Sellers ask me from time to time how many appraisal issues I see that might cause a deal to go awry.
My response is always that I see more sales killed from due diligence than I do from a low appraisal.
I recently worked on an interesting sale. The buyer on one of my listings had the home inspection. As with most inspections, the inspector said the HVAC unit worked fine but needed servicing and recommended it be serviced and evaluated thoroughly by a licensed HVAC contractor.
What happened next was both humorous and frustrating. The HVAC company the buyer chose sent out a technician to evaluate the unit.
He spoke to the seller, who let him in because the buyer’s agent was two hours late. He told the seller that the unit once again needed servicing, but it needed less than $1,000 of work. He even said that number would be cut in half if the homeowner did a little self-maintenance and showed him how.
What came next was a request from the buyer with a bid from that same HVAC company for a new unit costing almost $6,000. The report by the HVAC company was completely different than what the technician told my seller. It suggested wholesale replacement of the unit itself.
Now, you can imagine my seller’s response: He was not happy. The buyer had not been there at the HVAC second-opinion evaluation, and as noted, the buyer’s agent missed the inspection because he was two hours late.
Although the seller had a firsthand conversation with the technician, the report showed an HVAC company trying to make a living off him.
I have seen this before. A home inspector says the roof needs a few repairs and sends a specialist to take a look at it. The roof guy comes out and, instead of quoting those few repairs, he says the whole roof needs replacing.
I’ve seen siding contractors that recommend replacing all vinyl siding on a house with Hardie plank instead of addressing a simple flashing issue on a bay window that came up during inspection.
At this point, what happens all too often is that inexperienced buyers get scared off. They are told it “needs a new …” And they put a line in the sand with the seller, so to speak — or they just walk away.
With this HVAC issue, the unit needed to be serviced per the inspection. My seller went ahead and had his HVAC company — the one who had installed the unit and maintained it over the years — do an annual service on it.
I also relayed to the buyer’s agent that a home warranty might give the buyer peace of mind. The unit functions, after all. It doesn’t matter if a unit is 5 years old or 25 years old — if the unit has not failed and is functioning at closing, the home warranty will cover it.
I have spent years working on a relationship with one warranty company who has shown exceptional service to my clients after the sale. Over the years, a contact with that company has shown me what to buy to cover our clients, plus what warranties will fall short — and why.
I would encourage every agent I know to be present during inspections. I haven’t seen a buyer’s agent show up for a home inspection for their buyer since … I don’t know when.
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From a trusted home inspector, I’ve learned what’s major and what needs a Band-Aid — and I’ve learned it by being there for my buyers.
As my broker always says, “We are agents — not attorneys, bankers or contractors or inspectors.” So by being there at my buyer’s inspections, I understand how to advise my buyers better.
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The worst-case scenario happened in the sale mentioned above — a technician tells the seller one thing (the unit will need a $300 service, per the HVAC company), and then the sales guy tells the buyer something totally different (the unit will need to be replaced, a $6,000 price tag).
How else do you prevent this? By having your list of tried-and-true contractor professionals who you know will shoot straight with you and your clients without trying to make an extra buck.
Over a recent holiday weekend, the air conditioner in one of my vehicles went out. It was 90-plus degrees outside, and I took it by an area shop to have them look at it.
They came back and said it needed a new AC compressor. The quote started at $1,100 and, after a few hours of them banging numbers around, it ended up at $1,700.
On the first weekday after the holiday was over, I spoke with a mechanic who has worked on this vehicle over the past few years for me. He asked pointed questions and told me he would test other issues, such as whether the malfunction was a simple leak instead of a component failure, before ordering parts and replacing components that might not need replacing.
In the end, he fixed the problem for less than half of what the local shop wanted to charge me.
You see, being the owner of a car or a homeowner, you must have people you trust.
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That list of people you trust must be extensive so that you don’t lose a sale over something insignificant because someone is trying to cash in on the situation.
Hank Bailey is an Associate Broker and Realtor at Re/Max Legends. You can follow him on Facebook or Twitter.