Controversy: Would Ya', Should Ya' Ask For The Money Back

Reblogger Kevin Corsa
Home Inspector with H.I.S. Home Inspections (Summit, Stark Counties)

Here is a very interesting post by Steven L. Smith, which I thought was an interesting question, and deserved some more "Air Time". 

Original content by Steven L. Smith Home Inspector Lic #207
While mulling over the Sunday newspaper today, my wife read to me an article from the serious part of the paper. Personally, I was too busy reading, and looking at photos of, Britney, Lindsay and Paris, to waste my time on the business section. Anyway, the wife had an interesting article which expanded my world perspective.

It was a real estate column by one of the nationally syndicated writers. Someone had written in to him stating that they had purchased a home inspection. The inspector had found mold and other problems so they had walked from their deal. They had gotten the earnest money back from the seller.

Their next questions was this: "Should we ask the seller to reimburse us for the inspection fee?"

The columnist gave them the standard answer, that applies almost always -- "No, just move on and be glad you found out about thousands of dollars worth of damage for a mere $450.00."

That is, almost always the right answer. However, with all the hundreds of years of real estate experience at AR, I am curious if agents or inspectors have experienced situations where the buyer was justified in asking a seller for a reimbursement of the inspection fee.

Personally, I know that occurred after one inspection that I did and I know some questions in that regard were lurking n the background after another one. Here were the two scenarios and both involved failure to disclose on the part of the seller. In other words, the issues I found were things that would have, if reported in the seller's disclosure, immediately discouraged the buyer from submitting an offer. There was no doubt about it, these were deal killers going in.

Specifics:

1. Crawl space structure was dust, fully destroyed by anobiid beetles. No issues citing past pest problems had been disclosed. It was obvious sellers knew as there were signs of recent work, efforts to patch it up, and sellers had lived there for about 30 years. They knew and failed to disclose that the house was falling down.

2. Home was listed as a stick-built house. It was well-disguised but, during the inspection, I found definitive proof that it was a manufactured or mobile home, with additions. Buyer had zero interest in a manufactured home. This was, again, a failure to disclose. However, based on the fact nobody seemed to know this -- even the assessor -- maybe it was not the seller's fault that the information was not disclosed. Regardless, it was a major and significant piece of information that would have immediately turned off this buyer and probably any buyer who wanted a house.

I would be interested to hear your stories. Have those of you, particularly those who work mainly with buyers, ever demanded that the seller reimburse your client for inspection fees as a result of failure to disclose issues that were later found by the inspector? Obviously that would take extenuating circumstances but it seems to me it can be justified. 

Any personal cases that you would be willing to share, from either side of the coin, as a buyer or a seller's agent?

Steven L. Smith

Bellingham WA Home Inspections

close

This entry hasn't been re-blogged:

Re-Blogged By Re-Blogged At
Topic:
ActiveRain Community
Groups:
Realtors®
Home Inspector's Corner
Blogs Happen...

Post a Comment
Spam prevention
Spam prevention
Show All Comments
Rainer
15,098
Bubba Fife
Complete Property Maintenance - Nashville, TN

Interesting question and delimma. If it could be proved that there was fraud involved, maybe, but that would be hard to prove. The buyer should be glad that it just cost him what it did and be done with it...

Sep 16, 2008 12:33 AM #1
Rainer
15,098
Bubba Fife
Complete Property Maintenance - Nashville, TN

Interesting question and delimma. If it could be proved that there was fraud involved, maybe, but that would be hard to prove. The buyer should be glad that it just cost him what it did and be done with it...

Sep 16, 2008 12:33 AM #2
Rainmaker
53,133
Christina Moock
Cutler Real Estate - Canton, OH
REALTOR - Cutler Real Estate

Interesting.... I never thought about it.  It's always more like just move forward and forget about the house.  I agree with Bubba- if you can prove there was some items purposefully not disclosed by the seller, then why not try and get reimbursed.  However, I just don't see that happening.  The seller will probably fight the buyer to keep their earnest money deposit.

Sep 16, 2008 03:44 AM #4
Rainer
8,397
Dan Hagman
ProSite Home Inspections - Pleasant Hill, Iowa - Pleasant Hill, IA
ProSite Home Inspections, LLC

The buyers could put into the purchase agreement that if the home inspection reveals any repairs or structural deficiencies or safety hazards over $$$$$.$$ that could spoil the deal then the seller is required to refund the inspection fee along with the earnest money to the buyers. If the sellers are so confident that their home is good then they won't have no problem with it. That's why a Pre-Listing inspection is so valuable to both parties.

Sep 16, 2008 06:21 AM #5
Rainmaker
1,247,264
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

Since I wrote it originally, I will comment. The only times I know of when the buyer's agent really pushed for a refund was clearly a case of covering up. For example, there is a rat infestation, they say nothing about it, yet in the crawl space the insulation is all down, it is filthy and there is a receipt for rat bait dated a week before. The case I was specifically thinking of involved no disclosure of carpenter ants, yet the home was full of thousands of chewing ants that had wiped out the crawl space. They admitted, when questioned, that they had seen ants in the house on many occasions. I think, generally, it is best to move on.

Sep 16, 2008 11:01 AM #6
Rainmaker
179,897
Jack Gilleland
Home Inspection and Investor Services, Clayton - Clayton, OH

It's a shame that the buyer would have to pay in case of intentional fraud, but I have never heard of the buyer ever getting (or even going after) any of the HI cost.

 

Sep 16, 2008 04:35 PM #7
Rainer
321,367
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

Even when evidence might seem to be overwhelming, things are not always what they seem to be. For example, in Steven's comment a couple above mine, the receipt for rat bait could be dad buying for a son or daughter who had problems at their house, or son bought it to try to leave a subtle message for forgetful dad that he might have a rat problem. Just all sorts of scenarios. The seller can also simply claim, "I forgot about it," which did work in one court case here that I'm familiar with.

We do have a lot of sellers here who pay for the buyer's home inspection.

Sep 17, 2008 01:47 PM #8
Rainmaker
204,468
Margaret Mitchell
Coldwell Banker Yorke Realty - York, ME
Seacoast Maine & NH Real Estate

Hi Kevin - You and I have simillar blog reading tastes, since I had read and commented on the original.  :)

If the contract states that the inspection is at Buyer expense, I think the chances of a Buyer prevailing in a legal dispute are slim.  And if they dispute and lose, they may find that the legal expenses are substantially greater than the cost of an inspection.  Of course this is just speculation among real estate friends since I am not an attorney.

I thought it was a very good blog, too.

Sep 18, 2008 10:37 PM #9
Rainmaker
1,247,264
Steven L. Smith
King of the House Home Inspection, Inc. - Bellingham, WA
Bellingham WA Home Inspector

Kevin,

I read all my comments, and all of them here. Ends up that the answer seems to be that, sometimes, it makes sense to ask if you feel you, or your client, was hustled or lied to. On the other hand, if the seller says no and denies knowing, it is almost certainly not worth the hassle of any litigation. Move on. Now, if you bought the house and found out they hid something major, that is yet another story.

Sep 19, 2008 02:08 PM #10
Rainmaker
30,984
John LaRocca
LaRocca Inspections - Burbank, CA

Howdy Kevin,

This is an interesting article. I believe that the money that buyer invested into the home inspection served it's purpose and was $ well spent. If the seller was not disclosing something to the buyer it becomes a bit of a grey area but I still believe that the $ served it's purpose and was $ well spent... I don't think I'd ask for MY $ back but who knows, if I'd been duped and it was obvious I guess that might, at least after reading this article!

Sep 24, 2008 06:09 AM #11
Rainmaker
67,128
Kevin Corsa
H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH
H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

I had one very blatant attempt by a seller to disquise a major foundation defect by parging the basement wall and painting it inside and out, as well as dropping the vinyl siding on the outside and installing a board around the top of the wall on the inside to hide the fact that the foundation had actually dropped over 8 inches at the rear corner. My client halted the home inspection at the point I discovered this, and demanded that the seller pay for my home inspection, which he did, without any argument whatsoever. (CAUGHT RED-HANDED).

Sep 24, 2008 10:23 PM #12
Ambassador
525,608
Virginia Hepp - Mesquite NV REALTOR
Desert Gold Realty - Mesquite NV Homes For Sale - Mesquite, NV
Mesquite NV Homes and Neighborhoods - Search MLS

Kevin - I suppose that a case could be made in some instances where a buyer is justified in asking for seller to pay for the home inspection.

But overall, I think that a bad inspection justifies the cost, and the purpose of a home inspection is to alert the buyer of any problems that could cost them money or impact the value of the home.

It is a tool to help the buyer decide whether to buy the house.

Sep 28, 2008 05:40 AM #13
Rainer
132,369
Jon Wnoroski
America's 1st Choice RH Realty Co., Inc. - Green, OH
Summit County Realtor

Kevin, I read your post with interest.  It is this very thing that we rely on a good home inspector.  Most often the clients are not experts on home instruction (and I surely am not) and they rely on the expertise of their inspector to make them aware of defects.  I have only had a couple occasions where a buyer walked away from a home because of issues that surfaced in the inspection and neither of them requested the inspection fee.  On other deals, the buyers requested remedies for the issues that surface and the sellers complied.  Of course, these were not bank-owned properties.

I do believe that a buyer would have the right to ask for their inspection fee to be reimbursed if the issue was an undisclosed defect and especially one that the seller not only was aware of but also one that they tried to cover up. 

Thanks for the post and thanks for the card; I will give you a call before long and we'll get together for lunch.

Oct 15, 2008 11:42 PM #14
Rainer
654,274
Baker Home Inspection and Commercial Properties Inspections
Baker Residential and Commercial Properties Inspections - Springfield, VT
Home and Commercial Properties Inspections Vermont

Hey there Kevin
I sure wanted to be sure to stopping by to say, Welcome to the New Year of 2012!

Jan 06, 2012 10:04 AM #15
Rainer
654,274
Baker Home Inspection and Commercial Properties Inspections
Baker Residential and Commercial Properties Inspections - Springfield, VT
Home and Commercial Properties Inspections Vermont

Kevin, I'm stopping back by in-order to check to see if you had started being active on your blog here agin or not.

Jul 26, 2013 11:26 PM #16
Post a Comment
Spam prevention
Show All Comments

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?

Rainmaker
67,128

Kevin Corsa

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector
Ask me a question
*
*
*
*
Spam prevention

Additional Information