Orchestrating the variables of a Home Inspection

Looking back over the more than fourteen years I have been inspecting, I know that some of the buyers and sellers that I encountered could have been better prepared for the home inspection phase of the real estate transaction. There would have been fewer surprises, fewer "write-ups" and negotiations would have gone smoother and faster.

Buying and selling real estate can bring out the best or worst in people. 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.

You need the inspector to be professional, timely, objective and skilled in good communication, both oral and written.

What you may or may not know about selecting your home inspectors:

•· Not all inspectors have good bedside manner. Top players have good oral and written communications skills. This gives them the ability to tailor each inspection to the needs and communication style of each client so that the client gets the most out of this event. This reduces uncertainty and smoothes the process for everybody. I list this as the first point for a reason.

•· 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. Additionally, many inspectors have E&O with a "third party rider" which protects anyone that recommend their services.........like an agent.

•· Qualifications and expertise vary widely even in licensing regimes. For example, some are qualified to perform construction process inspections while others are not. Also, licenses do not guarantee experience and people skills.

•· Services Offered. Please compare apples to apples. Top inspectors want the buyer to attend so that he can learn, take digital pictures, produce a coherent written report, carry E&O and spend at least 2 hours (1 hour per 1000SF, minimum 2 hours) in most single family homes. Inspector that do not provide this level of service can and do charge less. Do you want less service for your client?

•· 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 offers less service. The top players in your market will vary in pricing by little more than $40. If someone comes in $80 less than what you are used to ask questions.

•· Stay away from the Yellow Pages or overly long referral 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. Refer only who you know. If you don't know enough, talk to your peers, test a few out and develop a three inspector list.

•· Report formats vary widely, however, the professional standard is a typed report with digital pictures. It should be coherently written and easy to read. The "meat" should not be buried in excessive CYA language. Most better inspectors use digital photography in the report. I do not personally care if an inspector prints on site or emails, as long as delivery is "same-day". Time is money.

The Second Variable: The Buyer

Please encourage the buyer to attend the inspection. Buyers who are not present at the inspection tend to have more misperceptions, which can cause problems later. Critically, a buyer who attends the inspection gets even more for his or her money. Think of the inspection as a walking seminar about the house. That's usually good therapy for the stress involved in a home purchase. Granted this works better if the inspector involved has good bedside manner. .

The buyer should budget a minimum of three hours for the inspection. The length of the inspection can depend on 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 make it longer as well as more stressful. Some buyers bring Uncle Louie, the dream stealer. Beware of Uncle Louie. He has killed many a deal by talking his young nieces and nephews into backing out for less than valid reasons.

Here are some things the buyer needs to understand before the inspection:

• There is no such thing as a perfect house. Especially if it is new construction. A good inspector will always find things. Not because he has to justify his existence (I hate hearing that offhand comment from a realtor, it is INSULTING), but because there is always something there. I tell buyers to not be concerned with how much I find, but with the seriousness of what I find. I have done homes with 25 issues all of which were minor and homes with 15 issues, of which 5 where critical, high dollar repairs.
• The buyer will need to pay the inspection fee on-site in most cases.
• The inspector is not present to help the beat up the seller for the benefit of the buyer. We exist to provide fair and accurate information. Many buyers, unfortunately, think that since they are writing the check we will look at the house from the standpoint of supporting their negotiating position. I have always held the position that we represent neither the buyer nor the seller, we represent the truth. Having a true reflection of the condition of the property is ultimately the fairest outcome for each participant.
• The inspector will not comment on cosmetics. He's looking for mechanical and structural problems, habitability issues and safety items per the language in the purchase agreement and most inspection standards and licensing rules. I am familiar with an inspector in a non-licensed state that was sued for $9,000 for not writing up a cigarette burn in a kitchen counter. The plaintiff never disputed that the counter could still perform the purpose for which it was intended, it was all about cosmetics. Why does our industry accept that level of stupidity?
• The inspector is not the appraiser, surveyor or repair contractor. He can not tell you about the home's value, flood plain or repair cost. Most state and associations do not allow inspectors to repair homes that they have inspected. Most inspectors are not repair contractors and can not quote work for other service providers. Any inspector that quotes prices, in writing, for issues he identifies is taking a big risk. What happens if the bill triples after someone digs in? If you want to know the cost, ask the qualified contractor.

The Third Variable: the Seller

Buyers tend to be more comfortable and at ease if the seller is absent during the inspection. Furthermore, some sellers become defensive during the inspection, which can cause problems. That said, depending on the personality of the seller, there can be some benefit should the seller available during the inspection.

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. If a buyer invites a seller to be present at my end of inspection summary, I simply make the following statement and continue my process.

"It is nice that both of you can be present for my summary. Normally this increases understanding of my findings and smooths the process. It is important to note, however, that both of you have agents that are not present (normal in my market) and as a result you should not make any negotiations or agreements without consulting them. Please listen to what I have to say and ask any question that you desire, but then consult your agents before taking any further action".

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:

• The home should be "showing clean". The inspector needs to see as many structural surfaces as possible.
• Move stuff away from in 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.
• Move the vehicle out from under the pull-down stairs in the garage.
• Make sure all exterior doors are accessible and the keys are present.
• 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, it should be disclosed and a note should be posted stating such. If it is a minor item, fix it before I arrive. This prevents the buyer from asking for a high dollar repair on something you could have done yourself. We can discuss pre-listing inspections later.
• 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.
• The seller's kids should not be home if the parents are not. If you have small kids, you may want to consider a trip to Chuck E. Cheese while I am at your home.
• If it is vacant, please make sure that all utilities are on. My understanding is that NAR and most state standards hold that it is the obligation of the seller to prepare his home for showing and inspection. Not his agent, the buyer or the inspector. I am amazed how often the seller assumes that I am going to spend an hour de-winterizing a home and lighting pilots and that they are not obligated to pay for my time. This is such a terrible use of my time, that Some years ago I stopped doing it.
• 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.

I am pretty sure that someone may evaluate me as arrogant as result of the foregoing, but I guess I will have to live with that. I long ago decided that I would stick to doing my job a much as possible, and refrain from doing other peoples jobs. I do not mind helping when it makes sense and I have the skill, knowledge and time. However, I will not allow my self to be taken advantage of.

Good luck in your endeavors. I hope the foregoing helps your deals stick together.

Glenn Wharton

www.texasinspectionpartners.com