When a Buyer Voids on Home Inspection, What Happens to the Report?

By
Real Estate Agent with Long and Foster Real Estate VA License # 0225089470

When a Buyer Voids on Home Inspection, What Happens to the Report?

Whenever I represent a seller that loses a buyer voiding their contract on home inspection, I have a serious conversation with the seller about what to do with the inspecton report.  A couple of years ago, there was a particularly scary set of observations made by a home inspector who represented a first time buyer on one of my listings.   Observations by this inspector included a "cracked foundation wall" and "mold." 

My seller, who had maintained his home was very angry.  The "mold" noted was spray paint overspray on the ground and the "foundation wall crack" was one that had been observed in my seller's own home inspection years earlier.  I counseled him on what to do next which was, 1) hire a basement waterproofing company to evaluate the "crack" and 2) disiminate that with the home inspection report to the next buyer. There was nothing out of the ordinary happening with the foundation wall and the home was found to be structurally sound.

A lot of listing agents will not release a home inspection report that they were given with a notice to void.  Home inspectors get angry because the report is property of the buyer.  Unfortunately, the report becomes property of a seller who is subject to disclosure laws when it is used to void a contract.  Withholding even a clean home inspection report from the next buyer is an act that can create distrust immediately.  Sharing the report and any additional information gathered, or corrective action taken, builds trust with the next buyer.  In the case of the second buyer on the home mentioned in this post, they were fine moving forward with all the information given.

Just because a buyer voids on home inspection doesn't mean they go quietly into society, never to be heard from again.  New Year's Eve, I received an email from a buyer who had just moved into their new home.  A buyer from 2017, who voided on home inspection, darkened my buyer's door with the inspection report that had scared her out of the 2017 purchase.  You can't make this crap up.

So now I had a buyer on the phone who was scared at the same word that had scared a buyer out of my own listing two years ago.  MOLD.  Did the listing agent from 2017 disclose this discovery to the buyer who ended up purchasing in 2017?  And if so, did the 2017-2021 owner remediate or cover the issue up?  

A look into the MLS revealed a discount listing brokerage that had been at the helm of two failed contracts, reduced the price by $20,000 and changed the MLS remarks to state the property was being sold as-is.  Not confidence inspiring.  To boot, the agent that helped the 2017-2021 owner purchase was not the listing agent.  Was the seller trying to hide something?  And even if the listing agent from 2017 didn't disclose the issue on behalf of her seller, there was a good chance that the Ghost of Buyer Past darkened the 2017-2021 owner's door as well.  My buyer's mind reeled with distrust.

The saving grace in this situation is that my buyer had a home inspection which was one of the most thorough I have ever seen.  Many of the issues caught on the inspection of the Ghost of Buyer Past's report were found to be repaired by the time my buyer was in the inspection seat.  

Meanwhile, at my buyer's request, I have rounded back to the 2021 listing agent with the report and asked if the seller knew about and/or remediated a mold issue.  I've also reached out to the 2017 buyer's agent who helped that owner purchase and asked if the mold disclosure was made to them.  

I tell you this story today so that, when faced with a buyer voiding on inspection, you consider a full disclosure of the inspection report.  Having your own Ghost of Buyer Past knocking on the door of your former listing with that same report would be a lot less powerful if the new owner was able to say, "Oh that?  It was provided to us when we went under contract with the seller."

 

Comments (11)

Kathleen Daniels, Probate & Trust Specialist
KD Realty - 408.972.1822 - San Jose, CA
Probate Real Estate

Just do the right things and disclose.  And, hire a professional home inspector that knows the difference between what may appear as mold and over-sprayed black paint.

You are so right Chris Ann Cleland we just can't make this stuff up. 

Jan 01, 2022 11:40 AM
Chris Ann Cleland

Doing the right thing is always the way to go.

Jan 01, 2022 01:00 PM
Jim Paulson
Progressive Realty (Boise Idaho) www.Progressive-Realty.info - Boise, ID
Owner,Broker

It used to be the three main words real estate were Location, Location, Location.  Now, I think it is Disclose, Disclose, Disclose. One thing I have started doing when selling homes in Boise, is to look up previous listings and read the seller's property disclosures on previous sales of the home my buyer is interested in. 

Jan 01, 2022 01:09 PM
Chris Ann Cleland

Same here.  Previous listings are full of information.  In one this year I found that the photos of the listing, where buyers were not allowed in, were from five years ago.  That's a big deal.

Jan 01, 2022 01:47 PM
Ed Silva
Mapleridge Realty, CT 203-206-0754 - Waterbury, CT
Central CT Real Estate Broker Serving all equally

I have not had to use an old inspection report but have used septic inspections from a buyer as once the tank had been pumped, there would be little chance for a new inspector to see any issues

Jan 01, 2022 01:37 PM
Chris Ann Cleland

Previous reports may be irrelevant, but the creation of distrust is much more a problem if withheld.

Jan 01, 2022 01:48 PM
Rocky Dickerson
Realty One Group - Las Vegas, NV
Superior Service!

Great points to cover Chris. I can agree with you here

Jan 01, 2022 01:45 PM
Chris Ann Cleland

No one wants the previous buyer coming round waiving an inspection report all alarmed.

Jan 01, 2022 01:49 PM
Lorrie Semler, REALTOR® in the Dallas area. Call/text 972-416-3417
United Real Estate - Addison, TX
Real Service. Real Results. Real Estate

The difference in terminology from one part of the country to another is so interesting. We'd never say "void a contract" here. We'd say terminate the contract, and it's usually done during the option period when the buyer doesn't even need to explain why the contract is being terminated.

Jan 01, 2022 03:30 PM
Chris Ann Cleland

Here, void means terminating without penalty.  And when you do it with the home inspection contingency, you need to provide a copy of the report.

Jan 02, 2022 09:41 AM
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Chris Ann - "ghosts" of past transactions (typically the worst of them) can make untimely appearances (and not just around the holidays).  It's definitely not a scene from "It's A Wonderful Life" either.  Don't be looking for Jimmy Stewart, Donna Read or warm and fuzzy feelings.  

Jan 02, 2022 02:54 AM
Chris Ann Cleland

It's a societal problem these days.  People want to round up folks to be outraged with them.  For God's sake, it was seven years ago!  If the mold wasn't remediated by then, it would be obvious.

Jan 02, 2022 09:45 AM
Kat Palmiotti
406-270-3667, kat@thehousekat.com, Broker/REALTOR® - Kalispell, MT
Helping your Montana dreams take root

Yes, if the seller has a copy of the inspection report, it needs to be disclosed going forward.

Have a great day!

 

Jan 02, 2022 05:10 AM
Chris Ann Cleland

Exactly.

Jan 02, 2022 09:45 AM
Alan May
Jameson Sotheby's International Realty - Evanston, IL
A moving experience!

We have found that home inspectors are "jacks-of-all-trades-and-masters-of-none".... and while some (not all) are quick to yell "fire" (or mold, or crack in foundation, or lots of other horrible things)... the are sometimes wrong.

I've had inspectors make claims of foundation cracks that I (as the buyer's agent) have had to search for with a magnifying glass... mold that the mold remediation professionals that we hired were unable to verify, and a leaking roof that the roofer was able to prove was dry as a bone.  Unfortunately you don't always have the opportunity to prove to the panicked seller that the "professional" that they hired and trusted was wrong.

- heavy sigh -

Jan 02, 2022 05:11 AM
Chris Ann Cleland

Believe me, I know.  It makes pre-listing home inspections sound like the best idea ever.

Jan 02, 2022 09:46 AM
Nina Hollander, Broker
Coldwell Banker Realty - Charlotte, NC
Your Greater Charlotte Realtor

Good morning, Chris Ann... disclose, disclose, disclose. As for those less than stellar inspectors, my list of "approved" inspectors gets shorter with each year. I've started negotiating a refund of additional inspection costs to a seller if further inspections show issues identified by a buyer's inspector are not what they were purported to be. This is also a good reason to encourage a pre-sale inspection... you have something from with to "argue."

Jan 02, 2022 06:28 AM
Chris Ann Cleland

Since inspectors are always kicking the ball to licensed contractors, I've found it best to get the licensed contractor in question (plumber, electrician, engineer) involved to be the ultimate authority when an inspector rings an alarm bell.

Jan 02, 2022 09:48 AM
Candice A. Donofrio
Next Wave RE Investments LLC Bullhead City AZ Commercial RE Broker - Fort Mohave, AZ
928-201-4BHC (4242) call/text

What we do, as directed by attorney, is this:
Amend the seller's disclosures with what was found in the summary report, and what actions if any were taken to address any issues.  

We do NOT deliver the actual report. It was only good for the day it was done and not always accurate.

If I had a dime for every time an inspector claimed an electrical issue when it was simply a burned out lightbulb or they didn't throw the flippin' breaker!

I had a deal fall out of escrow with 2 different buyers. The first wanted to use the inspection report to renegotiate price, we sent him packing but we amended the disclosures. 

The second buyer could not do what he wanted due to the zoning WHICH I told them at the start but they were too smart for me, LOL 

That second inspection report INTERESTINGLY did not find issues the first one did (before seller fixed the previous report's issues).

So it just goes to show, not all inspectors have a effin' clue what they are doing! 

Jan 02, 2022 06:57 AM
Chris Ann Cleland

It's the withholding the report that, I have found, creates distrust and makes buyers suspicious.  Let it all hang out.  Horrible inspectors are usually found out fairly quickly, even by buyers.

Jan 02, 2022 09:49 AM
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Chris Ann:

It's always tough then buyers pull out due to the inspection, but that's their choice. The seller, however is now in a position of having knowledge that they must disclose to future buyers. Withholding that information is a potential legal landmine.

Jeff

Jan 02, 2022 08:32 PM
Chris Ann Cleland

The reasons I hear from listing agents as to why they can't, won't or shouldn't have to disclose turns my stomach.  Just picture that former buyer popping by with a copy and justifying the decision to not disclose after the fact.  (gulp)

Jan 03, 2022 10:28 AM