inspections are done on the same property, it is but a fraction of 1% of that properties’ value/selling price.

They protect the interests of both the seller and the buyer. Neither should be “on the hook”.

 

Legal fees make inspection cost look like peanuts. This is the general thrust of the judicial interpretations we are seeing. Yes there are as many variations, opinions, and exceptions as there are different courts. Probably more.

Lawyers will handle it for you, but consider the price.

 

I’ve posted this here, as I’m interested in this aspect of the discussion:

http://activerain.com/blogsview/2096968/charita-vs-barbara-22-to-45-or-is-it-

 

 

Jan 24, 2011 03:08 PM #23
Rainmaker
601,327
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Charita - As I'm reading the comments on your post, I really liked how many Realtors/agents supported the pre-inspection.  My question is, after the pre-inspection are all of you Realtors/agents making sure the sellers include the findings on the TDS? 

I also agree with Roberty that buyers need to do their due diligence in having their own independent inspection.  However, I ask again, when the buyer notifies you of property conditions and defects and decides to walk because your seller won't repair and/or renegotiate, do you include what you now know about the property on the TDS for the next buyer?

Jan 24, 2011 03:28 PM #24
Rainer
171,030
Robert Butler
Aspect Inspection - Montreal West Island, QC
Montreal Home Inspector | Aspect Inspection

My take on it Donne (#24) is as follows;

-the sellers have the pre-listing inspection done, then list the property after deciding what repairs or improvements to do, if any.

- they and their agent price and show the home, with a summary of the inspection being provided with any handouts taken away by prospective buyers. The full report should be displayed openly and available for visitors to read and review.

Now when a potential buyer makes an offer they'll have had all the known facts prior to making their offer. Everything has been declared.

Now the buyers should have an inspection (they may opt not to, but that is of course legally not advisable). it is not likely that the buyer's inspection will find any issues, but should there be one it won't be a major big ticket item.

So settlement negotiations are less stressful. Information has been shared from the beginning. Much less chance of the sale crashing at this point now.

 

To answer your question about what you've learned in a situation where a buyer walks;

Yes, declare the information, don't ignore it. If you don't have documentation, get your own inspection to provide a written report that documents everything.

Then use it as I outlined above to get interested buyers to closing.

Jan 24, 2011 04:15 PM #25
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

I disagree.  Sellers don't lose a sale when the buyer's home inspection reveals a defect.  Sellers lose sales when the sellers refuse to make repairs pursuant to a home inspection contingency.

Sellers can have a pre-listing inspection for their own information.  That's all it's worth and often worth the money. 

Buyer's need their own inspection because it isn't the seller's job to protect the interests of the buyer. 

In a perfect world, good maintenance would eliminate the need for either inspections, but as long as many sellers have the belief that "if it's good enough for me, it's good enough for them", .. . . .

 

Jan 24, 2011 10:41 PM #26
Rainmaker
837,257
David Popoff
DMK Real Estate - Darien, CT
Realtor®,SRS, Green ~ Fairfield County, Ct

Charita, you put up a good argument and I agree with certain circumstances. If you are getting top dollar for the home then it should be in tip top shape. If you are selling a fixer upper or maybe an antique home then there will always be issues.

Jan 24, 2011 10:52 PM #27
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Nona yours is a case in point. Even though the "now" seller had one done 18 months earlier, had he done a pre-sale inspection he would have discovered this.  And while it should have been taken care of when he purchased it, the new pre-sale inspection ideally would have revealed any new concerns, IF any.

Christine your comment begs the question:  Are they disclosing what they already know?  Or would the be hiding something under the guise that they did not have a home inspection.

Charles "information is a good thing."  And of course what else are you going to say:-)?  Totally agree.

 

Jan 25, 2011 12:23 AM #28
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Robert, here's a repeat of what I wrote on you post:  Robert now this is what I call a well laid out argument. I am of the opinion that a pre-inspection on the part of the seller serves as due diligence. So did it miss this or did I not? Also Alabama is a caveat emptor state, but clearly you are correct in that it means nothing if a case can be made in favor of the buyer which can very easily happen as courts don't seem to favor deception (my opinion). The staunch support for not having a pre-inspection, on the surface, would imply that there was something to hide (whether true or not) or at least an attempt to not peep the sellers potential hold card. With regard to liability compounded by legalize, the question becomes at what point in the progress does the seller chose to reduce their liability? That answer would be -- upfront --- at the beginning of the process by putting the cards on the table. I definitely appreciate your contribution to this very interesting conversation.

And for the sake of clarification, I later added: 

Robert I consider a seller having a pre-listing inspection as part of their due diligence in preparing the home for sale.  Perhaps I should have clarified that.  When you think about it, everyone involved has a role in due diligence.

Jan 25, 2011 12:27 AM #29
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Donne in my case, the answer is yes.

Jan 25, 2011 12:29 AM #30
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Robert I continue to find value in your assessment.  I am of the opinion, like you, that any discovery lends itself to be included as negotiable items.

Lenn I'll have to disagree with your first paragraph.  Case in point:  a few months ago, a buyer made an offer on a property that my client had rehabbed.  Overall he did an excellent job, but of course, the buyer's inspector made some discoveries.  No problem.   My seller never sweated it.  It never came into question whether he would make repairs or not.  In his mind, addressing those concerns were a no brainer.   He agreed right off the bat and the buyer STILL walked anyway.

As for the balance of your comment:  I'd say we're on one accord.

Jan 25, 2011 12:40 AM #31
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

David I think that you pointed out the distinct difference and maybe the deciding factor in whether a pre-listing inpsection should be considered or not.  Hey and I'm glad you finally woke up and joined the conversation:-).

Jan 25, 2011 12:50 AM #32
Rainmaker
683,319
Cynthia Larsen
Cotati, CA
Independent Broker In Sonoma County, CA

Personally, I encourage pre-listing inspections whenever possible. This gives the seller an option of fixing what they can and disclosing the rest.

Jan 25, 2011 02:21 AM #33
Rainmaker
1,110,217
Paula McDonald
Beam & Branch Realty - Granbury, TX
Granbury, TX 936-203-0279

A great, healthy debate with good points on both sides.  Ultimately it is up to each party to do what they feel is right for them.

Jan 25, 2011 02:54 AM #34
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Ssssssynthia --- whenever possible.  Sometimes it's just not possible.

Paula it was interesting to say the least.

Jan 25, 2011 03:23 AM #35
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

"He agreed right off the bat and the buyer STILL walked anyway."

1.  It is not unusual for buyers to use the Home Inspection Contingency to walk.  In my area, a buyer can walk "pursuant to paragraph _____ of the home inspection contingency" without giving a reason or produce the home inspection report. 

Same thing with HOA or condo docs.  They have 3-5 days to walk without giving a reason. 

2.  In the case of a rehabbed property, a buyer may believe that the defects discovered may represent a pattern of defects that were not discovered.

I would suspect that #1 was what happened.

Jan 25, 2011 07:22 AM #36
Rainmaker
1,558,046
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

WOW -- this is a good debate.  As someone that doesn't take listings, I have seen the inspection reports left on the kitchen counter in the seller's home that have had the inspection done.  This conversation comes up when that occurs:  You still need to get the home inspected, I tell the buyers.  We can't assume that all the defects were caught, or corrected.  If I saw the home inspection report, I think it's great the sellers went to that length to be pro-active in their home sale.  But, when representing the buyers I can't suggest to them that they rely on the inspection report.  I think if a seller has not done some deferred maintenance in a LONG while, having an inspection is a good idea.  Too many things that come up on the buyer's inspection report can be a turn off.  Good debate!!

Jan 25, 2011 07:24 AM #37
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)

Lenn "right off the bat."  The seller felt the request were reasonable and never even considered rejecting the request.  I suspect the buyer had cold feet as is common with 1st timehomebuyers.  I also felt that the buyer's agent did not do enough to properly address the concerns of the buyer (just my opinion) based on how it was handled.

Carla a visible home inspection would only be there to show that the seller was being proactive. In no way should a buyer or his/her agent even conclude otherwise.

Jan 25, 2011 07:49 AM #38
Rainmaker
414,502
Tni LeBlanc, Realtor®, J.D.
Mint Properties, Lic. #01871795 - Santa Maria, CA
Tenacious Tni (805) 878-9879

Interesting debate indeed.  I have never had a seller willing to do a pre-listing inspection so it's hard for me to relate.  Most of the sellers I'm working with right now are short, so. . . 

Jan 25, 2011 11:31 AM #39
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)
Tni point taken on the short. A pre sale inspection is a suggestion only.
Jan 25, 2011 12:21 PM #40
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Dagny Eason
Dagny's Real Estate - Wilton, CT
Fairfield County CT, CDPE Homes For Sale and Condo

This certainly was a great discussion!    I feel very strongly that if there are suspected problems, seller should get an inspector or an appropriate contractor in to check it out.   If not, then have the buyer's inspection find things and address them if they come up.    Usually my buyers will negotiate about problems as they are revealed.  

Jan 25, 2011 01:46 PM #41
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Charita Cadenhead
Keller Williams Realty - Birmingham, AL
Serving Jefferson and Shelby Counties (Alabama)
Raghu many think that a pre-sale inspection puts seller at disadvantage. This isn't necessarily true. But regardless, issues can be resolved via negotiations.
Jan 25, 2011 06:26 PM #42
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Charita Cadenhead

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