Stories From The Street – May 2014

How Knowing Your rights with a Home Inspection Saved a Seller $13, 500!!

A home inspection is one of the many hurdles that buyers and sellers must overcome in getting from contract to settlement.  In this story, I’m going to discuss what happens after the inspection, how a 2nd round of negotiations take place once a home inspection is completed, and how my seller overcame an unrealistic purchaser. Most inspections are done by buyers to uncover possible issues once purchasing the home and to protect themselves against large expensive items after they purchase. Every home has issues. It could be as minor as a slow drain in a sink. A reversed polarity in an outlet. Or something major, like a structural issue with the foundation or a failed septic system. It is up to the inspector to find these items, write a report and present that report and the issues to the purchaser. The purchaser then goes over the report and notifies the seller of the items they want fixed prior to settlement. -This is the simplistic explanation of what happens as I’ve left out 3 additional steps, but for the purpose of this article, they do not add value to the story.-

I recently listed an incredible home in Hagerstown. Stunning Home: All Brick, new pool, upgraded kitchen, 5 large bedrooms, new hardwood on main level, 4,500+ finished square feet. A true dazzler. We listed at $499k on a snowy week in February. And within 4 days on the market we had a very strong contract financially, our next hurdle was a home inspection, and we knew that there would be some issues uncovered as this was a 9 year-old home and there were some maintenance issues that the seller would have to fix prior to settling. I didn’t anticipate anything major being found from the inspection.

When I received the Inspection Repairs Addendum the following was requested from the buyers:

Based on the Home inspection, the buyers are asking that the sellers take care of the following items:

Defective Summary
• Have licensed electrician remove the two tripped breakers in the Electric Panel Box in the basement so that wires are no longer live.
• Cover open exterior electrical outlets on patio
• Master bedroom closet light fixture to be operational

Maintenance Summary
• Secure/replace missing baluster and railing on deck
• Repair/replace double hung balance mechanism in dining room window
• Missing closet door in shared bathroom to be replaced

Based on the following items, buyers are asking for a seller credit/repair credit for the following due to seasonal constraints – $18, 759 Repair Credit
• Porch needs to be repaired by a licensed contractor
• Roof flashing needs to be sealed and secured
• Foundation needs to be evaluated by a licensed contractor and repaired.

I was reading through it saying to myself, “Ok, nothing major. We can get that fixed. Next item, no biggie. Again, not a major issue. The foundation, yes we knew about that and will fix. The paint around doors and windows, again, no biggie.” I’m thinking in my head, that the purchaser is nit-picking and asking for a lot to be done, but they are first time buyers and are overwhelmed about the process…. Then I get down to a request for $18,750 credit and I’m BLOWN AWAY!!!! Huh? Maybe I’m missing something. I re-read the addendum. I looked at the entire inspection. $18,750 – where did they get that number? I’ve worked with many contractors and have done many projects before and I’ve got an estimate in my head of $5,000-$6,000 for the work they are asking be completed.

Needless to say I was blown away by the buyers’ request. I took a deep breath and played out the conversation that I was about to have with my seller and the other agent in my head. I forwarded the request to my seller and told him to call me to review. He called, and had the same reaction as I did; where the heck did they get their $18k number? I called the other agent and had a calm conversation with her. “Um, where did your buyer get their figure? Do you have a written quote from contractors? Can you forward them?” Her response was, “Eric, they took a copy of the inspection and sent it to a family ‘friend’ and he said it could be $18k-$20k.” I’m still calm at this point and say again, “so a contractor has not been out to actually access the situation? The buyer does not have a written quote for the work?”

Most would be upset and overreact to such an outrageous request from a buyer/agent on a home inspection. I calmly talked to the other agent and suggested that I get some contractors that I have used in the past and ‘trust’ to give their opinion and an ACTUAL written estimates for the repairs, and then we would go from there. The next day, I’m calling my mason/foundation contractor, Kevin and ‘Roofer Craig’ about the front porch, decking and roof issue. Another call to Brian the painter. These were the 3 major contractors that would do a majority of the work. The other issues were maybe a few hundred dollars total. Within 3 days I received written estimates for the major repairs that the buyer requested be fixed. The total was $5,600, NOT the $18,750 that “a friend” of the buyer- who just glanced at the inspection and some pictures- estimated. The seller was still not thrilled as he thought the buyer was nitpicking a 9 year old home, but he agreed to go ahead and do the repairs anyway as cooler heads prevailed.

The experience that I’ve gained over the years and my relationships that I have with local, reliable contractors was key in holding this deal together. Others might have gotten ‘blown-away’ with the request and told the buyer to take a hike and possibly lose a transaction. I have seen other agents just accept any request from a home inspection, which in this case could have cost the client an additional $13,150 in UNNECESSARY costs.

I have seen many many transactions fall apart for inspection issues with unreasonable expectations or requests from buyers or sellers that are unwilling to fix issues. Taking emotion out of the situation and dealing with the facts, in this case, we held a transaction together and “Saved” my client $13,150.