- When I worked in Southern California, our company policy on inspections was to have the buyers take a credit for the work and have their own contractors complete it.
- It's no secret that when there are multiple offers on a property, that the buyers will often do what is necessary to win the property and then use the inspections to work the seller's price back down.
- When all is said and done, it comes back to having a strong, competent broker on your side.
The inspection process during any transaction can be a challenge. Nevertheless, nit-picky inspectors and buyers who believe they should be purchasing a perfect home are lending new meaning to the phrase, “You’ve got to be kidding.”
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If there was ever a reason for hiring a strong listing agent to represent you, negotiating through the inspection period is it. I’ve often used the following script for agents who discount commissions: “If that agent can’t even negotiate a full commission on his own behalf, how can he possibly negotiate the highest possible price on his property?”
I’m thinking about changing it to: “If that agent can’t even negotiate a full commission on his own behalf, how can he keep you from being hit with thousands of dollars of unnecessary repairs on your inspection report?”
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My experience selling our home
We thought our house was in good shape. Needless to say, we were surprised to discover that both the physical inspector and a roof inspector called out hail damage on our roof. Unfortunately, that meant we had to pony up for the deductible for a roof replacement.
When we listed the house, I asked our broker to put a seller’s home warranty on our home when we first listed it. Why? You never know when a hot water heater can burst, the air conditioning can go out or some other major system will have an issue.
In our case, there was a hairline crack in the seal on the garbage disposal. The good news was that we were out the cost of a service call and that’s it.
As sellers, we certainly couldn’t argue that these were legitimate issues. The next day, we received the you’ve-got-to-be-kidding list.
- There is evidence of cracks all exterior penetrations of exterior stone and wall cracks and gaps — buyer would like the seller to address that with the builder and request them to seal all the cracks and gaps. Will do a walk-through to point out all the cracks and gaps to be repaired.
- Buyer requests the seller have an electrician label the service breaker panel with all electrical circuits. There are missing labels on the breaker panel.
- There needs to be an expansion tank at the water heater. Buyer would like the seller to have the expansion tank installed by a plumber.
- Attic ladder is missing fasteners at end and side brackets. Buyer would like the seller to fix the fasteners and side brackets.
- Buyer would like to have the kitchen faucet tightened by a plumber.
- Buyer requests the seller to get the sprinkler heads adjusted or changed to a different style to prevent direct spray contact with home, fences and other equipment.
This is the kind of situation that causes people to dig their heels in the ground and say, “no way.”
How we responded
My response to my broker was: “So they expect the builder to take care of minor caulking issues, and they’re going to tell the builder what to do? Our builder warranty was up seven years ago. And by the way, all the electrical circuits were already labeled when we moved in. The inspector didn’t bother to move a couple of items in the garage to get to them.
“The expansion tank was a code requirement for new homes today — our home is built to code for 2007. The attic ladder repair — we found two screws that needed to be replaced. Also, we’re supposed to pay a plumbing service call to tighten a faucet screw? Oh, and they want a different style sprinkler head? Seriously?”
When I worked in Southern California, our company policy on inspections was to have the buyers take a credit for the work and have their own contractors complete it. Here’s an example that illustrates why.
I once had an attorney client who had a six-month-old baby. The roof inspection came back with damaged shingles. The seller supposedly had a licensed roofer repair the damage. In the first big rain, the roof leaked right on the baby’s crib. Needless to say, everyone ended up in court.
The seller claimed that he had a licensed roofer handle the issue. The judge ruled that the seller was responsible for the damages. It was up to the seller to seek reimbursement from the roofer for the faulty work.
If the buyer had been given a credit, she would have had her own roofer. The dispute would have been between the two of them rather than involving the seller and the brokers.
In our inspection, I wanted to use the same approach — write a check and make it go away. No chance. The buyers wanted the repairs done.
Managing expectations
It’s no secret that when there are multiple offers on a property, the buyers will often do what is necessary to win the property and then use the inspections to work the seller’s price back down.
Savvy listing agents have figured out it’s wise to give the buyers time to inspect the property and then have them come in with an offer without an inspection contingency.
The challenge is that many buyers are demanding properties that are like new. If they had ever built a new house, they would know that “new” really means a year of uncovering all the things that weren’t done properly during construction.
In fact, one broker friend who told me her buyers wanted everything in a 150-year old house to be perfect. Another told me that the buyer’s estimate to add a shower to an existing bath was $140,000.
They both confirmed what we had experienced — the inspectors are nit-picking to show their value, and they don’t do a good job of explaining what a legitimate repair is, what’s preventative and what’s simply outrageous.
When all is said and done, it comes back to having a strong, competent broker on your side. We took care of the caulking, replaced the two missing screws in the attic ladder, sent the buyers a picture of the electrical panels and tightened the kitchen faucet.
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Our broker explained to the other agent and her clients what was preventative and not required. She helped keep us at the negotiation table until we worked out our issues.
If she hadn’t done her job, we could have lost the deal or paid thousands of dollars in unnecessary inspection-related work.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/
