As part of my “Team in Transactions” series, I thought I would discuss Home Inspections for this edition of my blog. The thought of a home inspection typically sends buyers and sellers scurrying for cover and agents acting like Ostriches and putting their heads in the sand. However, if handled correctly, its an opportunity to strengthen the transaction by building a spirit of cooperation.
That is until the flood ensues. It really happened – home inspector turned on the heat – and the waters came, and came, and came. Flash forward 3 weeks – Buyer is happily living in the house. Property Closed, everyone moved on with their lives. How did that happen? Experienced agents on both sides came together and deftly moved through the issues.
Three ideas: Educate, Collaborate, and Communicate.
Lenny Licari of B-Sure Home Inspection gives this advice for Buyer’s Agents and Listing Agents “Try to give the home inspector as much information as possible about the house, Age of roof, systems, etc.” This will immediately create a spirit of cooperation between the inspector and the parties. Home inspectors never want to feel that the seller or their agent is hiding anything. Education is an important component of the inspection for buyers (especially first time buyers). Consider it a user’s manual for their new home. They will learn how to maintain the systems, where all the key components are located, and how to shut the water off. Educated buyers are less likely to kill the deal (unless it needs to be). Buyer agents should encourage their clients to ask as many questions as they can think of. Good home inspectors will provide an assessment that will give the buyer context and most importantly perspective on the home. It will also give buyers a feel for how typical inspection items are. For example, in 9 out of 10 condo buildings, you will find various cracks in the concrete foundation. In most cases, these “cracks” occurred when the concrete was poured and will not be harmful. If the home inspector does not relate it as such, buyer’s can be unnecessarily alarmed. Buyer’s agents need to help facilitate that information.
Listing agents should be at the home inspection. I’ll repeat, listing agents need to be at the home inspection. You are the seller’s eyes & ears and need to be able to negotiate these items with the above mentioned context and perspective. You need to be able to communicate to the seller the items and give your feedback. Sellers are as anxious as buyers and need their agent to represent and advocate for them. I go into every transaction assuming and planning for the best. Some listing agents plan for the worse, don’t attend because they “don’t want to know the info.” There have been times that I have negotiated a better deal for the buyers because the listing agent was not there and didn’t have the benefit of the context. I take copious notes and advise the seller right away.
The best way to negotiate is to collaborate. Home inspections are powder kegs. They can blow up at any moment. Often, two polarizing views will emerge: 1 – the seller thinks their home is a palace, and 2 – The buyer thinks it’s going to fall down. Neither is correct. Here are two ways I use collaboration and communication
As a sellers agent:
Be pro-active: Take notes, get in front of the issues, and have your seller voluntarily and pro-actively agree to fix things you know need fixing. It makes the buyer feel better and will often end up better in the long run. Get the seller to understand what the issues are and work with the buyer to move through them. For example, I had an inspection several years ago, where the inspector determined that the outlets were not grounded and the panel was old (fuses). After discussing with the seller (the buyer had won a competitive multiple offer situation), we pro-actively offered to “split” the cost of the work (on the line between defect and upgrade) and have it done prior to closing. Win-Win: work got done, buyer got to finance their portion, seller came out looking like the hero, and everyone was happy (especially the buyer).
As a buyers agent:
Sometimes it’s helpful to take a collaborative approach. Try to put the issues on the table and work through them with the seller side. It’s not always helpful to simply put a dollar amount out there before the seller has a full understanding of what the issues are. Once the seller has a realistic view, negotiating a repair list or credit will be much easier. You need to get buy in from them on this. Often if you do this, seller will make an offer of what they think and a solution will be found much quicker. It is critical to be communicating and collaborating with your extended team. For example, on a recent transaction, there was termite damage found on the sill. There was some disagreement as to what the damage was, so we arranged a meeting with the seller’s contractor and Lenny Licari (our home inspector) to make sure everyone was on the same page. After the work was done and before the work was completed, Lenny returned to make sure it had been done properly. On the water issue above, the inspector returned to the house to test the system prior to closing. This is how the entire buyer team comes together on behalf of the buyer.
In closing, if you remember these principals, much stress and angst will be avoided. For buyers & sellers rely on your agents to get you through the process.
