After the home inspection

The one way to (nearly) eliminate all of what was written in this article (asking for price reductions after the inspection), effectively taking the house off the market (not too many buyers in this market will write offers on homes while there is another offer being considered, so the home loses market momentum) is to HAVE THE INSPECTIONS DONE BEFORE THE HOUSE IS PUT ON THE MARKET SO THAT THE BUYER KNOWS WHAT THEY ARE BUYING!

There are provisions for additional inspections (if needed) at the buyer's expense, such as roof, chimney, foundation, etc.

You wrote: Most sellers are open to realistic requests but become annoyed with attempts to renegotiate the price after inspection without good reasons. In my experience as an Out-of-State R.E. Broker who manages nearly 100 Realtors, the sellers are the ones who need a major education in selling their home, especially in this type of market. The sellers are usually the ones who are out of touch with selling a home, as many of them haven't sold a home for a decade or more. The initial list price, further price reductions, inspections - they are clueless - as are most of the Realtors who list the home and take the easy way out.

Realtors in many other States have, at bare minimum, a home and pest inspection done before they list a home. We also include a preliminary title report, CLUE report, flood and other hazard reports. I know that MA. is not a Title State and you use Lawyers for the P&S and much of the negotiation. To me, this means you do even less than we do, as we write our own contracts and go right into P&S with 3% liquidated damages.

Why is MA. so backwards?

I heartily agree with Ward’s comments, for out here in Silicon Valley, that is the way homes are sold. As a home in Atherton, Los Altos Hills or Palo Alto is 2X or 3X+ what it is in Weston, it seems to work just fine. Inspections and title work are done up front before the home goes on the market. As long as the Listing Agent uses a well known and reputable home inspector, buyers and their agents use the inspection as a tool to price their offer.

Seller’s need to understand the difference between having a home on the market and having the home in the market. The later is having a home ready to sell from day one and priced correctly. Not by lowering and lowering the price to find the market. Not having to waste time by getting inspections done after an offer comes in. That delay can have the effect on the buyer of getting buyer’s remorse by wondering why no one else had purchased the home (or why it had fallen out of agreement due to a prior inspection which they don’t get to see) and then using their inspection as a way to get out of the sale. It is like playing hide and seek.

With inspections done up front, this happens very rarely as long as everything is disclosed. Buyers can order their own inspections, though most just rehire the same inspector who had performed the inspection for the seller and he goes over the report with the buyers. By doing so, the inspector is now acting in a fiduciary capacity to the buyer and the liability is on him.

As they say in sales “a delayed sale is often a lost sale”. Having a 2 part home selling system of writing an offer and then going to a P&S complicates and drags out the sale.

We in Mass have heard Ward's criticisms...well, forever, it seems. Many sellers have inspections prior to marketing their homes, but in my experience, buyers always want to have their own inspection. Face it, they are an untrusting bunch--particularly the newbies. What an amazing broker Ward is to have the pre-inspection work so seamlessly for him.
Sam, you're right on. Make a fair offer up front and stop treating the seller as you would your landlord. And Sellers--listen to your broker

As a Pittsburgh Pa (metro area) home inspector, your 'take' on what to do after a home inspection is good. I try my best to put potential buyers at ease, put things into perspective. I feel I am more qualified than many inspectors, in that I have a background in home maintenance / building & construction.. I KNOW whats a big deal and what isn't. I can't begin to tell you the level of anxiety i see, specialy from 1st timers. When problems depicted in a report are not properly explained, folks are likelty to walk away from a great home !!

There must be a good reason that inspections are only done after an offer is made, and I assume it's because they cost money. However, if I were buying a house and really wanted to ensure I'd get the best deal, and at the same time, be certain the house was worth buying, or even trying to buy, I'd think paying for an inspection first is worth it. If I buy a used car, I don't negotiate a price, sign a P&S and then say "NOW I will take this to my independent mechanic who may tell me it needs something which likely affects the perceived/real value of this thing, and THEN I'll come back and negotiate further with you even though you're probably going to be sick of this deal, etc, etc..."

Sam is right that "The time to negotiate a good purchase price is before the offer is signed, not after inspection." However, the inspection provides necessary info about the thing being bought, and I'd rather have it all on the table ahead of time then squabble about the changed circumstances afterward. It seems more difficult for both buyer and seller.

jchristian,

the P & S typically isn't signed until after the inspection has been completed and buyer/seller are in agreement about any inspection concerns...

Once the P and S is signed, the only outs I know of are not getting approved for the financing or breaking the contract and forfeiting your deposit and P & S monies (5-10% of the purchase price).

Interesting commentary on East versus West, and which customary practice is better, but here in Masscahusetts inspections are performed AFTER the Offer to Purchase. The question isn't which practice is better, but rather what is the right perspective on price adjustment. The time to negotiate a good purchase price is up front, but a home inspection may reveal undisclosed items that may significantly deflate the negotiated price. As a practicing attorney for 25 years, my take away is that Buyers AND Sellers have to be realistic about price adjustments to address legitimate necessary repairs.

Mary appears to be like many of the older agents that I manage. Unfortunately, she is in the majority of unquestioning, old school and wanting to preserve at any and all costs the status quo. If not forced to change, the old ways and methods are good enough. The real estate culture where I work expects sellers to fill out a 7 page mandatory property disclosure form, pay for a home and pest inspection and have a preliminary title search done.

Sellers do not have to remedy (fix or repair) any issues found from their inspection, it is done to give the sellers a better idea as to what they are selling (which helps to establish a realistic list price) and it helps the buyer and the buyer agent to better determine an initial offer price. It is a selling tool, just as is a CMA.

It is no different than buying a used car. Unless the home has just been built, we realtors are selling used properties! Buyers, or the term Mary used - newbie (I hate the use of that condescending term) or experienced, still mostly hire their own inspectors, but rarely does the second inspector find something the inspector for the seller hasn’t found. It happens sometimes, but people get hit by lightening sometimes also. Buyers nowadays are distrustful and we in the industry are to blame. Buyers have been taken advantage of for far too long IMHO.

As far as “sellers, listen to your broker”, to me that means yet another Agent/Realtor pretending to be a higher level Broker (all these designations are used interchangeably and are not the same) and secondly, a agent masquerading as a salesperson when all they really want is for the seller – or buyer – to lay down for them and take their word as gospel.

Two thoughts:

1. Inspectors are paid to find "the fly in the ointment." (They will find "something" just to keep the buyer happy, so the buyer will feel that they're getting their money's worth). They often come back with ridiculous repairs or issues that really don't warrant attention.

2. It used to be that the real hurdle was getting through the inspection - now it would appear that the real obstacle is getting through the bank appraisal...

If sellers don't want buyers coming back for concessions after the offer they should disclose up front all that is wrong with the property. If I make an offer for a home that has disclosed that the roof leaks, I shouldn't expect the seller to make a price reduction when my inspector figures out that the roof leaks. Way too often the seller doesn't come clean on things they clearly should be aware of.

The seller should get an inspection prior to listing the property - that way there won't be any surprises that may have a drastic effect (up to and including being condemned). A reasonable buyer should not go by the seller's inspection 100% buy using the seller's inspection as a guideline. The buyer should then make an offer based on the understanding of both parties that an adjustment may be requested if the buyer's inspector finds something significant that was overlooked or played down.
Although an "extra" inspection would need to be paid for, both parties can feel confident in the results, and the seller may be able to recoup from their inspector for their error (if it is big enough).

Bill the problem with your logic on this is 2 different inspectors are going to see the same property in a different light. Much in the same way two different attorneys will approach a contract.The problem in MA. is that there is no mandatory seller's disclosure to hold people responsible for things they know to exists but sometimes fail to tell people.As a seasoned home inspector in MA. who deals with brokers all the time the two biggest questions asked are " how long will this take i have another appointment." or "i hope that your not an alarmist." Now i am not saying there are not good brokers out there but the fact of the matter is more times than not alot of the surprises that come up are so obvious that we all know it should have been disclosed in the first place!!!

Let's say I DO want to bring in an inspector before making an offer, and am willing to pay for it out of pocket. How much would that cost me in metro Boston?

Regardless of who pays and when it happens the point is home inspections are very important. My husband and I put an offer in on a home that eventually foreclosed (in April 2006). Our offer was accepted, but before the home inspectionw as even half complete we knew we weren't going to buy the house. It was the best $600 we ever spent. Everytime we drive past the house it looks worse and we fondly recall our home inspector. BTW - he never said don't buy the house, but his report was very informative.

Sam is correct that the price should be negotiated before the offer is made but, if there are significant deficiencies in the property that were not disclosed the seller should expect a request for an adjustment in price to repair the deficiencies.
Real estate agents treat home inspections as a pro forma procedure and steer buyers to inspectors that do not create issues that may effect a sale. .Joe Inspector comes in and fills out a check list or prints a boiler plate report on site.The problem with Home Inspections in MA is that the scope is very limited and the vast majority of home inspectors are not experts but , are generalists and do not have the experience to determine the condition of a building or its systems. There are few inspectors that are experts.
I have recently been involved as an expert in a case against a home inspector and I am appalled by the process. The inspector either missed or failed to note over $ 100 K of deficiencies in the building.The biggest problem is that the scope of the home inspections is so limited that many of the deficiencies were beyond the scope of the home inspection. Buyers need to hire an " expert " not a run of the mill home inspector to properly protect themselves.

Sean (#13),

Depends on the size of the property but average is $400-$600 for an inspection. They take 2-4 hours.

Out here in Silicon Valley, one of my Doctor clients bought himself a 3rd car as a weekend toy. A 2007 Ferrari F430 from the local Ferrari dealer. He paid much more at the dealer than he would if he purchased the same car from a private party, not only due to the dealer mark up, but due to the fact that the dealer "certified the car". The car was fully inspected and warranted by the dealer and that was worth more to my client than by saving a few thousand dollars by not buying a certified car.

In other words, the Doctor knew exactly what he was buying before he made an offer. Buying Real Estate should be no different. How in the world can someone make a (so called) "reasonable offer" when the odds are that all the negotiations up to the time of the offer will be up for grabs once the inspections are completed!

Or, the buyers might not even have wasted the time, emotion, effort and money writing an offer if they knew the problems in the house! Maybe that is why you do not have homes inspected when the home is initially listed in MA?

We Realtors/Brokers CAN NOT give inspection, or legal, or financial advice for the risk of being sued, so how can we establish a reasonable price without seeing the home inspection up front! By using the flawed CMA, which doesn't even take into account REO or foreclosure sales, etc?

All of us in the R.E. industry need to get away from closing the transaction at any cost and the constant need and amount of time and money to find new business, but then again, changing the present and broken NAR won't happen in my lifetime.

That issue is never covered as a topic on your blogs as it is in other newspapers and in R.E. blogs and it should be. Many of us feel the same way, but many others just don't want to tell the truth for fear of losing a sale.

sean
in my experience you can not get an inspection w/o an accepted offer. best case scenario you have a knowledgable gc in your network that knows code and costs to cure. if not try extended network and see if a friend of a friend will do a quick walk through for major issues for a case of beer or some sox tickets. if you are stuck w/ relying on a home inspector you're in a tough position. imo exposure has motivated inspectors to limit liability as much as possible and to use language so ambiguous that their reports have very little value. i have a similar opinion about title insurance but i still would recommend getting both.

ward,
i totally agree on seller disclosure. i also wish for world peace and the end of hunger and poverty. your doctor friend may feel comfortable but he got beat for that piece of mind.

I'm a long time ASHI Certified Inspector. Out here in Hawaii, it seems everyone tries (or is told) to sell AS-IS. The pre-sale inspection is being discussed more, but I don't like some of the programs such as 'Move-In-Certified" a few inspectors are pushing. I have read it; it is reckless as it suggests it is OK for Mr. Buyer to waive his later inspection. Easy money- with no obligation to the Buyer, as they are contracting with the Sellers. What everyone needs to remember is conditions can, and do change. Also remember Inspectors range from superficial to outstanding. Any inspector who tells a Seller, Realtor or Buyer it is OK to skip their own inspection (because they did a pre-sale inspection) might as well stand outside the nearest courtroom door.

Only a foolish Buyer would waive having their own independent inspection performed. As far as AS-IS goes, well, my inspections have secured some very large price reductions or credits for my clients because I am thorough with an outstanding report.

Pre-sale inspections CAN be a good tool and disclosure aide. That said, it should only be a part of the equation, never a substitute for the Buyers inspection. Buyers, INTERVIEW AND HIRE YOUR OWN INSPECTOR- THE BEST, MOST QUALIFIED INSPECTOR YOU CAN FIND. CHECK FOR COMPLAINTS, LAWSUITS, CURRENT LICENSING, AND LOOK FOR LIABILITY AND E/O INSURANCE. ATTEND YOUR INSPECTION. Last, do not blindly trust referrals made by your Realtor. Screen every one (at least three) YOURSELF.

RE # 19 - WR - ASHI is largely responsible for poor quality and limited inspections, and is purely a marketing Company that charges inspectors a fee.. ASHI did alot of lobbying to restrict the scope of home inspections when the Home Inspection law was passed in MA, and was successful in doing so. The ASHI Standards of Practice are far too limited and do a disservice to home buyers. Hire a real inspector , not a member of one of these marketing groups.
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