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Inspections. Do they make it too easy for buyers to walk?

By
Industry Observer with Nature As Neighbors

Inspections. Do they make it too easy for buyers to walk?

Inspections. Do they make it too easy for buyers to walk?The positive momentum was going great for on of my recent sales. Listed and pending in 10 days, plus the cash buyer wanted to close in 10 days. I jokingly dubbed it the perfect "10," a well priced property, a motivated seller, and a motivated buyer.

The buyer didn't want to move twice, and since she'd sold her house, she needed to move quickly. My seller, a former HOA director, rushed the resale certificate and canceled her Thanksgiving travel plans to expedite the transaction.

The contract stated the interior was sold "as is." The 1978 condo is in good condition, but it's dated. Since it's a condo development, the HOA pays for all exterior repairs and maintenance. That's why I wasn't worried about the inspection.

It turns out, I should have been. The buyer's agent called me after the inspection, "nothing major, just a lot of little things." It was the day before Thanksgiving, and she mentioned that she would send paperwork on Friday morning, because of the holiday.

Inspections can make it easy for a buyer to walk - if they abuse the intention.

True to her word, she called on Friday morning. After some obligatory niceties about Thanksgiving, she dropped the bombshell. "My buyer feels there are too many big issues and she has changed her mind." I pressed for more details. A skylight is leaking and there's dry rot on the deck - all the posts will need to be replaced.

Naturally, I explained that any exterior issues would have to be repaired by the HOA. I encouraged her to send me the items of concern to submit to my seller (and the HOA). She said she'd discuss it with her buyer.

Later that day, I got the inspection notice and a form withdrawing the offer. They buyer didn't give the seller a chance to address any of the repairs. Further, she did not submit any of the items of concern.

Buyers who use inspections as a reason to walk.

My seller, concerned about the repairs the buyer's agent shared with us, notified her HOA of the so-called leak in the skylight and rotting deck posts. Their maintenance supervisor, and an outside contractor, both inspected the skylights, and the deck posts - they didn't find a problem.

It's my opinion, the subjective nature of inspections leave the door open for buyers to walk away from a contract - and get their earnest money returned. In this case, the inspection process was abused. The buyer simply changed her mind and will not be penalized.

When a buyer chooses to bail on a contract due to an inspection, the seller should (at the very least) get a copy of the report. Further, perhaps it's time to tighten up the language in the response document. When buyers simply change their mind, the penalty should be the loss of earnest money. 

 

 

Posted by


Debb Janes  Bernie Stea
Brokers/REALTORS®
Call or Text 360-608-4900

We help buyers and sellers in Camas, Washougal, Brush Prairie/Hockinson, Salmon Creek, Felida, and other Vancouver, Washington Areas. 


We bring our passion for nature and beautiful environments to Real Estate. Multigenerational and family estates, country land and homes, and small farmsteads are our speciality.


We agree with our clients, "The true luxury of rural living is having elbowroom for the soul.

 

Comments (247)

Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

You are welcome Tony, I enjoyed reading your comment.

Hi there John - it's quite frustrating and sadly, a few agents get their clients to "rush" and sign the contract ( which should be legally binding, unless there's good reason) telling them, no worries it's easy to get out of this...

Dec 09, 2013 08:00 AM
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

I agree.  some buyers view the inspection as a chance to get out of the contract particularly when they see that the home is not perfect.

 

Dec 09, 2013 11:41 AM
Margaret Mitchell
Coldwell Banker Yorke Realty - York, ME
Seacoast Maine & NH Real Estate

OMG, what a timely post for me.  Yes, many buyers treat inspection period as an opportunity to renegotiate.  They dredge up known, discussed issues e.g. older but functioning furnace, and demand a lump sum off.  In many ways, until we get past inspections, the buyer has an option to buy but not an obligation.  That makes it an option, not a contract. (sigh)

Dec 10, 2013 03:04 AM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Pam and Margaret. Thanks for the visit and comment. Margaret, you summed it up PERFECTLY. Yes, at this point, the way inspections are worded, a PSA is merely an option to buy. 

Dec 10, 2013 03:10 AM
Donald Hester
NCW Home Inspections, LLC - Wenatchee, WA
NCW Home Inspections, LLC

Debb, You got a lot of traffic on this one ; ) 

These can be tough situations. I have seen buyers walk using the inspection as the excuse.

I had one set of buyers start to really look at things during the inspection and get buyers remorse. I even tried to talk them back into reality a bit, but I could see where it was going. In fact on this specific occasion the buyers bought the second home they looked at. It had more issues but I think they like the location and house layout better.

I am not to judge this when you are spending that kind of money it tough to argue they should not have a choice, whether it is a good one or not.

We as inspectors must report what we see and I know I have been used as a fall guy. I agree sometimes the agent involved is not good at handling the situation and that can kill a deal as easily as the inspection.

Dec 10, 2013 04:38 AM
Marnie Matarese
DWELL REAL ESTATE - Sarasota, FL
Showing you the best of Sarasota!

I have found that some buyers actually have several offers in on different properties and then use the inspection contingency to get out of the ones they decide they do not want.  It is a complete and total abuse of the system but one that is hard to prove and has no recourse.  And if the buyer's agent is complicit, shame on the agent!

Dec 10, 2013 08:26 PM
Clint Mckie
Desert Sun Home, commercial Inspections - Carlsbad, NM
Desert Sun Home, Comm. Inspection 1-575-706-5586

Hi Debb,

As a home inspector. I find issues. It's what we do as a home inspector. But as a buyers standpoint I always try to explain the cosmetic issues. I want every home I inspect to sell. After all they have seen the home before. Unless there is a major structural defect. The (what I call) minor repairs should be made and the sale should go forward.

Have a great day and a very good post.

Best, Clint McKie  

Dec 10, 2013 10:32 PM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Donald, agree. My premise remains - they can choose to walk. However, the seller at least deserves to see the parts of the report the buyer claims they can't live with. I'm not even saying they have to give the seller a chance to make repairs - just share the items that broke the deal. ( Some say, the seller now has to disclose those issues - Great! I'm all for transparency). Bottom line, when buyers abuse the inspection process there should be some penalty - perhaps a bit of EM that they lose.

Dec 10, 2013 11:11 PM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Marnie, the buyers agent is often complicit in these situations. Irks the heck out of me. ( I think you can tell). Lol. That may have been the case in this one...

Clint - there is no finger of blame pointing at the inspector in this post. It's the process - and our contracts that allow buyers ( and their agents) to abuse the purpose of the inspection period. I'm sure you are a very good home inspector - and I appreciate you.  Have a great day yourself. D

Dec 10, 2013 11:14 PM
John Juarez
The Medford Real Estate Team - Fremont, CA
ePRO, SRES, GRI, PMN

 Our standard California Residential Purchase Agreement stipulates the inspections will be shared by the buying and selling parties no matter who order the inspections. 

It is my experience that some buyers leap to make an offer, get in contract and, then, want to renegotiate. I hate that approach and fight it. Your buyer did not even get that opportunity.

 

Your deal was simply not meant to be. Move on. Another…real…buyer is out there.

Dec 12, 2013 02:06 PM
Larry Johnston
Broker, Friends & Neighbors Real Estate and Elkhart County Subdivisions, LLC - Elkhart, IN
Broker,Friends & Neighbors Real Estate, Elkhart,IN

I haven't found that to be a problem in Elkhart, Indiana. Most homes have multiple offers now with the lack of inventory.

Dec 15, 2013 12:31 PM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

John. I suspect you're right.

Larry, we do in many sectors, but not in this pocket neighborhood of mostly retired seniors.

Dec 15, 2013 10:07 PM
Randy Shamburger
Movement Mortgage - Greenville, SC
FHA, VA, USDA and Conventional Mortgage Expert

Hey Debb, what an excellent post.  Thanks for taking the time to put this together. 

 

Have a Big day,

Randy

Dec 16, 2013 02:46 AM
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale

Debb, I had a contract fall apart a couple of years ago because the buyer decided to walk on what would have amounted to $1,500 worth of repairs on a $500K home. The seller felt he should be able to keep the earnest money but the reality was the buyer questioned whether the seller would make the repairs requested. The seller actually gave him reason to think he would not. It was a long story I won't go into here. Suffice it to say, contingencies are meant to protect buyers not sellers.

Dec 16, 2013 05:12 AM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

You're welcome Randy.

Tammie, I appreciate that and respect their ability to walk. However it sounds as if they shared the report items with the sellers. That's all I'm asking...

Dec 16, 2013 05:16 AM
Ben Yost - 303-587-4297
First Time Home Buyer, Mortgage Rates, Pre-Approval - Denver, CO
FHA, VA, Conventional - Mortgage Loans in De

Yes they do!

That and cable television :-)

Good Post!

 

Dec 16, 2013 05:27 AM
Wayne B. Pruner
Oregon First - Tigard, OR
Tigard Oregon Homes for Sale, Realtor, GRI

I always caution my Sellers not to do anything drastic until after the inspection. I temper their enthusiasm because a sale can fall apart. A 10 day closing is just a pressure tactic and not very realistic..

Jan 11, 2014 01:27 PM
Alyse "Aly" Sands
AGORA Realty - Nashville, TN
It's Good To Be Home

Our Tennessee Association contracts state that the inspection be done by a professional, licensed inspector and that the seller can request to view the professional inspection report showing the issues the buyer is using to try to get the seller to perform or to void the contract.  Perhaps adding this verbiage to your contracts would lessen the liability of buyers using their inspection contingency for cold feet.  

The buyer had a lot of nerve in expecting and allowing the seller to bend over backwards to accommodate him or her and close in 10 days.  He or she sounds like an inconsiderate boar.

Feb 12, 2014 08:57 AM
Debb Janes
Nature As Neighbors - Camas, WA
Put My Love of Nature At Work for You

Ben, Wayne and Alyse. Thanks for the remarks and visit.  It's not required to explain why a buyer denies an inspection - that's my gripe. :) 

Mar 01, 2014 02:08 AM
Craig Daniels
Tech Training for You! - Staten Island, NY
Technology Instructor/Project Consultant

Wow 247 Comments that must be some sort of high score ;)
Great topic and discussion going on here Debb.

Aug 09, 2014 11:11 PM