Inspections can be a nerve racking experience. It is
difficult for any property owner to turn over their house to an inspector whose
job is to be critical and look for trouble.
So what is an owner to do if the house inspection report
they receive is bad?
If you knew that your house needed some updating or
repairs, the report will probably not be a surprise. If you thought your place
was in great shape, but the inspection stated otherwise, you will probably be
in a state of shock or concern. It may be disappointing and even devastating depending on what was found. Don't despair.
The most important thing to remember is that if you
really want to sell, there is no such thing as a bad report.
What?!? How can I possibly say that?!?
First of all, you must remember that inspectors are there
to do a specific job. They do not have any ulterior motive. They are not “out
to get you”. The report serves to describe your property with the most detail
and best expertise possible.
If the report finds something you were not aware of,
think of it as good news.
Really!?!
“This woman is full of shiitakes!” You must be thinking.
Well read on…
What To Do
The most important thing is to stay calm. Breathe and
then do the following:
Step 1
Review the report and find the stuff you didn’t expect. Look
at the house again with a critical eye. Is it right?
Step 2
Be very thankful that you are finding this out before
escrow from an inspector rather than an attorney’s letter following the close.
That’s right! You probably just averted an ugly, ugly lawsuit!
Step 3
WAIT. Wait to see if the buyer has a reaction. That’s
right! What you may be freaking out about may not even matter to them!
Wait and see how the buyer will react. That uncertainty
is the worst part, for sure. There are two basic outcomes of a bad inspection. At
the very least, you might have to deal with a request for repairs or some other
renegotiation. The worst possible case is that your buyer will back out.
Request For Repairs
If your buyer comes back to you with a list of repairs,
DON’T REACT! Do NOT be confrontational!!!
Take time to consider the list and see what is on it. It
probably will not be everything in the report. There are several ways to work
this out.
Price Reduction
Reduce the price of your house and move on with your life.
Let the seller do the repairs.
Disadvantage: The seller will typically want to improve
as well as repair. The estimates may be high. This reduces the money that you
will receive.
Repair
Offer to do all the repairs on the list and keep the
price of the house the same.
Advantage: You stay in control of the work. You get to
approve the contractors and the costs.
Disadvantage: Typically the buyer knows that you will go
for the lowest possible bid with the lowest quality work and materials. They may find this option unattractive.
You will be spending your last days in your house… fixing it for someone else.
You will be spending your last days in your house… fixing it for someone else.
Combination
There may be some work you can do yourself and other work
that needs to get hired out.
Advantage: You can arrange a compromise with the buyer
and make this a win-win negotiation. Typically this will avert any future legal action on their
part.
Disadvantage: The more work needs to be done, the longer
and harder it is to come to a fair compromise. The buyer may get frustrated and
back out.
Worst Case Scenario
Your buyer is overwhelmed by the information in the
report and backs out of the deal.
Advantage: If you didn’t get a seller’s inspection before
putting your house up for sale, you have one now!
- You can use this information to revise the listing – and revise the price.
- You can do the repairs on the list – or in the whole report and stay firm on your price.
Disadvantage: You lost this buyer. Your plans to sell and move on may be
delayed.
Above all, remember that you lost a buyer. You didn’t
lose your house! Another will come along and now you have more knowledge than
you did before. Consider you options. Maybe you will need to revise your game
plan.
Whatever you do, don’t despair. Your house attracted one
buyer and in time you will find another.
So thanks for reading my post. I'm so glad you're here!
And I really look forward to getting into more great stuff in future posts -- so that you can
Turn Your House To $OLD!
Feel free to ask me any questions through the contact info below. I would be very happy to help.
OMG, this is like living through the last year with my house which turned out to be a lemon, mostly due to seller neglect. We were buying the backyard which was perfect for my husband's observatory, and we've owned enough houses that we knew what we were getting into ... or thought we did.
ReplyDeleteWe asked the sellers to fix about half the problems, mostly the ones involving safety - GFCIs, smoke detectors, ventilation in crawl space to get rid of mold, etc.
Then the fun started ... with trip to AZ to meet the movers. Next morning, 59 degrees & it took 3 months until the warranty company approved new compressor ($3,500). Refrigerator never worked, most of the faucets had to be repaired so you can turn water on easily, water shut-off at street had to be replaced, found out there had been water softener when we went to hook one up before installing new refrigerator, just found crack in guest tub - OMG.
If we didn't work so hard to find the perfect backyard, this was a home inspection report to walk away from. We honestly couldn't comprehend such total lack of basic home maintenance, and then one day a neighbor explained the likely cause. They told us the people closed on the house one day, and hung a For Sale by Owner sign out the next day ... so they never intended to live in the house for long, just long enough to flip it and now it all makes sense.
Hello Tina,
ReplyDeleteThank you for taking the time to read and to share your experience. It is always a sad story when there are issues in an inspection report.
You make a very important point about buyer's due diligence. I always review the inspection report very carefully. It gives a lot of good information. However as a real estate investor with near 20 years experience, I have learned not to rely solely on this information. When considering a property I attempt to have the immediate neighborhood reviewed as well. I find it is a good idea to contact the immediate neighbors whenever possible to get information on the subject property. It is a good way to find out about the seller's maintenance history. Often it is the best way to learn if the property has been maintained over time or if it is the proverbial "lipstick on a pig."
I hope that you have resolved all the issues with your house and are enjoying it and that fabulous back yard! :)