As a manager, I have seen too many deals fall through because of home inspections. When I dug deeper into the story, I found that it was not because of the home inspection itself but because of how the results of the inspection were handled by the buyer agent.

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For example: The buyer agent at the request of the buyer submits an amendment to the Agreement of Purchase and Sale to delete the condition on inspection but inserts a long list of things for the seller to fix. Many times that caused the offer to die because the condition on inspection was not waived, or the purchase failed on closing because the buyer argued the quality of the repairs done by the seller was not satisfactory.

I always prefer to negotiate a lower price and have the buyer do the repairs once the house is theirs, rather than have the seller do the repairs before closing.

Here is how home inspection conditions should be handled. Do not misunderstand what I am about to say – there are circumstances where the buyer should not go ahead with the purchase (when the deficiencies are severe). But generally, use the following technique:

1. Prepare the buyer before the inspection starts by making sure they understand that the inspector checks everything. That is their job. The inspector may be liable for issues that were not pointed out to the client, the buyer.

2. Explain that the inspector will put a price for repairs on everything. (Changing a malfunctioning door handle, leak under the faucet, electrical outlet that does not function, etc.).

3. Distinguish between:

  • Critical – must fix right now.
  • Good – if fixed later.
  • Optional (do it if you want to) – such as change a hinge, handle, small faucet leak or cosmetic issues.

4. Explain that $5,000 to $10,000 in non-critical repairs is normal for a resale house.

5. Now, have the inspector do their job.

Imagine a buyer who stretched the limit of their financial ability and bought the house, perhaps for more than they expected, and now – surprise – the inspector says there is $4,000 worth of repairs. This could be such a shock that it will be relatively easy for them to back out of the deal.

Now, imagine preparing that same buyer by telling them $10,000 worth of non-critical repairs is normal in every resale house. The inspector then does his job and finds only $4,000 worth of non-critical repairs. Isn’t it a reason for the buyer to be happy? What is their choice? Put an offer on another house, pay again for another inspection and find that the second house, too, has thousands of dollars worth of repairs (because you said, “Every house will have an average …”).

I found that closing the deal often depended on this one sentence told to the buyers before the home inspection.

23 COMMENTS

  1. With reference to the above article … The Canadian Association of Home & Property Inspectors is taking this opportunity to clarify the following items…

    #1 Prepare the buyer before the inspection starts by making sure they understand that the inspector checks everything [we do not check everything – we follow our industry Standards of Practice – we check and report on the visible components of the house]. That is their job. The inspector – [listing and buyer’s agents,] may be liable for issues that were not pointed out to the client, the buyer.
    #2 Explain that the inspector will put a price for repairs on everything – [The vast majority of Canadian Home Inspectors do not give prices or repair quotes for deficiencies – this falls under our Standard of care for the industry. As a real estate agent we feel Mr. Friedman should know this after 30 years in the real estate industry.] (Changing a malfunctioning door handle, leak under the faucet, electrical outlet that does not function, etc.).
    #4 Explain that $5,000 to $10,000 in non-critical repairs is normal for a resale house. [Typically, we suggest 1-3 % of the value of the property is reasonable to put back into the home.]
    #5 Now, have the inspector do their job. [Correct – leave the buyer and the inspector alone and let us do our job. To often real estate agents try to interfere and downplay important issues that are being discussed onsite during the inspection process. Once the buyer has ALL the information, he/she can make an educated choice as to how they wish to proceed. Often agents try to get the buyers to sign the inspection release for within minutes of the onsite inspection being completed – the buyer client needs to be able to read the formal report carefully, without pressure and have ample time to make an informed decision.]

  2. A good home inspection and a thorough report will bring transparency into a real estate transaction and that benefits all concerned over the long haul. Now, take the pledge to give home inspectors the respect they are due and stop blaming them for “killing” deals. Even the ancient Greeks stopped killing the messenger centuries ago.

    Regards,
    Kurt

  3. Home inspectors are no different than any other members of various vocations. Some are good, some are very good, some are not-so-good, and some are amenable to being paid off (via securing ongoing commissions to produce good reports) by certain friendly Realtors. Some inspectors are deal breakers, and some are deal makers. The ratio of one to the other is unknown.

    An inspector’s responsibility to his job description is really quite simple in its scope, and it is thus: Do one’s absolute best to find any and all deficiencies, whether they be obvious or not-so-obvious, and put those deficiencies in writing within the framework of the inspection report. All speculation about potential problems should be in writing only. No verbal speculation should be offered without same being included within the report document, ideally word for word, which in and of itself should suggest that verbal advice should therefore be avoided at all costs. People often tend to misrepresent what another’s words might mean. Verbal testimony of a hearsay nature usually is not admissible in a court of law. Pointing out obvious deficiencies and commenting on same is another matter entirely

    Inspectors are not estimators…period. They are inspectors, so…they should stick to their job description. To offer up estimates of certain repairs is to interject a personal, thus subjective, opinion about costs that might not be accurate, thus skewing the process, maybe in favour of a deal coming together, or falling apart. Beware the estimator/inspector.

    When I was representing the fiduciary interests of my buyer clients, I looked for and found an inspector for whom the title “inspector’ meant something. Said inspector did what I wanted him to do on each and every commission—which obviously was what my clients wanted—being to produce an inspection report that was the toughest he could make it in good conscience. That was what he was being paid to do after all. Find everything possible of a negative nature; leave no stone unturned; be prepared to defend his report in court if need be. In other words, be the best inspector possible for ‘my’ side, the purchasing side. If the deal were to fall apart based upon his report, the buyer will offer again on another property—through my efforts—and the inspector will surely gain another commission to inspect. He will be a trusted advocate of a professional nature.

    It is often asserted that a Realtor should not suggest whom to use as an inspector on behalf of one’s buyer client. That holds true if a Realtor cannot secure the trusted servicers of an proven-to-be honest, competent inspector who is not afraid to offer up a report likely to kill a deal and, who is not susceptible to corruption by way of being a deal maker, the latter point thus keeping the commissions coming from favoured Realtors who reward unscrupulous inspectors with a never-ending stream of income via commissions. Money talks, more loudly to some than others. Some Realtors just want to sell, sell, sell…first time around…and not have to waste time showing all over again, after a deal has gone south due to a poor inspection report, thus starting the process over from step one. One’s hourly wage factor thus goes down. What a drag.

    I have stated my former operating strategy in this regard often herein over the years, and have been roundly criticized negatively thereto by more than one respondent. Remember…sub-agency is dead. It should never have lived.

    I await further criticism with an open mind.

  4. Yes, in today’s lipstick on a pig, DYI world, leave it to the seller to fix.

    As for estimates? I still can’t get over one experience where the seller’s hired inspector disclosed asbestos wrapped pipes with a $500 cost to remedy.

    Yes, of course, tell your clients to expect the type of house they want in their price range and all houses will need about $x in typical repairs and to adjust their budgeted purchase price accordingly (unless a major issue is uncovered) – the cost then becomes an established budgeted item like land transfer tax and legal fees – we’re supposed to do this stuff before we set the purchase price limits not after. That’s far better than to ‘sell’ them as in ‘talk them into pulling the trigger because that’s just ass backwards!

  5. C’mon guys, let’s lighten up a bit. This is a great article; the main point he is making is to prepare your buyers for the inevitable, and it is a good point. If we do it a bit different, that’s okay as well.
    1. I really doubt he literally meant “everything.” You only have so many words in an article and you can’t correct for every nuance of every word. Everything includes every nail, screw, staple…
    2. Again, he said “price”, not “quote” and I’m sure he meant the inspector will give a ballpark number and will let the homeowner know it is only a general estimate. Last I checked, we put prices on everything when we do a CMA. This trend toward vagueness in our world/profession to avoid liability is, in my estimation, not a good road. I have always done very detailed CMAs using very detailed and well research manuals such as Craftsman Books or RS Means Books to assist in my evaluations. I have found this to be incredibly accurate, and the statistical chance of error is minimized by the use of good cost manuals, some of which come from home inspection firms. Coincidentally, one client just provided me with a very positive testimonial after the price they wanted was 10-15% more (sound familiar?) than my evaluation. It ended up selling exactly as evaluated.
    I’m not criticizing different approaches, I’m just saying being precise works for me so far. Doesn’t mean it’s “better.”
    3. Great idea, if you want, you can delineate into more categories or less
    4. Again, he didn’t mean “normal” in the most extreme definition possible (as if everything else is completely abnormal). Only so many words per article, we can adjust our speech in the field. I get what he is trying to say and it is a great point.
    5. Totally agree.

    I would say great article.

  6. In my opinion rating systems can be very subjective. H.I. Standards typically require identification such as significant defects, beyond life expectancy, as well as health and safety hazards.

    As noted by earlier responses home inspectors generally are not estimators or required to provide estimates of costs to do so, presents a very high level of risk. Legal precedence has already proven that point well over a decade ago.

    The real problem is “bidding wars” causing the demise of the home inspector sector.

  7. How would you have handled this situation?

    I had a challenging situation, in the 90s that I spoke of years ago on REM. I had a high profile senior lawyer’s house listed. They were retiring and moving out of town and had committed to a builder contract. I had been referred to him.

    The footprint of the house was wide-side frontage, not a deep floor plan, with a generous street clearance set back, presenting a wide view of the roof. Although a custom built home years earlier I couldn’t help notice from the street what I saw as a warped roof. And the spanners seemed very far apart allowing for the visual sagging. So I questioned the owner, saying this might impact the sale of his house due to the likely cost to replace such a wide roof expanse. And it was so clearly obvious.

    The owner said the roof was only maybe five years old. He offered as part of the listing that if the roof topic became a problem he would rebate the buyer 9k to replace. So I put that information in the private MLS listing notes for agents to advise their buyers to draw attention to a possible roof needing replaced; if so seller offers a 9k rebate. The house itself was plain and although high end at one time, currently dated, but exceptional in its cleanliness. Immaculate and I wrote an appropriate web storybook page noting its dominant features.

    An offer arrived in a couple of weeks in a rather ordinary market. Clearly the agent with the offer had not read my MLS agent-notes and likely had not addressed the topic with the buyer.

    The seller and I were both shocked with the sit down offer presentation when we realized the contract did not request the rebate. And the offer agent never asked any roof-related questions. And no home inspection was required. Firm offer. Accepted as presented. Sold sign on lawn immediately.

    The sellers and I had a very complicated private discussion, having requested privacy. He, being a lawyer and owner could only decide whether to brooch the topic at the table. A decision was made thus. The lawyer made a written commitment and gave a copy to me; that if the 9k topic surfaced before closing he would honour it even so not addressed by the offer or agent.

    Never heard another word. Transaction closed as scheduled. I never knew if the buyer was aware of the intended rebate offered in the listing. Everyone moved on with life. I felt fortunate that the owner was a retiring well-respected lawyer. I didn’t want to embarrass the other agent at the presentation, or to her buyers. It was an excellent offer.

    The wife was furious that her lawyer husband provided the commitment in writing given to me. But I always wondered if there was another way this situation could have been handled. Had the owner not been a lawyer I want to believe I would have handled the topic in a similar way, and asked that the seller’s lawyer review the state of the offer vis a vie the MLS listing info.

    Trying to be fair to all concerned. I was concerned because agents often printed out broker-only copies of listings and shared with the public even offering MLS copies at open houses. And that would have provided agent-broker info notes. Naturally I hoped there would be no subsequent fallout. There wasn’t. But it was indeed a memorable sale.

    Carolyne L ?

    • Carolyne, I don’t know what I would have done but it sounds like you handled it very well. I would also agree with the lawyer over his wife; knowing he is a legal professional and the courts hold him to a higher standard, I think his course of action was stellar and very professional.
      I would love to have known what happened on the buyer’s end between them and their agent.

      • Gerald, thank you so much for commenting. I would have loved to know also re the buyers. Never ever saw or heard from the agent ever again.

        As I always did, I hand-delivered the agent commission cheque to the brokerage immediately after I was notified by the law office that the transaction had closed and I collected and deposited the law office cheque to my brokerage commission trust account, from which the co-op cheque got issued.

        All commission transaction cheque’s were ready in the appropriate file just waiting for my signature so I could hand-deliver quickly. I always paged the agent through their office to inform that their commission cheque had been delivered to their brokerage so they could check in when they actually would get paid.

        In all the years no agent ever said thank you for speedy commission hand-delivery. I know when commissions were owed to my brokerage, I often had to make calls even weeks later sometimes to get paid. From day one when I opened my brokerage that was rule number one: get the co-op brokerage paid immediately. I know how hard agents work. Agents did love to sell my listings, maybe in part due to not having to wait to get paid. Maybe the agent was so excited to get a sale, finite listing details just never got checked.

        I’m guessing the topic never was addressed with the agent’s buyer. It was likely the agent had never read the MLS listing agent comments section of the listing. And if so, the agent never would have known about the intended seller rebate if the buyer had any issue with the warped roof. It’s always been a curiosity. We’ll never know.

        Thanks again for your REM comment.

        Respectfully
        Carolyne L ?

  8. Remember that the buyer just put an offer on their “dream” home. advising them that the inspector is likely going to come back to them with a list of items ( sometimes long) that may or may not need to be corrected right away is important. Preparing them to be not disappointed will go a long way in not losing what might be an excellent deal over things that will likely present themselves in any well cared for but older home.

    however regarding the items in the article.

    1. I would never tell a client that the inspector checks everything, they just dont. And it could get you into a heap of hot water with the inspector for defining his job to the buyer, and also with the buyer when he finds out he did not get a mold, radon, infrared inspection or an in depth inspection of the electrical or heating system. The inspection is non invasive.

    2. it is just wrong and inappropriate for an inspector to start giving price quotes for repairs, or offering to the buyer the names of contractors to come in. If that happens it is the last time I use them for inspection services.

    4. I would never put an ‘average” price on the expected repairs. there are some older homes that are in immaculate condition with nothing to do, others will need way more than 10,000 to make it pristine. A good agent will already know if the clients have access to the extra money to make repairs. If they only have an extra 5000 G, dont scare them by saying it could be 10,000.

    6. one last item that the writer did not include, I believe the agent should personally attend the wrap up where the inspector presents his findings to the buyer. The buyer has trusted the agent to help them find a great house, dont abandon them at this point. They need to understand what the inspection means to them, an agent in their corner should be able to do this with them.

    • #6 is an excellent point. We should be listening in on the report in an effort to provide options/choices at that point of the process.

  9. I really cannot believe it has been 30 years since Carson and Dunlop gained traction
    ( actually one of their newby engineer inspectors at the time Duncan Hannay went on to become President and CEO of Street Capital Bank in 2017 30 yrs after he did his first inspection ) .

    30 years and brokerages are still talking about home inspections like it’s the 1980s.

    TRESA should clear most of this up when it launches.

  10. Inspectors can only do visual inspections so to tell a Buyer that the inspector “checks everything” is misleading.

  11. #1. A good relationship with home inspectors starts with the understanding that ANY and ALL deficiencies will be stated in the report to the buyer. Advising the buyer client of what to expect with an inspection IS crucial.
    #2. Really? Putting a price on repairs? This statement is irresponsible – both for the inspector and the buyer.
    Quotes should be done by the buyers contractors to the benefit of the buyers at the buyers expense.
    #3. Good
    #4. Blanket statements of dollar amounts for repairs is unacceptable. Contractors should be relied upon for
    quotes as stated in #2
    #5. Good
    It appears that there is too much emphasis on “closing the deal” instead of providing service to the buyer. Less attention to earning a commission and more attention to looking after, in this case the buyer, will result in earning an income with satisfied clients who will provide repeat business and referral business as well. In 30 years of practice, I have only had ONE transaction not go forward because of an inspection. This article is a disappointment.

  12. 1. No they don’t. Their contract makes this very clear.
    2. No they won’t. Another reading posted the standard.
    3. Yes explaining to your client the degrees of issues to be discovered is crucial.
    4. There is no such thing as “normal”.
    5. Yes, let them do their job.

  13. If there are deficiencies in the property is it wise to try and sell your Buyer client to take them on? Another four hundred dollars is much less expensive then $40,000 in surprises down the road.

  14. 100% agree with the importance of explaining to the buyer(s) what the purpose is of the Inspection, and what a reasonable outcome should look like. Unless the house is brand new they should be prepared for a long list of minor deficiencies. An inspection is not a Pass/Fail, but a summary of the current condition of the house. Also it helps to point out obvious deficiencies during the showing, as this will set the buyers up for the issues we cannot see.

  15. Home Inspectors are not required and should not put a price or place an estimated cost on repairs. This is in the Exclusions of every SOP.
    The new Ontario Standard CSA-A770 States 4.1.4 Exclusions: d) Estimating costs or providing quotes for redemption of conditions identified.
    Imagine an inspector stating that a roof covering repair will cost approx. $7,000. The new buyer gets quotes of $10,000 and goes after the Home inspector or sues the Inspector for the difference of $3,000.
    The inspector is not a professional in the repair or replacement of the homes systems. All quotes should be done by a trained and licensed professional in that field only.

  16. My husband has the seller order a home inspection and includes the same in the listing package. If anything major comes up the seller can make preparations to repair before the sale or the noted issues are reflected in the sale price. There is essentially no need to renegotiate.

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