Within the last year or so, I have seen a marked increase in the number of deals that do not close because of the home inspection report, both my own deals and those of fellow agents within my company. What is causing this? Is it an increase in the dreaded "Deal Killer Inspector" or does the problem lie with the buyers and buyer's agent?
Awhile back, John McKenna, of American Home Inspection wrote an article, Deal Killer Inspector. This post received over 200 comments, so obviously, it is something of interest to us. I think, first we need to define what exactly IS a deal killer inspector.
Calling every inspector that does an inspection that happens to kill the deal as "Deal Killer" is unfair. There have been numerous occasions where the inspector found major problems/issues with the property and reported them to the buyers as such. As a buyer's agent, you should be thankful that these issues were caught. As a seller's agent, these inspectors give you something that really does need to be addressed by the sellers, before any other offers are made.
Then, I think that there are a few inspectors it seems that their whole goal is to make the property seem as bad as possible. They note every defect, however minor, and make is note seem like a major expense issue at best. An example is a recent report I received that included such things as "cracked light switch plate - Consult licensed electrician. Estimated $75 to fix." and, "Cord plugged into outlet running up wall to light mechanism (that would be a light fixture for everyone else), this is fire hazard and needs to be corrected. - Consult licensed electrician. Estimated $125 to fix" Or, maybe just unplug the cord!
I think that vast majority of "deal killers" do fall into the former category. The latter serves no real purpose, other than possible self-importance and/or an over-whelming fear of liability. Also, it's been my experience that when deals do not close, the home inspector (as well as any other inspectors/appraisers), tend to have a hard time collecting their pay. Not a productive way to make a living.
So, if most inspectors aren't actually trying to kill the deal on purpose, then what's the problem? It's fourfold, in my opinion.
First, you may have an inspector that cannot communicate well with the buyer, either verbally or on paper. Communication is very important. I'd much rather have an inspector that finds everything on a home, including the scratch on the door, BUT communicates effectively which issues are just FYI things, which are need to know, and which are major problems. Problems arise when inspectors don't talk (or call) the buyer to go over their findings, or worse, simply give them a cold written report with no explanations or details on the finds, "simply consult a professional."
Second, my biggest gripe about recent home inspections is the "consult a professional" phrase. It seems to be getting added more and more and for lesser problems. From my talks with local home inspectors, this phrase is new thing being pushed as a liability protection. The problem with this is twofold. However minor the repair, it creates fear in the buyer. The more "consult a..." in the report, the more fear. Second, this phrase may protect you right out of business. If everything is consult a... then it would be just as simple to hire each professional (electrician, plumber, contractor, etc) than it would be to hire an inspector, THEN hire a professional. It would be cheaper for the buyer, too.
Third, agents are to blame in a lot of cases, too. Some agents blow off notably visible problems, or do not communicate known problems to their buyers, then blame the inspector. Case in point, I listed a home that had old wood siding that needed replacing. An agent called, said she had a buyer wanting to see the property and were already very interested. I informed her that the siding needed replacing and the sellers would NOT do it nor would it be part of the repair contingency. They made an offer, was accepted, and had a home inspection. Guess what? The inspector said the siding needed replacing. I received a call from the agent that the buyers wanted it replaced. I reminded her of our conversation. Her reply, "but, oh my God, the siding really needs replaced." Now, is there a difference between "needs replaced" and "Oh my God, needs replaced," I ask. Where does the blame lay in this case.
Fourth, and finally, it is the buyers as well. In the current market, buyers are much more nervous about the buying process than before. Any problems, major or otherwise, is a cause to run. As agents, we tend to compound this problem by making the repair contingency number way too low. It creates an easy out. Here, for example, that amount is around 1% or so of asking price. For any home more than 2-3 years old, that number is simply too low. It is the agent's responsibility to communicate this to the buyer. Home ownership does have cost associated with it.
Your thoughts?
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