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Around here, pre-inspections, paid for by the seller, are common.

In my old neighborhood, pre-inspections, paid for by the buyer, were common.
My house went on the market on Wednesday, and was swarmed by interested buyers. On Saturday three of the more serious buyers were back with their inspectors. Offers were due on Monday, and the buyers who’d already had inspections done waived the inspection contingency. Happily, those were also the highest offers.

I think that arrangement works well for everyone except the buyers who paid for inspections and then got outbid on the house. But with houses at $1M+, the cost of an inspection (<$1k) isn’t as off-putting, even if, as a buyer, you have to do it a few times before getting an offer accepted.
For my dad’s house, which was $300k, all the offers had the usual inspection contingencies, so we just dealt with the result, fixing some things and not others.

In both cases, I’d, as a seller, paid for my own inspection prior to putting the houses on the market, and either fixed or disclosed everything my own inspector found, as AJ described. However, I would not have shown my inspection report to prospective buyers. No need for them to see what was wrong, even if it had been fixed, and certainly no need to see the inspector’s errors.

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Did the ‘inspector’ have any inspection credentials?

Yes, he was licensed, but from a different part of the state where the buyers were from. That said, I am seeing a pattern with multiple sellers experiencing the same thing.

Sounds like he was a contractor who was bidding on the jobs he wanted to do, not an inspector.

The mom is a real estate investor in the eastern part of the state and I am sure she has used him for inspections on all the homes she has bought. I have no doubt she simply said jack up the prices, because anyone who has a clue about what things cost would have scoffed at the prices this guy put up. It was truly laughable. Almost cost them the house, since we will cut off our nose to spite our face when it is a matter of principal.

Just offering a follow up for something I had suggested doing wrt inspections. If you ask them to eat the first $5K, be alert that they may simply ramp up the prices.

IP

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Yes, he was licensed, but from a different part of the state where the buyers were from. That said, I am seeing a pattern with multiple sellers experiencing the same thing.

Additionally, understand we have less than 30 days inventory available for sale in our area. You want to put $500-700 down on an inspection? Go for it. We are still going to offer zero in return, but now you are further invested into buying the property. If you don’t want it we will just wait for the next buyer. Heck, even rentals are so tight that I had to reach out to a couple of friends/investors to see if they had anything to hit the market that my tenants could look at. Zero availability, lots of demand for both purchase and rent.

This inspection was intentionally done in bad faith to ramp up the costs, rather than to determine what needs to be done. There was nothing unbiased about it. When that happens, it doesn’t really matter if the first $5K is on them or not.

IP

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still on track for end of April close

crossing fingers all goes well going forward!

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Yes, he was licensed, but from a different part of the state where the buyers were from. That said, I am seeing a pattern with multiple sellers experiencing the same thing.

Interesting. I have never gotten any repair estimates from a home inspector, and certainly not written estimates that I would be able to give to the sellers to try to justify costs. The inspectors I have used don’t want to be liable if the estimates are too low. That’s why I asked if they had any inspection credentials and postulated that they were actually a contractor doing a bid for the job.

Whenever I had a concern over the cost of a repair and wanted the seller to pay for it, I always had to get my own estimate from a contractor/service for how much it would be.

AJ

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still on track for end of April close
…
crossing fingers all goes well going forward!</>

Appreciated. Sellers and landlords are currently in the catbird seat, for as long as this lack of inventory lasts. Buyer has to be ready for her June 1 start at work. Happens every year en masse as hospitals bring in residents and add to staff.

Even rents are crazy. I had to check in with two friends who have multiple properties to see if they were about to put any turnovers on the market that our current tenants could take a look at before the general population. They were finding nothing. Happily, one of them did, though with the buyer’s taking over the last month of the lease, it’s really their problem. I like our tenants, however, and am happy to help.

IP

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Interesting. I have never gotten any repair estimates from a home inspector, and certainly not written estimates that I would be able to give to the sellers to try to justify costs. The inspectors I have used don’t want to be liable if the estimates are too low. That’s why I asked if they had any inspection credentials and postulated that they were actually a contractor doing a bid for the job.

Whenever I had a concern over the cost of a repair and wanted the seller to pay for it, I always had to get my own estimate from a contractor/service for how much it would be.

That is the wild world of real estate, where each area does things differently. Perhaps it’s an East Coast thing, but our inspectors provide estimates, with the caveat that they may be wrong and we should bring in contractors to get more accurate pricing, having us sign strong contracts that relieves them of responsibility for missing things or providing incorrect pricing. This guy assessed $100-300 for a line of caulk! Loose outlet, $300. Everything priced as though the electrician would come out for each little thing separately. The buyer’s agent had it right…only small items were present and the rest was fiction. We maintain our properties well. It’s cheaper in the long run, and with rentals creates competition between prospective tenants to get the rental. We were selling this because it frees us up and would net us an excellent after tax profit with the 2/5s capital gains exclusion from prior residence, and our current low retiree income treating much of the remaining profit at 0%, the remainder at 15%. No Roth conversion this year!

I was conflicted about selling it, and could have easily thrown it back on the rental market for a crazy high price. Super profitable rental, but the appliances, water heater and HVAC were all coming towards the end of their life and I could see large repairs in our future. We of course had budgeted money for that, but selling now allowed us to pocket that money as well. It’s not always a good idea to ride an investment down to get the last penny.

Timing matters. The previous owners bought this property in 2008 at the height of the market. They proceeded to put in a kitchen that had to be AT LEAST $25,000 at that time, as well as update the bathtub in the main bath, a new water heater and HVAC system. Even without closing costs for both ends of the transaction, they clearly lost money when we bought it in 2017 for only $22,000 more than they had paid for it, though we did have to put $13,000 into it for a new roof, refinish floors, and a landscape overhaul to bring the property up to standard. Sure, if we wait we might make a bit more on the property, or we might be in a post high downward swing, or have to sell, making us more desperate. Hogs get slaughtered. Time to move on.

IP

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28

Additionally, understand we have less than 30 days inventory available for sale in our area.

Median days on market here is 5, which is why sellers do pre-inspections and buyers waive inspection contingencies. Even with the $3MM+ listings, 72% are currently going under contract in less than 30 days, and for price points lower than that, it’s 85% - 97% There is no inventory, so every property that goes on the market gets a huge number of showings, which means that there is literally no time for anyone to do a proper multi-hour inspection before the house goes under contract - the seller’s agent won’t let anyone book the house for that long. In order to get the contract, you probably will have paid at least a mid 5 figure (often 6 figure) non-refundable deposit that you will lose if you don’t buy the house, so any additional inspection will likely just be information gathering.

This inspection was intentionally done in bad faith to ramp up the costs, rather than to determine what needs to be done.

That seems counter-productive in a seller’s market, especially when there are multiple offers. As you said, it almost lost these buyers the house. If it had been me, it probably would have lost them the house. In 2012, when it certainly wasn’t a seller’s market, I refused the inspection contingency requests that my buyer was making, and told her I was going to put the house back on the market if she continued to make ridiculous demands. She caved and bought the house without getting her requests.

AJ

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…almost lost these buyers the house. If it had been me, it probably would have lost them the house. In 2012, when it certainly wasn’t a seller’s market, I refused the inspection contingency requests that my buyer was making, and told her I was going to put the house back on the market if she continued to make ridiculous demands. She caved and bought the house without getting her requests.

When a buyer makes ridiculous demands, the seller’s options are:

  1. Cave.
  2. Negotiate.
  3. Say, “no, take it or leave it as is.” Essentially, call their bluff.
  4. Say, “here’s your deposit back, go away.”

Options 1-3, the buyer doesn’t lose the house, unless (option 3) they want to, and in that case, depending on the contract language, they might lose their deposit. They’ll certainly lose time, and have to start their house hunt over from scratch.

I used a variation of #3 back in 1992, when I sold a house without getting my own inspection done first. The buyer’s inspector discovered a cracked heat exchange in the furnace (which explained DH’s flu-like symptoms - he could’ve died of CO poisoning, so we dodged a bullet there). We replaced the furnace. Our Realtor said, “You have to do all these other things too,” and we said, “No we don’t. If the buyers want out, that’s fine, this house goes back on the market with all the wonderful features it had before plus a new furnace; so good luck to them finding another house as nice for the price. Plus, their parents are helping with the down payment, and I doubt their parents will let them do anything that stupid.” They went ahead with the purchase.

I’m not sure Option 4 is even legal. The buyer might sue for specific performance.

So I think a lot of times buyers (especially 1st-time buyers) just make a list of every single thing the inspector discovers, and submit with the idea that “it doesn’t hurt to ask.” Worst case, Option 3. Very little risk of Option 4; if sellers get mad, the Realtors will talk them down from the ledge.

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I’m not sure Option 4 is even legal. The buyer might sue for specific performance.

Depends on the state laws. When contingencies are still in play, there is almost always a way to get out of the contract, although it may take a few days. Where I was, there was a 10 day period for the inspection contingency to be released. That allowed time to do the inspection, get contractors in to do bids if needed, and then negotiate on any changes requested due to inspection issues. If there wasn’t a revised signed contract in 10 days (at a minimum, the inspection contingency having been signed off on), there was no longer a contract, and the seller was free to put the house back on the market.

So I think a lot of times buyers (especially 1st-time buyers) just make a list of every single thing the inspector discovers, and submit with the idea that “it doesn’t hurt to ask.” Worst case, Option 3.

It pisses off the sellers, and can lead them to take Option 4, as allowed by their state laws. Among other things, my buyer was asking me to pay to upgrade the electrical system to add in arc-fault breakers (the house had been built 15 years before code required them) and asking me to pay for a new retaining wall because the inspector said it might have to be replaced in 2 or 3 years - which didn’t occur because when the house was sold again in 2018, the same retaining wall was still in the pictures.

if sellers get mad, the Realtors will talk them down from the ledge.

Actually, my Realtor also thought that the buyer and her Realtor was being completely unreasonable, too, and didn’t blink at all when I asked about putting the house back on the market. She e-mailed the other Realtor we were so far apart on the repairs request that there was no point in doing anything else on the contract (including having me sign an addendum that their lender was requiring) because I was going to put the house back on the market. I was actually surprised when the buyer caved on the repairs request.

AJ

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31

Additionally, understand we have less than 30 days inventory available for sale in our area.
…
Median days on market here is 5, which is why sellers do pre-inspections and buyers waive inspection contingencies. Even with the $3MM+ listings, 72% are currently going under contract in less than 30 days…

We may be talking different terms.

Months’ supply refers to the number of months it would take for the current inventory of homes on the market to sell given the current sales pace. Historically, six months of supply is associated with moderate price appreciation, and a lower level of months’ supply tends to push prices up more rapidly. In December 2020, the months’ supply was at a record low of 1.9 months, meaning that at the current sales pace it would take just 1.9 months for housing inventory to be depleted.

https://www.nar.realtor/blogs/economists-outlook/inventory-a…

Here for the most part buyers waive inspection without it being pre-inspected, and cash is king. Very tough to get any contingencies accepted. We are inundated with corporate buyers to put on the rental market.

In 2012, when it certainly wasn’t a seller’s market, I refused the inspection contingency requests that my buyer was making, and told her I was going to put the house back on the market if she continued to make ridiculous demands. She caved and bought the house without getting her requests.

Same. I tend to be very tough on these, but I also tend never to sell when I HAVE to.

IP

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4. Say, “here’s your deposit back, go away.”

…

I’m not sure Option 4 is even legal. The buyer might sue for specific performance.

When I was a practicing Realtor, it was common knowledge that specific performance was often not advocated by the courts. Either way it will delay the buyer getting a place to live without guarantee of success. Most people have to move. Time is of the essence.

Specific performance is not often granted. Courts are understandably reluctant to force a homeowner to sell, particularly if the seller now plans to remain in the home (as opposed to a situation where, for example, the seller decided to breach the contract in order to accept a better offer).

https://www.lawyers.com/legal-info/real-estate/residential-r…

IP

33

"less than 30 days inventory available for sale in our area.
…
Median days on market here is 5,"

We may be talking different terms.

Different measures of very similar things I think.

I think months of inventory is taking number-of-active-listings divided by number-of-sales-pending at the end of each month.
So if there’s 50 sales pending and 50 active listings, it’s “1 month”.

Median days on market is like it says. Median of how many days houses are on the market before it is sold. (Median of 5 means 50% of sales are within 5 days, 50% are at >5 days.)

I think median days on market could be less because something that doesn’t sell wouldn’t be accounted for in that measure. And if it’s removed from the market then relisted later it probably only counts the most recent listing.

IMO median-days-on-market is a better indicator here for how low the supply is of houses.
But if everything is selling, those numbers will probably be very close.

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We may be talking different terms.

Two different ways of looking at inventory. If half of the houses are going under contract in 5 or fewer days, that’s just another way to say the supply is really low, especially since prices still keep going up.

Here for the most part buyers waive inspection without it being pre-inspected, and cash is king.

Given that many of the buyers here are engineers working for tech companies (Microsoft, Google, Amazon, Facebook, Blue Origin, SpaceX, etc.), not having some type of inspection would probably not command premium prices. Additionally, the seller disclosures here are so detailed (6 pages of small print) that anything in the inspection is likely to have to be disclosed anyway.

AJ

35

Additionally, the seller disclosures here are so detailed (6 pages of small print) that anything in the inspection is likely to have to be disclosed anyway.

Sounds like the state I was a Realtor in. Here the sellers disclosure basically says buyer beware.

My engineer DH isn’t keen on buying without an inspection either, but many places are bought by contractors or bring their contractors with them in an unofficial inspection. Given you get a 30 minute window to view the house in most cases, it’s tough to get a pre-inspection in.

We chose to sell in this market figuring the little stuff would slip through. Tried to get fancy to skew it more towards our benefit, and they got fancy back with using their friendly inspector to ramp up those prices. We held tight on no additional give backs after settling on a price, so no foul, but we could have just as easily lost the deal. You have to be willing to accept the consequences of your actions and we absolutely were, but it’s something you really can’t suggest to another party. Each has to determine their own motivation to sell and tolerance for failure to do so.

As I look at the goodies we can leave them to use on the house, I find that their bad faith inspection is making me question leaving anything. Extra pack of roofing from our roof replacement could help them out should a limb fall and necessitate a roof repair. Touch up paint for almost every room, some of which recently cost us $20/quart for 1/4 used. Specific halogen lightbulbs that I only recently realized we also need at our cabin. Replacement tile for those that are cracked in the kitchen floor. Screen door frame for the slider, which we had removed before they viewed the place, expecting to replace the screen, (and was interestingly not in the inspection.) We can transfer the warrantee on the roof by getting on the phone with them and their paying the $100 fee to do so within 6 weeks of property transfer. We can let them know who did the work in the house so they don’t have to reinvent the wheel, or our phone number so they can ask us history or what that mystery light switch goes to. Potential savings for them? Significant. Motivation to me? $59/ton during a trip with an existing load to our dump. Think about what you might leave on the table by pi$$ing the sellers off.

IP,
trying hard to leave her destructive anger behind and gift them everything so as not to lose a deposit into the Karma bank

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