Looking back over the more the twenty years that I have been inspecting, I have been often surprised how un-prepared many sellers are for the home inspection phase of the real estate transaction. There could have been fewer disagreements; fewer reported findings and things could have progressed more efficiently.
Buying and selling real estate can be challenging. The home inspection phase of the transaction can be contentious and emotional or educational and informative. Here’s my risk management advice for orchestrating the variables: you (the real estate agent), the home inspector, the buyer and the seller.
The First Variable: The Real Estate Agent
Professionals tend to refer other professionals in all fields of endeavor including real estate transactions. Top real estate agents refer top home inspectors to prospective home buyers. They understand that there is more risk in lengthy referral lists than in one or two specific recommendations. You have a lot of control here in terms of who will perform the inspection. Use it to protect your client and yourself. Yes, some brokerages, gurus and insurance advisors recommend long referral lists as a way of playing CYA. My own experience tells me that the risks of a long list far outweighs the benefits.
You need the home inspector to be professional, punctual, expedient, objective and skilled in good communication, both oral and written. He or She must maintain professionalism and take an appropriate perspective with any home, within its age, condition and “trim level”. Finally, you need the report sooner than later.
What you may or may not know about home inspectors:
- Not all inspectors are insured. It is better risk management for you if the inspector has both Errors and Omissions (E&O) and liability insurance.
- Qualifications and expertise vary widely even in licensing regimes. For example, some are qualified to perform termite inspections while others are not. Also, licenses association memberships or certifications do not guarantee experience, quality and people skills.
- Inspection fees vary. Beware of what appear to be bargain fees. This is a clue that the inspector is new, not insured, having trouble getting referrals, or perhaps cutting important corners. Saving $100 now can cost $5,000 later.
- Stay away from the Yellow Pages or overly long lists. Unless you know each inspector listed and are comfortable with their performance, you are risking that your client will find the one under-performer that is going to get both of you in trouble.
- Report formats vary widely. You will want the report sooner rather than later and you will want it to be clear and easy to read. A subject organized, printed report with a summary will tend to be easier to digest. Many inspectors use digital photography in the report. Many don’t. Some deliver reports on site, although the cost of ink has led to same-day E-mail reports becoming the standard.
The Second Variable: The Buyer
Please encourage the buyer to attend the inspection. Any buyer that attends the inspection gets more bang for his or her buck. Think of the inspection as a walking seminar about the house. Home inspections are not just about finding issues; they are also about education. A good home inspector wants your buyer to ask questions, learn and gain a comfort level with the home and its condition. Your buyer will be better prepared to maintain his home and protect his property value after a good inspection. Buyers who are not present at the inspection tend to have more misperceptions, which can cause problems later.
The buyer should budget a minimum of three hours for the inspection. The length of the inspection will depend on the size, age and maintenance condition of the home, as well as, the personality and knowledge level of the buyer. Make allowances.
Tell the buyer to leave the kids and relatives at home. They do not contribute to the inspection process and quite often distract Mom and Dad and slow the whole event. Some buyers bring Uncle Louie, the “know-it-all”, dream stealing reletive. Beware of Uncle Louie. He has killed many a deal by trying to show off and talking his young nieces and nephews into backing out for non-valid reasons.
Perhaps you can clarify other things the buyer needs to understand before the inspection:
- The buyer will need to pay the inspection fee on-site in most cases.
- The inspector is not there to help the buyer get a lower purchase price.
- The inspector will not focus on cosmetics. He’s looking for mechanical and structural problems, habitability issues and safety items per the language in the purchase agreement, codes, building tradition and state rules.
- The inspector is not the appraiser, surveyor, code enforcer or repair contractor. He cannot tell you about the home’s value, flood plain or repair cost.
- The home inspector will find things wrong with the home. No home, even a new one, is perfect. A buyer should not doubt the purchase of a home because it has some issues; it is more about the gravity of the issues.
- A home inspector is not a clairvoyant. He can only determine issues present and visible at the time of the inspection.
The Third Variable: the Seller
Buyers tend to be more comfortable and at ease if the seller is absent during the inspection. They want to be free to move about and discuss issues openly with the inspector without having to fear offending the seller. While most sellers are professional about the situation, some buyers have had a negative previous experience. On rare occasion, sellers become defensive during the inspection, which can cause strain on the process. That said, depending on the personality of the seller, there can be some benefit should the seller be available nearby. Having everyone attend the home inspection generally results in all parties being on the same page. However, it is important to understand that the home inspection is for the benefit of the buyer, not the seller.
To prepare the seller for the home inspection, the listing agent should remind the sellers that the inspector will not move heavy furniture or storage items. It is important that the seller do the following:
- Move personal property away from the front of the electrical panel and fireplaces (the inspector will be getting into them).
- Clear stored items, etc. away from the attic stairs or scuttle hole.
- Insure that all doors can be opened with the available real estate keys or leave instructions and additional keys.
- Move the vehicle out from under the pull-down stairs in the garage.
- Leave a copy of the disclosure statement on the kitchen counter.
- Replace burned out light bulbs. Otherwise, the inspector will likely report the light as defective.
- If something doesn’t work, for instance the dishwasher, leave a note to that effect.
- Kennel Rover or Tabby for the day. That dog that “never bit anyone” might feel cornered and get aggressive. Also Tabby can sometimes be quite an escape artist.
- Remember that the inspect will find things that you did not know about. It is the nature of the event. In the end this is a good thing. It protects all parties.
Have a copy of any existing pest control contract or the recent termite treatment laying out for the termite inspector. Buyers often ask about these documents. I prefer to be able to address specific situations, rather than general answers.
The 800 pound gorilla: The home inspector:
So why did I not include the obvious variable of the inspector? Remember the point here is to discuss preparing transaction participants, the buyer and seller for the inspection. The selection of an inspector is critically important and as such, I have dedicated an entire article to the topic: Please see: Selecting a Home Inspector.
Acknowledgement: I first wrote this article when I was the Houston Area Manager for the largest home inspection firm in the country. I have updated and revised several times since then.