Can A Home Inspection Kill Your Deal?

Real Estate Broker/Owner with Lizette Realty - Richmond KY 205403

Can A Home Inspection Kill Your Deal?
Inspection Picture

As you go out home shopping you need to consider that the house you fall in love with will need to pass a home inspection.

Some things are minor and no house is perfect...but it's good to have homes professionally inspected.
Many interesting things are uncovered by an inspector.
An FHA loan also has many requirements for a home to pass that seem like overkill. Like peeling paint, cracked foundations, height of steps and no hand railings and many more items. 
Many times this happens on a property that is being sold, "As Is".

There is a good reason why sellers sell homes like this...because they don't want to make any repairs.
After an inspection on an "As Is" home, you can't ask sellers to fix anything and your FHA loan may require items to be repaired before they will close.
An appraiser will have to come out again to re-appraise specific items and a buyer will pay again for that visit also.
Lenders are very picky in what they will loan money on these days.  As we look at homes, I like to be pro-active in thinking ahead to whether the home will pass a home inspection.
I might mention that I see a few red flags as we tour homes. It's not because I don't like the house.
There is nothing worse than a buyer paying for the inspection and having to get out of a contract. Some of these are tough to release.
Then we have to start all over again.
It is a learning process and every situation is different. 


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Lizette Fitzpatrick- Principal Broker at Lizette Realty.

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Lenn Harley
Lenn Harley,, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

"After an inspection on an "As Is" home, you can't ask sellers to fix anything"

Sure you can ask for repairs.  However, if they refuse, the buyer can walk.  Withuot the home inspection contingency, you couldn't walk. 

Further, since the seller AND THEIR AGENT now knows of the defects, they can simply expect the same thing with any subsequent buyers.

It pays a buyer, through their agent, to ALWAYS ask for repairs.  Especially if a "material defect" is discovered.  The listing agent will then become you're best friend knowing that that material defect will have to be disclosed. 

There is a lot more flexibility in home inspection contingencies than many agents know.


Mar 11, 2011 05:03 AM #1
Paul Walker
Equity Fifty Five Realty, LLC - Scott AFB, IL
Scott AFB IL Area Realtor

Nice post. Home buyers need to be educated while they are looking for homes (perhaps some agents need education too), but they need to be told up front that the home will not go FHA or VA, when they are looking for homes that need obvious work and will not pass for those loans.


Mar 11, 2011 05:04 AM #2
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Lizette - I always try educating my clients prior to even submitting an offer on a home and the reality is a home inspection can kill a deal.  Sometimes the amount of repairs needed is more than a buyer can handle/afford or than a seller is willing to repair/credit.

Mar 11, 2011 05:06 AM #3
Ronald S. Accornero
OC Signature Properties - Villa Park, CA

Home inspections have changed over the years.  When they first started I would find the easiest inspector.  Nowadays I look for the most thorough inspection because of the liability.

Mar 11, 2011 05:07 AM #4
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

"can a home inspection kill your deal?"

More times than I care to remember.  So far this year, poor inspections and/or appraisal repair requests are the bain of my existence.  In the past five months, worse than expected inspection reports and too many repair requests from either the borrower and/or the lenders apraiser and/or underwriter have torpedoed almost every one of my escrows.  I feel like I have some sort of curse hanging over me or something. 

In reviewing all of these cancelled escrows, I've tried to find out what I could have done better or what I should have done to have prevented it.  On every file, I've come to one conclusion - better educating my borrowers and their BA's on what constitutes an acceptable and eligible property.  Not one of these cancelled escrows was because of my borrowers qualifications.  Every one of these cancellations was because of poor property conditions.

Because I'm not out there viewing the properties my borrowers are seeing, I rely on my borrowers and their BA's to have some common sense as well as a discriminating eye for what does and does not constitute a run-down, dumpy, money-pit.  Realtors/agents and buyers need to start being realistic about what they're looking at.  As for me, I need to be more proactive about training and educating my borrowers on acceptable and eligible properties.

Mar 11, 2011 05:18 AM #5
Thomas Staples
La Rosa Realty - Ocoee, FL
(407) 476-4993

I think it is imprtant to assess a property accordingly. And share obvious defects a house may have with the buyer and advise them to speak with their loan officer if they have interest in submitting an offer. If we take a picture of the defect, send it to the loan officer, discuss how this impacts the loan guidelines, and then have an informed conversation we can make an informed decision as a team. Another option would be a 203K loan. Of course this is just for obvious defects, defects that require the skill of an inspector will go unnoticed by the rest of us. And if that defect exists everything is still negotiable with the seller to perform repairs. Individual, bank, it does not matter. I have had repairs performed by sellers of all types (even when not stipulated in a contract!)

Mar 11, 2011 05:46 AM #6
Connie King
Sevierville, TN

Your photo reminds me of the junk house I pass on the way home.   I think he collects scrap metal and lets it pile up for weeks....   that and just trash.    

Mar 11, 2011 11:45 AM #7
Gary Woltal
Keller Williams Realty - Flower Mound, TX
Assoc. Broker Realtor SFR Dallas Ft. Worth

FHA requirements can definitely kill a deal with inspections and whether repairs are made or not.

Mar 11, 2011 12:16 PM #8
Ginger Harper
Coldwell Banker Sea Coast Advantage - Southport, NC
Your Southport~Oak Island Agent~Brunswick County!

Oh yes...They can kill the deal so easily..

It is up to US to keep it together.. and we can..


Mar 13, 2011 02:45 PM #9
Eleanor Thorne
Equity Resources - Cary, NC
Equity Resources 919-649-5058

And if it's a USDA Home Loan and the Inspection is showing on the HUD1 - the Closing Department is asking that ALL repairs on the Home Inspection (even the door knob that's missing) be fixed!  Ouch!  This is a problem!

Mar 14, 2011 12:05 PM #10
John Cannata
214-728-0449 - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Thats why its so important to do an inspection before the appraisal actually happens. Plus, it helps the buyer know if there are some serious problems with the home that are not visible to the eye.

Mar 29, 2011 04:32 AM #11
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Lizette Fitzpatrick

Lizette Realty, Lexington KY MLS - Kentucky Homes
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