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Real Estate

Fighting the inspection wars

- Last modified: April 11, 2013 at 11:49 AM

I was asked again by a reader about the wisdom of requesting “too many” home inspections while negotiating to purchase a property.

Indeed, property inspections have become a major deciding factor in the ultimate success of a real estate transaction, perhaps even the second-most behind the mortgage contingency clause in the contract to purchase.

It wasn’t always that way, however.

In the 1980s, the home inspection industry began to grow as contractors were asked by home buyers to review properties for defects in construction. Over time, the number and scope of inspections has also grown, to the point where there are virtually unlimited ways a buyer can have a property “checked out.” Here in Central PA, we see about half-a-dozen common procedures that can be elected right on the purchase agreement form.

However, sellers don’t always feel so great about these.

Over the last five to seven years (really, since they were added to the contract forms, IMHO) property inspections have become bargaining chips or worse, “deal killers” when wielded by savvy buyers. Here’s what happens: The buyer and seller negotiate an agreement to sell with set terms (most importantly, financial). Then the buyer conducts the agreed-upon inspections and demands another round of negotiations, usually at the seller’s expense.

For many upfront sellers, this is a bridge too far and has prompted some backlash against the due diligence process over recent years.

So what’s the best way to fight the inspection wars? In my experience with both sellers and buyers, I would suggest that setting limits to the post-inspection negotiations while encouraging more dialogue during the contract phase is a great combination -- sellers who aren’t hiding anything but recognize their property may have a surprise or two and are willing to make the fixes; and buyers who aren’t looking to use inspections as a weapon but merely as the tool for their due diligence.

The end goal, one sincerely hopes, is for satisfied parties and a sold property with no surprises.




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