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The Buyer Canceled The Contract Due To A Home Inspection-Now What?

By Cindy Jones

Real Estate Agent with Integrity Real Estate Group

May 16, 2011 02:33 PM

What Would You Do Next? The buyer of your listing just completed their home inspection and has presented the seller with a list of repairs to be addressed. Among those repairs are the that the roof is made of FRT plwood and is failing. Then there is what appears to be mold growing on the baseboards and finally they discover a crack in the foundation wall. The seller decides they are not going to repair anything in the home. The buyer cancels the contract and leaves you with the inspection report outlining all of the issues.

Do you disclose these issues to the next buyer?
Do you pretend you never saw the report?
Do you change the listing to "as is" even though you know about the problems?

For most of us the answers are obvious but perhaps in your area disclosure has a different meaning? What would you do next?

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Ellie McIntire

Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD

Luxury service in Central Maryland

Disclose disclose disclose. Seller should just suck it up and fix it so that there is no issue with the next buyer.

May 16, 2011 03:01 PM

Mike Jaquish

Realty Arts - Cary, NC

919-880-2769 Cary, NC, Real Estate

Cindy,

I don't think I could change my advertising to "as is" unless my client said it will only sell "as is."

But, I sure think I could disclose better than often is done. I see properties that have fallen out of contract multiple times with no mention of any material defects by the listing agent.
Now, it may be reasonable to assume that the agent would disclose prior to contract, but all too often that is not my experience.

May 16, 2011 03:32 PM

Brenda, Ron, Lee Cunningham & Tara Keator

West USA Realty - Phoenix, AZ

Realtors, Homes for Sale - Phoenix Metro

The seller better change the Property Disclosure.

May 16, 2011 04:02 PM

Kathryn Acciari

Central One Federal Credit Union - Shrewsbury, MA

Mortgage Loan Originator

Better make sure the seller understands how limited the buyer pool will be if the roof needs repair. If they are not willing to disclose, that is a problem.

May 16, 2011 11:10 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Richard-had a buyer who's inspection turned up a cracked foundation wall. We came into a muddy basement and the owner trying to clean it up. The buyer walked and suddendly the house sold "as is".

May 16, 2011 11:43 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Leah-maybe the next buyer won't have a home inspection and no one will notice was a response I got once.

May 16, 2011 11:44 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Ellie-I would agree. Seller could be setting themselves up for a potential lawsuit once they know the issue exists.

May 16, 2011 11:45 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Mike-I asked an agent friend to call on a property that had fallen out of contract with one of my buyers over the failed roof. They did and were not told that there were any issues with the roof. After the second contract fell out we saw the roofers on the property. Could have sold it 2 months before if they had done the right thing to begin with.

May 16, 2011 11:50 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Brenda and Ron-that would be my recommendation.

May 16, 2011 11:50 PM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Kathryn-and especially with FHA and VA buyers.

May 16, 2011 11:51 PM

Coral Gundlach

Compass - Arlington, VA

Real Lives. Not Just Real Estate.

Get it fixed!

May 17, 2011 12:29 AM

Jackie Connelly-Fornuff

Douglas Elliman Real Estate in Babylon NY - Babylon, NY

"Moving at The Speed of YOU!"

Hi Cindy, a crack in the foundation is not always bad. Is this a serious crack? Home inspectors usually note if those cracks are normal or not. The seller really should fix the serious issues. I've been there, done that. Not fun!

May 17, 2011 12:41 AM

Hannah Williams

HomeStarr Realty - Philadelphia, PA

Expertise NE Philadelphia & Bucks 215-820-3376

Cindy..Most law suits today are from disclosure's.. if you are aware you best disclose..perhaps get another opinion...

HelpfulHannah

May 17, 2011 03:18 AM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Coral-I agree and I'm wondering if an agent who ignores a serious issue isn't setting themselves up for a future DPOR compliant.

May 17, 2011 03:29 AM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Jackie-in this case the crack was serious enough that you could see the dirt coming in and when it rained there was a muddy dirt puddle in the corner of the house. They were mopping up the water as we came in and it didn't take long to figure out where it came from. The house went back on the market "as is" and I was to new at the time to think about reporting the agent for what might have been a breach of the COE.

May 17, 2011 03:31 AM

Cindy Jones

Integrity Real Estate Group - Woodbridge, VA

Pentagon, Fort Belvoir & Quantico Real Estate News

Hannah-if it's a question bring in an expert in the field required, ie roofer, electrician, plumber, mold remidiator etc so you know what needs to be done to fix it.

May 17, 2011 03:33 AM

Chris Ann Cleland

Long and Foster Real Estate - Gainesville, VA

Associate Broker, Bristow, VA

Get the Sellers to fix the issues because otherwise they have to disclose them. I had that with a radon inspection once. The Seller outright refused to fix it. When I told her that i would have to disclose as a latent defect, she was on the phone with a radon remediation company that day.

May 17, 2011 06:40 AM

Lloyd Binen

Certified Realty Services - Saratoga, CA

Silicon Valley Realtor since 1976; 408-373-4411

The attorneys for the California Association of Realtors answer your questions: "yes", "no" and "doesn't matter." As Is doesn't relieve disclosure obligations.

Good post and a frequent issue.

I've asked a California Association of Realtors attorney if a Termite Inspection from 5 years ago must be disclosed to a buyer today, and the answer is "Is it material?". They're so helpful.

May 17, 2011 01:51 PM

Lou Ludwig

Ludwig & Associates - Boca Raton, FL

Designations Earned CRB, CRS, CIPS, GRI, SRES, TRC

Cindy

In Florida you would have to disclose the defects.

Good luck and success.

Lou Ludwig

May 17, 2011 03:11 PM

Brad Rachielles

CENTURY 21 Peak, Ca BRE# 01489453 - Upland, CA

REALTOR, CDPE, Upland, CA

Cindy,

Disclose everything material.

Have your seller consider this: Which is cheaper? Doing the repairs and disclosing that they are completed, or losing a fraud case.

"F" is for the crack in the Foundation.

"R" is for the Roof that soon will fail.

"A" is As-IS that doesn't relieve the obligation to disclose.

"U" is for Unknown dark spots on the baseboard.

"D" is for Disclosures never maid.

Disclose, Disclose, Disclose, Disclose, Disclose - What's your career worth?

PS - Surprised that the home inspection was not submitted as documentation for the defects. That still exists and doesn't that become material information?

May 18, 2011 11:09 AM