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."