Who’s it for? It seems like such a simple question, but there are so many possible answers.
We can ask this question about a lot of things in our lives, but today we’re going to focus on a home inspection. If we stop to think about it for just a moment, we’ve probably never stopped to ask ourselves this question about our job.
Who are we doing the inspection for?
On the surface, it appears that this is an easy one to answer. Obviously, we’re doing the inspection for our paying client.
Not sure where you’re going with this…
Well, yes. I know that the home buyer who’s paying us is party we’re doing the inspection for. That’s really a no-brainer. But if we stop to think about it, there’s more than one party that’s interested in what happens during an inspection. And there’s more than one party that’s going to see the results of our work.
Well then, I’ve never really thought about that before…
In all likelihood, there will be quite a few different people that are going to get a look at the finished product: our inspection report. Undoubtedly, each of these parties is going to have different goals, and each of them will be looking at our report from a different point of view.
We know that each of these parties will be trying to figure out how they can interpret our report so that it benefits them and their agenda. So, we’ve got to do everything in our power to make sure that our report provides us with enough ammunition to protect us from each of these parties and their competing interests.
How the hell am I supposed to do that?
Let’s start off by trying to list everyone who may possibly come into contact with our completed report and what possible motivation they may have for twisting our words for their own benefit.
1) The home buyer (our client)
For most inspectors, the vast majority of the home inspections that we do are done for someone who’s buying a home. Buyers seek us out to investigate the property that they’re looking to buy and are usually the ones who are paying for our services.
In this case, it’s pretty easy to figure out what their motivation is regarding our inspection. They’re looking for a handful of different things from our report.
Homebuyers want to know that they’ve made a good choice when it comes to their new home. Most are looking for some sort of reassurance that they’ve made a good decision.
As the new buyers have limited familiarity with their (potentially) new home, they’re looking for us to check everything out for them. They want us to let them know what’s working, what’s broken, and which items are likely to need replacement in the near future.
The buyers are trying to pay as little as possible for their new home and are hoping that we’ll provide them with some ammunition to use to argue with the sellers about price. If we find things that are wrong (like an AC system that’s not working), then they’re able to use our report as the basis for negotiating a reduction in the price of the property.
2) The buyer’s agent
The buyer’s real estate agent is often in a difficult position. Depending on how your local market works, it’s likely that they’ve recommended us to their clients. They’ve contracted to represent the buyer in their negotiations with the sellers and need to look out for their best interests. They also need to figure out how to get a property to the closing table, as they don’t make any money until a property is sold.
If you’re lucky enough to have top quality agents as your clientele, then you can be sure that they’ve got the best interests of their clients (the home buyers) in mind and will stop at nothing to make sure that their clients are happy. These types of agents are a joy to work with, as they put the needs of their buyers above their commission check.
It’s hard for some people to grasp, but if you provide outstanding customer service to your clients, prosperity inevitably follows.
If you’re not quite as lucky as some inspectors (or are still relatively new in the business), you may be dealing with agents whose number one motivation is their commission check. It’s situations like these where we have to make sure we’re dotting our I’s and crossing our T’s. These types of agents will throw us under the bus without a second thought. Nothing’s going to come between them and their commission.
3) The seller
Again, depending on how your local real estate market operates, it’s quite likely that the seller will eventually get a copy of your inspection report. While the report was (obviously) not intended for the seller, in many markets the buyer’s agents forward a copy of the report to the listing agent and their seller.
Often, this is done with the intention of trying to further along negotiations. The reasoning behind this tact is that once the seller is made aware of the reported deficiencies with their property, they’re likely required to add those deficiencies to their property disclosure. With this requirement of disclosure hanging over their heads, the thinking goes, the sellers would be more open to negotiation with the current buyer and more likely to reach a consensus regarding problems with their property.
Many sellers will take offense with the findings of the home inspector, alleging that the inspector is under pressure to invent problems with the home in order to justify their inspection fees. They look for mistakes and inconsistencies in the inspection report to undermine the credibility of the inspector. And they will try to find contractors willing to dispute the inspector’s findings in order to get out of having to repair problem items that they’ve simply been living with in their homes.
4) The seller’s agent
The listing agent presents another hurdle for our inspection report to overcome. This agent, like the buyer’s agent, has their own agenda and it likely doesn’t line up with our agenda or the interests of our client.
This agent wants to get the house sold as quickly as they can, for the highest conceivable price, all while doing as little work as possible. And while there are certainly some listing agents who are looking out for the best interests of everyone involved, many of them are focused solely on their commission, to the exclusion of everything else.
There are even some listing agents who will refuse to acknowledge receipt of the inspection report, in an attempt to deny knowledge of any deficiencies with their listing. They believe that by not receiving the completed report they cannot be held culpable in any eventual court proceedings, as they can claim ignorance of any problems with the property.
Obviously, there’s little that we can do to affect an agent that operates like that. But we shouldn’t let those types of agents color our opinion of all agents, as the don’t all work in the same manner. A good portion of the individuals we come across while doing our job are well-meaning and looking to make sure that everyone is satisfied during the home buying process.
5) The buyer’s contractor
Most buyers are going to try to use the inspection report to reduce the cost of their new home. Often, the information provided by the inspector will be used to negotiate a reduction in price or an allowance for repairs of the deficiencies found during the home inspection. The buyer will typically hire a contractor to provide estimates for the needed repairs, bolstering their bargaining position in the negotiation process.
The contractor will typically visit the property to make sure that they’re providing an accurate repair estimate, but many times will provide the buyers with a price based solely off of the information provided in the inspection report. This is a fairly common practice, especially in situations where the buyer’s agent doesn’t want to be bothered with meeting contractors at the home to obtain proper estimates.
Situations like this can potentially put the inspector in a bind, as a lazy agent is certainly going to try to blame inaccurate estimates on a lack of clarity in the inspection report, rather than admit they were “too busy” to meet the contractor at the house to obtain a more accurate estimate.
6) The seller’s contractor
The seller and their agent, on the other hand, are in a different situation. They’re looking for a contractor to dispute the home inspector’s findings. The seller and their agent are looking to get away from the house they’re selling as cheaply as possible. They want to maximize the sale price of the property while minimizing the amount of money the seller has to spend to get the house sold.
Most of us have things in our house that don’t work, are working but aren’t properly installed, or, while still working, are at the end of their useful life. We’ve just been living with them and getting on with our lives. Home sellers are no different. They reason that if it was good enough for them, then it should be good enough for the person that’s buying their house.
Why should I have to pay to fix that. It’s working fine!
The seller, in conjunction with their agent, are going to find a contractor that’s willing to back up their claims that everything’s fine. The contractor likely has a working relationship with the seller’s agent and will do whatever it takes to keep that agent happy, as they’re likely a consistent source of business for the contractor.
If the agent wants the contractor to say that the roof still has at least 5 years of life left in it, then that’s what he’s going to do. (Although the way the contractor words that statement will likely be fairly non-committal and will include a lot of legalese to keep anyone from trying to hold him to his word).
This contractor is likely to look for some loopholes in our inspection report to justify his opinion. He’ll try anything to attempt to defer future liability away from his company and onto someone else.
A sticky situation
This can be a difficult position for an inspector. When dealing with resale residential homes, quite often items are near, at, or slightly past their life expectancy. In cases like these, it’s relatively easy to find two contractors with differing opinions, one (usually representing the buyer) who states that the item needs to be replaced and one (usually the seller’s contractor) who swears that there’s still a lot of like left in that old item.
Knowing that things like this are going to happen (and that someone’s sure to try to drag us into the middle of them), it’s always best to go on the offensive from the start. Letting your clients (and their agent) know what the situation is up front can help to diffuse some tension once the accusations start flying. Letting them know that the roof is at the age that one contractor will condemn while another (especially if he’s working for the seller’s agent) will swear on his grandmother’s grave that there’s still lots of life left in that roof.
Prepping our clients for the realities that come along with a negotiation can go a long way towards making our lives easier. At the end of the day, we’re often left holding the bag, being blamed by anyone and everyone for not reporting (or over reporting) problems with the house.
Everyone involved in this process has their own agenda and their own ego. They all want to come out of this transaction smelling like a rose (and with a fatter wallet than they had going in). Unless we’re lucky enough to be working with honest and trustworthy people on all sides, eventually someone’s going to try to throw us under the bus.
Educating our clients on what’s likely to occur, through our boiler-plate language, our website, our inspection report, and our personal interactions can play a huge role. More information leads to more informed customers. Educated clients are better prepared for the gamesmanship involved in a real estate negotiation. And while a solid argument can be made that our buyer’s agent bears the responsibility for providing this education to our clients, smart businesspeople know better than to leave things to chance in their business.
Taking a little time to make sure that everyone’s on the same page is an investment that will pay dividends to our business for a long time.
And keep us driving the bus instead of getting rolled over.
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