The Protocol of Home Inspections

J Philip Faranda December 13, 2012

We do things a little different in New York from the rest of the country, so a Westchester real estate  transaction will have the home inspection prior to contract  as opposed to being a contingency of the contract in most other markets. But the basics of what I am about to share probably apply to 99% of all real estate markets. First, when buying residential property every buyer should get get the house inspected by a local, established inspector. Every Buyer. Every House. Always. Not Uncle Hank the contractor, but a licensed home inspector. OK,  now that we've got that out of the way, let's suppose that the inspection yielded some discoveries that have to be addressed before going forward. The inspector found what may be evidence of termites in the basement, the water heater is on its last legs, and the roof is at the end of its useful life. And, just for fun, let's also say that there are some double tapped breakers in the circuit panel. First, here's what the buyer agent should never do: _______________________
TO: FROM: Phil: The inspector said the house needs a new roof, has termites, needs a new water heater, and  there is a problem with the circuit panel. The inspector gave us a $15,000 estimate for a new roof, and with all the other repairs my buyer got nervous and is asking for a $25,000 reduction in price and a $15,000 repair credit at closing.  Thanks and have a nice day. Please let me know.  Wanda Schmidlap 1982 Agent of the Year 
_______________________ Communicating the above in a phone call is a no-no as well. As 2013 nears, we have things known as "Digital Cameras." Inspectors issue "reports" which can be "emailed" to the other side; as a matter of fact, that is the purpose of the inspection report, to document the findings. Our friend Wanda should get her client's consent and send the listing agent the excerpts of the report, with photographic proof, of all issues the inspector found. Moreover, in Westchester, and I daresay every other place, NO INSPECTOR should ever quote a price for repairs. Roofing estimates should come from roofers. Electrical estimates should come from electricians. Water heater estimates should come from Plumbers. I am sure you get the picture. Of course, in lieu of documentation of the issues, the seller is likely to see this as a lame attempt to renegotiate a price arrived upon in good faith. This is what Wanda should do: _______________________
TO: FROM: Phil:  Please find attached to this email the portions of the report that document the issues found in our inspection of your listings. You will note what appears to be termite damage, evidence of three layers on a roof at the end of its life, an installation date of April 12, 1997 for the water heater and lots of rust, and a picture of 4 double tapped circuits.  I am attaching an estimate from Miller Roofing for a $7500 tear off, an $1100 estimate from Royal Flush Pest Control, a $300 estimate from Galcor Electric, and a $500 estimate from Ace Plumbing to replace the water tank. My buyer is therefore asking for a $9,500 reduction in price to address these issues so that we may proceed. Kindly present this information to your client and assure them that if we can make this arrangement my clients will sign the contract tomorrow.  Thanks and have a nice day. Please let me know.  Wanda Schmidlap 1982 Agent of the Year 
_______________________ Wanda has now done things right. She has
  • Provided documentation instead of making an arbitrary demand
  • Gotten estimates from legitimate contractors
  • Not allowed panic to influence her client and advised them professionally
  • Covered her rear end so as not to appear silly, amateurish, or unprofessional.
She has also put us in the position that, if we don't do business with her, we are compelled by law to disclose these findings to every prospective buyer going forward. In short, she has followed protocol, which is becoming all too rare. Now, I can respond accordingly. _______________________
TO: FROM: Wanda:  Thanks for the information. As you recall, the roof was already a negotiating point in the arrival at the current price. I am attaching paperwork provided to my client from the previous owner showing the termites predated their ownership and treatment was already made with a warranty in effect. My client has arranged for their electrician to repair the double tapped breakers. Thank you for bringing that to our attention. The water heater will be replaced Tuesday.  We can proceed at the current price with the repairs promised, as my client can engage a backup offer waiting in the wings if you choose not to proceed. Please advise your client that they can be in their new home before the football playoffs start and celebrate Festivus in their new home if they sign the contract.  Best regards Phil
_______________________ The above has all happened many times in many forms, but the takeaway for buyers and their agents is that inspection results cannot be treated like classified state secrets. Pictures are worth 1000 words. The buyer need not give the whole report over, but the better the documentation, the better informed both buyer and seller are, and best chance the transaction has of proceeding with integrity.  

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