What to Do When Your Inspection Goes Wrong?
03/10/2023
The inspection is one of the crucial steps in the selling process that allows potential buyers to know the true condition and value of the property. So, what should you do when your inspection goes wrong? Conducting a building inspection also helps prevent unpleasant surprises, potential legal actions, or difficult negotiations. Using the services of a certified inspector allows you to benefit from a valid and effective inspection. But what happens when the inspection report reveals several issues to address? Our experts answer the most common questions that arise in such situations and demystify the best practices to adopt when you receive an unfavorable inspection report.
What to dowehn your Inspection goes wrong?
Firstly, it is not uncommon for experts' opinions on a property to differ, resulting in one report being more critical than the others. Consequently, some buyers may back out after receiving a negative inspection report. At this point, your real estate broker's analysis of the report is essential to understand the issues identified by the inspector. Are they significant enough for the buyer to withdraw their offer? Are they relatively easy to fix or just points of concern? If the deficiencies seem substantial, we recommend obtaining a second opinion through a counter-expertise to clarify the extent of the problem. Here's a concrete example to illustrate this point: an inspector notices a sign of humidity on the ceiling of a relatively new property. The inspector states in the report that the ceiling needs to be opened for thorough cleaning. The buyers request the work to be done as per the inspector's recommendation. However, the real estate broker handling the case believes that the initial inspector made an error in his remarks. They arrange for an independent expert to reevaluate the situation, and it turns out that the initial inspector's probe touched a screw, leading to an inaccurate reading. Hence, always be vigilant to determine if the problem highlighted is genuinely present. In this example, it is essential for the real estate broker to disclose what happened during the inspection to interested buyers. There are various opinions on this matter, but in our view, the best practice is to make the corrected report available. As a seller, if you want optimal protection, we advise you to make this inspection report public. Another practice is to note specific parts of the report, transcribe them into an amendment document, and provide it to the buyers. However, this method carries the risk of errors and does not offer the same level of transparency. Instead, opt for stating the modifications in the seller's declaration and make it available for consultation. You cannot prevent a bad inspection, but you can address the situation by being transparent.
Why Would a Buyer Withdraw from an Offer?
In general, the major structural elements of a property, such as masonry, foundation, and roof, can significantly influence the buyer's decision based on the extent of necessary repairs. As a seller, should you carry out the renovations or not? Here's an example to demonstrate a concrete situation: during the property inspection, the expert notices a problem with sinking and recommends using piers to lift the house. The property is priced at $529,000, and due to the required operation, the seller decides to reduce the price to $470,000. Even with this nearly $60,000 reduction, the buyer no longer wants to proceed with the purchase. The seller then decides to perform the necessary work for $40,000. Subsequently, the property is sold to a new buyer at the original price of $529,000. In this case, the seller's investment was profitable. However, this may not be the case in all circumstances.
Is it a Good Idea to Buy a House Without an Inspection?
Regarding a pre-sale inspection, we do not recommend it as it is a too subjective procedure. The seller receives multiple opinions from various experts, which often causes more problems at the end of the day. Generally, when a property is on the market, the seller is more motivated to find solutions to satisfy potential buyers. Therefore, we suggest starting the sales process and addressing problems as they arise. As for buying without an inspection, the real estate broker must always advise against it, regardless of the situation. However, in the current dynamic market, many people may skip this step. Depending on the type of property, it may be worthwhile. For houses that have never been renovated, the buyer knows what to expect. In contrast, for properties that have undergone renovations, it's more delicate. Do not overlook the legal warranty either; buying without legal warranty and without inspection is a very risky decision. If you buy without legal warranty, opt for an inspection to avoid unpleasant surprises. Also, remember that an inspection is not a negotiation tool but rather a way to reassure yourself.
Should the Seller Withdraw the Property from the Market to Make Repairs?
It depends on the cost versus the benefits. The seller can declare the problem in the inspection report so that potential buyers are aware of the issues. Alternatively, the seller can decide to carry out the repairs and maximize potential gains. The extent of the renovations needed and the costs involved are the primary factors to consider in such a situation. It is best to discuss this with your real estate broker to get a clear picture. In summary, if your inspection goes wrong, do not panic, and analyze your inspection report with your real estate broker. If needed, seek expert opinions to reevaluate problematic areas. Discuss with your real estate broker the best solution based on the necessary work. If you proceed with renovations, make an inspection report available for buyers to facilitate the selling process. If you have any questions, do not hesitate to contact us for assistance from experienced real estate brokers.
