Would you sell a house built in the 1940s to your mother without a home inspection? Would a happy buyer and the potential of repeat business be of higher importance and morally just, rather than a quick commission? One would think so, but it’s not always the case.
The recent frenzy to offer blindly on a property in multiple offers often results in the successful buyers having serious buyers’ remorse. A seasoned, reputable agent would hopefully recommend a home inspection on a 75-year-old property, but sadly some of my clients have not been so lucky and have been guided by someone with less experience and more interest in a quick commission payout.
As a home inspector for 13 years, I can say I’ve pretty much seen it all. It’s always been a positive experience working with excited buyers and investors. While a few times a year a buyer armed with a full and comprehensive report will walk away from a property, those who proceed do so knowing what they may be facing to rectify deficiencies and plan for future end-of-life systems like a new furnace, AC unit or roof. Both those that walk away or proceed and purchase are happy to have been able to make an informed decision.
This overheated market is now generating buyers who have maxed out their budget and now have buyers’ remorse. Pressured to buy without due diligence because of multiple offers and tight schedules, many book a home inspection after the closing date but that is often too late.
Having spent top dollars, and possibly $100,000 over ask, they have a limited budget to deal with unexpected defects. The young inexperienced selling agent has since driven off in his Mercedes to check on his dog walker, cleaning lady and hot tub temperature (as posted and boasted on social media) and grossed a whopping $20,000 commission. That commission would not come close to covering the major deficiencies of their client’s new home that can go undetected until it’s too late.
Having to deliver the facts on a post-closing-date inspection is starting to feel like a doctor delivering difficult news to patient who is seriously ill. Seeing a buyer near tears on what is supposed to be a happy, new and exciting chapter in their life is not fun.
A recent client had some costly and concerning findings. Lead water supply pipe – a major concern for a young family. A furnace 19-years-old, AC 38-years-old, asbestos and 60 amp electrical service, basically rendering the home uninsurable until upgraded to a minimum 100 amp service.
These issues alone could cost $25,000 to $30,000 before the planned kitchen renovation or new windows. Most of these items would have easily been discovered by a well-seasoned agent who has dealt with 75-year-old homes, and who would have recommended a home inspection during the seven days the house was being shown before offers were due.
Those smiles and eager looks of a first-time homebuyer fade quickly into the reality that they have some serious issues to remedy, potentially delaying that new kitchen and windows they had planned. They are not happy with their agent either.
Most of the agents I work with will find a window prior to when offers are due to schedule a home inspection that follows the industry Standards of Practice and provides buyers with a comprehensive report. Sometimes the buyer decides there is too much work and declines putting an offer forward, but generally they proceed with the information they need to make an informed decision and offer that will allow them to address key deficiencies that were disclosed before making an offer.
We all know it’s not a great time in real estate. Competition is fierce for buyers and agents alike. Agents are suing agents; buyers are suing agents and underhanded deals and games of the trade are putting wedges between those who are supposed to represent the needs of both buyers and sellers. Offer acceptance dates are being cancelled because of bully offers (that often puts the listing agent in the position of double ending the property). Winning bidders are being told “there are some very competitive competing offers” that are actually below theirs, and they end up over-bidding themselves. This is creating distrust in the industry.
House prices have increased approximately 35 per cent and so have commissions. All during a pandemic when some can’t put food on the table or pay rent. Seems a little off-putting when the listing to sale date can be two to five days and approximately $50,000 commission is paid out and the buyer is often left with buyers’ remorse.
So again, would you sell a 75-year-old home to your mother without a comprehensive home inspection? Do you want positive feedback, happy clients and a highly rated recommendation as a professional poised for a long and prosperous career? Or do you want the reputation of a Mercedes-driving salesman looking out for himself and ending up in court?
As a very seasoned (30-plus years), respected, professional agent recently said to me, “We created this environment and we need to fix it.” She was referring to the current practice of list low, generate lots of interests and offers and drive the price up while disappointing prospective buyers. Now when a property is listed at an appropriate price, potential buyers don’t even look because they expect the price is artificially low and it will sell for $100,000 or more over ask.
Let’s hope things change quickly for the benefit of everyone.
Mike Hayes CAHPI RHI
National Home Inspector #NHICC00550