While no one can prevent accelerated markets and bidding wars, professional home inspectors can offer additional services that help ensure Realtors and sellers don’t end up in a legal battle with buyers who opted out of an inspection and then found out about serious issues within the home.
In a hot market, when any of the big three conditions – financing, insurance or inspection – are waived to “give buyers an edge” over the competition, buyers can say they felt pressured by, or received guidance from, their Realtor to waive conditions and make their bid more attractive.
So what happens when they win a bid only to discover the foundation is cracked, the roof is leaking, the house isn’t safe or there are rodents in the attic?
The buyer has moved into a home that’s unsafe and perhaps they can’t even afford to fix it because they paid well over asking. The buyer may then sue the buyer’s agent for pressuring them to bid with no conditions. They may also sue the seller’s agent and the seller for not disclosing problem areas within the property.
The seller’s defence is they checked “don’t know” on the disclosure statement to try and protect themselves and the seller’s agent. The seller’s agent denies knowing anything. They had their seller sign a release from all liability to try and protect themselves and their broker.
Any judge who looks at this situation expects the seller’s agent to know better. The courts will uncover if the previously flooded basement and rodent traps in the attic, for instance, happened while the seller lived there. Plus, if an insurance claim was made, it will be clear that the seller knew about previous issues with the property.
So how do Realtors protect themselves and their clients?
If you’re the buyer’s agent, it’s important to look past winning the bid for your buyer at any cost. And if you’re the seller’s agent you may be purposely wanting to create the frenzy of bids with no conditions. But have you thought about the fact that a hot market is the perfect time for people to dump problem properties?
We understand that a traditional inspection is difficult in an accelerated market. Some sellers are no longer accepting offers with an inspection condition, which means buyers who include it will lose the bid.
In response, we’ve created solutions to help alleviate risk for all parties. This includes:
This full inspection protects the seller and seller’s agent and provides the buyer with transparency. Many selling agents are even paying for this service on behalf of their sellers and including it in their listing offer. In this case, sellers can justify not accepting a condition of inspection because they’re able to provide the digital inspection report upfront to every interested buyer. This service also comes with an option to have an inspector return after the buyer wins the bid to complete a full walkthrough with the buyer, which enables them to be further educated on the property, receive an updated report and benefit from the transfer of all warranties. This dissolves any fear of bias as the inspector is now obligated to the buyer.
Pre-offer advisory service: verbal consultation.
While this service doesn’t replace the value of a full pre-inspection, it offers some added support to the alternative where there is no professional guidance at all prior to buying a home. In this instance, an inspector joins the potential buyer during their viewing of the home. The inspector surveys major systems and uses specialized technology such as infrared thermal imaging to take a deeper look at the property. The inspector then provides a verbal consultation at the end of the viewing so the buyer and agent are at least made aware of major problems before bidding on the property. If they win the bid, the inspector can then return to complete a full inspection and provide a thorough report.
Homes across the country are selling like wildfire right now – and often over asking thanks to accelerated markets triggering bidding wars due to high demand, low supply and rock-bottom mortgage rates.
But at a time when buyers often don’t feel they have the liberty to include a condition in their offer pending a home inspection, it’s more important than ever for sellers and their agents to take steps that protect them from hassles and even possibly a lawsuit if something major is uncovered after closing.