Home Inspection Killed Multiple Sales
Published November 24th, 2006 in Buyer Information, Finance, Ken Mascia on Mortgages and Finance.Today we welcome back Ken Mascia, from Oxford Financial. If you have questions about home finance, you can send them to Ken through our contact page, or call him at 248.642.4744
No way! A home inspection blew up your sale? That only happens to some other poor sucker in tales told at Peabody’s bar on Friday afternoon, right? Not so much. Recently one of my first time home buyer clients has made three separate offers on three different properties and the home inspection resulted in the death of all three deals! The same home inspector each time and at a cost of $450 per inspection. The buyer has paid enough to the inspector to have made many of the repairs that the inspector noted. It seems odd that every house this guy goes into has potential drainage issues, or black mold under the deck (under the deck??), or the siding is totally wrong, the roof will blow off in the next storm or the addition is a fire hazard!
Are home inspections bad? No way. Home inspections have become crucial tools in making a sound decision when buying a home. This inspector, however, is an ALARMIST and presents his findings in a way that makes the buyers only choice to duck out of the deal. A good home inspection will point out the faults of the property in an objective way and allows room for people to make their own decisions about whether an issue is a deal breaker, no big thing or a renegotiation. Making every problem into a major defect is not in the job description. Can’t we all just get along?
Really, one of the things that seem to have gotten lost over the last few years is that buying an existing home is buying a home USED. OK, when you buy something second hand it is not brand new. Do we understand each other? Plus, part of being a homeowner is the cost of maintaining a home. Statistics show that the average cost of maintaining a home over time is 1 to 2% of the homes value per year. This is for things like roof, furnace, painting, water heaters, etc. So, if the inspection reveals that the house will need a new roof in 5 years that’s OK. If the house was built in the 50’s then it probably has 50’s electrical and plumbing. What else would you expect? I mean this is not rocket science. The bottom line is that a buyer should expect that the house is going to need routine maintenance on an annual basis and some general updating over time.
It seems like the thing to do is have a chat with your buyer prior to the inspection and give them an idea of what kind of things they may hear from the inspector. Some advance warning and a little knowledge can turn things around and keep the sale on course.
Written by Ken Mascia, Oxford Financial
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13 Responses to “Home Inspection Killed Multiple Sales”
- 1 Pingback on Dec 4th, 2006 at 3:43 am
As a home inspector, I think that we are the only non-biased party in the sale of a home. We could care less if the buyer buys the home of not. Sure I want to see my client happy, but not at the expense of thousands of dollars in repairs.
Yes, we have many inspectors in the profession who lack good communication skills. This is usually a newer inspector who also has a lack of practical experience.
As a Seller, you should also ask yourself if you would buy this home? You will soon be on the other end of the buying process, and you will want a home that is in a safe and good condition.
As for that “Deal Killer†home inspector, I bet that your real estate agent or mortgage broker will call them when they buy their own home.
Scott,
Thanks for your thoughts on this one. I’ll put in my 2 cents, and ask Ken if he can pop by himself to reply to you.
Personally, as a Realtor, I recommend inspectors I have used for my own purchases and others who have impressed me in the past. I would much rather have a client find out about a problem during the inspection than be calling me after closing to tell me about a problem.
I also refer my clients to ASHI.org if they want additional choices. I noticed you are a member of ASHI.
I think I expressed my thoughts on that best here
Also, I have had a lot of traffic today from NACHI.org, the site of the National Association of Certified Home Inspectors. It seems to have created some discussion over there. I welcome an NACHI members to write a post in response to Ken’s post. I would be happy to publish it. I’ve tried to post on the NACHI article, and even though I jumped through all the hoops to register, I still cannot post a reply.
Hi Scott, Hi Maureen,
Happy to respond to Scott’s comments. As a lender I have no personal interest in whether my client buys one house or another. So I don’t think that the home inspector is the “only non-biased†party involved in the deal. My borrowers ask me questions all the time about what I would do with some specific issue with the house and I give them an honest answer.
Good communications skills is really what I meant to be the focal point of the article. I think if you read it again, Scott, you’ll see that I am not bashing the home inspection industry, but am commenting on the less than professional way that some inspectors communicate their findings to the buyer.
As for myself, I would not use this particular inspector, as you mentioned I would. As a 17 year veteran of the real estate business I find this individuals reports to be unnecessarily critical in areas that I don’t believe they have real expertise in and then to make the issue larger than life in the eyes of the prospective buyer. Some of the things this particular buyer said to me after the inspection I had trouble not laughing out loud about during our conversation. However, I advised them to get out there and find a different house to buy!
As a Realtor, I have never heard of one set of buyers having 3 homes ‘fail’ inspections.
I do agree, Ken, it is a communication issue. First time buyers, in particular, need some perspective in advance of a home inspection about what they should expect to hear. I try to do that with my clients. What ever the home inspector says is between the client and the home inspector. He is the professional.
It is interesting to see the interaction between inspectors and the agents.
Following on Maureen’s comment, I always warn my buyer that it is the inspector’s job to make them wan to cry and doubt themselves on buying this home. And it gives them the chance to prepare for the meeting with the inspector.
Scott Patterson makes a good point. I have been fortuinate to use “WIN Home Inspectionâ€. They’re a national company that trains their inspectors on customer service. The training really comes in when there are problems; the inspectors handle it very well.
Ken, lenders are biased by their very compensation model (no close, no commission) so Scott is correct when he talks about bias.
As a Realtor, I have never heard of one set of buyers having 3 homes ‘fail’ inspections eiter.
I think the buyer needs to be prepared going into a home inspection. The inspector will find defects (that is what they are paid to do). Even if the home is perfect , they will always find something wrong.
I am a member of the National Association of Certified Home Inspectors (NACHI) and I am a home inspector.
Your article discusses a very unique situation, regarding the inspector who “killed” three consecutive deals. He probably represents as large of a percent of our industry as the predatory lender represents yours.
At the other far end of the scale is the home inspector whose entire business is dependent upon the continued referrals made to him by real estate agents who, in turn, expect him to write “soft” reports — and he does, thinking he must in order to stay in business.
A salesmen’s job is to sell - whether it is a loan or a building. You will professionally taylor your presentation toward the perceived needs of your customer in an attempt to close a deal. Your share of the profit does not come to you until that customer decides to buy. The same goes with the agent selling the house.
My job, as a home inspector, is to present a clear, precise and objective picture of the readily observable conditions of the home and its systems. In that respect, our different roles can be considered adversarial - for I am paid if he buys or not and my report is standardized.
When we all do our jobs to the best of our abilities - presenting a suitable loan package, locating and showing a suitable house, and providing an unbiased and precise report on its condition - our client is served.
Sometimes this service results in a sale. Sometimes it does not.
To have 3 houses in a row commit suicide and be refused by the buyer is rare. Usually the buyer learns from the failings of the first house to avoid making an offer on a second unsatisfactory home. Obviously the buyer did not learn, or the inspector did not educate the buyer, and any real estate agent should also have taken notice and debriefed the buyer to avoid future problems in homes shown.
Hopefully the inspector was ethical and not trying to generate more income from the buyer by using scare tactics. I have heard rumors of such unethical inspectors. Greed drives many over the edge especially in bad economic times.
I have been hired by real estate professionals to go in after a contentious inspection to determine the reality of conditions. A thorough, but confidential seller’s inspection would generate the same information.
Between all the emotions, buyers remorse, etc. if a buyer demands a perfect home that needs no maintenance and has no prpblems, the buyer should be paying a premimum for such a home and looking for a recently built home where the builder’s warranty work is satisfactorily completed, or an extraordinary existing home.
I have an undergraduate degree in Mechanical Engineering and in Real Estate. I’m a Building Consultant. I’ve spent 40 years in construction, real estate and inspections. In that time I’ve had quite a few buyers go to a 2nd inspection, BUT only 3 clients ever went over that. One went to 3, one went to 4, and the other went to 5.
The 1st one was an oriental couple that wanted 100% perfection, and never found it. The 2nd couple didn’t learn squat from the 1st house which actually was a POS, but everything bad was fully visible upfront. The 2nd house was the same way & they finally got it right the 3rd time out.
The 3rd wanted a DEAL. He would negotiate the seller down a lot to start, AND then use my report to ask for as many as 173 repairs. If I said there was minor cracks in the concrete driveway - he asked for a new drive (what he really wanted was NOT really the repairs BUT a lot more $$$ off the selling price). He never bought - both the Agent and myself finally refused to keep working with him.
Does not happen often, but it does happen.
I am NACHI inspector from Bowling Green Ohio . In my First year in the inspection business I incounterd 3 clients that were buying forclosed homes that have been vacant a long time. Each client paid the fees I asked each time.They were all looking for that perfect fixxer upper .they all went through 3 homes before they settled on the fourth each time i would remind them that foclosed property is not always the way to go most times your better homes were the ones listed by an agent and the seller moved on to a new home . Grant it several of these homes were so bad you could feel the floors move when you walked on them and many had electrical issues that were costly to repair . and three home so infested with termites the cost to rebuild was cheaper .I have been known to be a deal killer . but Im also Known as an inspector who reports what he finds and explains to the client the good the bad & the ugly . not all homes are deal killers there are some that are better off rebuilding than repairing . 98 % of the home i inspect are in great shape its the 2% that are the deal killers . reporting what you find and explaining what you find in a wqay that helps your client to make an informed desicion is what its all about . we as inspectors cant please every one . but I do know this out of 275 inspections to date only one disatified client and that one was my first inspection I did . thanks God Bless happy Holidays Top To Bottom Home & Property Inspections Denny L West
Property Inspector Response:
As we gather experience, training, professional affiliations, more experience, more training, etc., we become more capable of providing information. We also get punished more and more for our knowledge and competency.
Referring agents are strong proponents of the “team” concept. This is all too well known by the franchise operators. Agents want a team player that won’t “scare” anyone. BTW, “scare”, is anything this side of the stuff printed in newspaper RE ads and on the flyers next to the front door. A good reference for what I am talking about is a lawsuit that is somewhat famous by now. Check out :http://www.rongrazianolaw.com/CM/PublishedCases/Herner-v-Housemaster.asp
Please take the time to read it carefully and you will start to see what can happen when the “team” concept gets carried away.
Very few agents are thinking more about risk management than they are the commission check. If they can count on the inspector to help facilitate the “deal” rather than point out “negatives”, the deal should sail through. Please note that inspections didn’t really take-off until another famous case of Easton v Strassburger back in 1984. http://www.ncrec.state.nc.us/bulletin/vol16-4bulletin/easton_v.htm
If you read this case, you will note the real reason for the increased involvement of inspectors in real estate transactions. This case was the first real, solid signal to the RE business that a property inspector would be advantageous to help shield them from liability.
The part about agents using so called “deal killers” for their own, personal purchase inspections is so true. When this happens you know you have hit the mark professionally, but your overall bottom-line still suffers because you don’t get their “everyday” transactional inspections.