Real Estate Talk:
Fear of Inspection
An inspection is not worth stressing about if handled properly
By Joseph Marovitch
Updated May 11, 2023
A few years ago, I was selling a beautiful lakefront property in the Laurentians. The property received many visits. One Sunday, during an open house, a buyer walked in and perused every inch of the property with a negative comment for each of those inches. A seller would assume with all the buyer’s comments, there would be no further interest or offer.
I assumed the opposite. A buyer either comments negatively on a property because they want to purchase but want to set up the seller with lower expectations, or the buyer is an ass. A buyer with proper etiquette either offers positive comments or says nothing at all.
Lo and behold, this buyer provided an offer a day later. The offer was not terrible, but not great either. After negotiation, the buyer and seller came to an agreed price, and the offer was accepted, with conditions. One of the conditions was inspection.
During the inspection, the buyer followed the inspector around the house with the same negative attitude he had during the first visit, a negative comment for each part of the house. When the inspection report finally arrived, it indicated that the roof required repair, the pressure in the kitchen sink was low, the garage door did not open quickly enough, the electrical system only had 200 amps (which is more than sufficient), and other sundry items. The buyer requested, in writing, based on the report, a $50,000 reduction in the purchase price.
My client gave the buyer the option to accept the property as is at the offered price, or cancel. The buyer purchased, as is, at the original offer price. The buyer was trying to use an inspection to reduce the price and failed.
There was no actual indication of any significant structural damage in the roof, walls, or foundation. There were no indications of code violations or bylaw infringements, and there were few photos in the report.
Nonetheless, my client was concerned and was considering the requested reduction. I suggested my client have a second inspection with another inspector and I offered three different yet very experienced, professional, and well-known inspectors. My client accepted and chose one of the inspectors. The second report indicated with proof and photos that there were no significant structural issues that required repair.
My client gave the buyer the option to accept the property as is at the offered price or cancel. The buyer purchased, as is, at the original offer price. The buyer was trying to use an inspection to reduce the price and failed.
A seller accepts an offer to sell their home. The offer has conditions that include an inspection. Many experienced individuals who have sold more than one home know the feeling that comes with the condition of inspection.
What if the house has a defect the seller was not aware of? What if the windows have a crack, the foundation is damaged or the fireplace allows smoke in the house? What if there is nothing wrong but the buyer is making up issues to get a price reduction? These are all reasonable concerns but they are not worth stressing about if they are handled properly.
‘Legitimate issues that can devalue the house are headaches you do not have to deal with unless you want to.’
Legitimate issues that can devalue the house are headaches you do not have to deal with unless you want to. An experienced eye can easily detect illegitimate issues.
Should an issue be detected in an inspection, the buyer is required to provide the seller with a full copy of the inspection report and a written document stating what the problem is and what they would like to do to remedy the situation. The buyer can request a price reduction or ask that the seller repair the damage to the buyer’s satisfaction, or they can cancel the sale.
Should the buyer request a specific price reduction, the seller should get a couple of contractors to provide quotes for the work. These quotes will validate if the work is required and what it will cost. If the issue is legitimate, the buyer and seller can usually come to a compromise. If the issue is not legitimate, the seller must decide if they want to sell and if they are prepared to compromise or not. The seller must also guess the buyer’s motivation to determine if the buyer will try and cancel the sale or not.
This is not difficult for an experienced real estate broker or experienced individual who has purchased and sold several properties.
‘The bottom line is, if the house has an issue that can devalue the property, it should be dealt with by reducing the price or repairing the damage.’
The bottom line is if the house has an issue that can devalue the property, it should be dealt with by reducing the price or repairing the damage. It is that simple. We cannot sell a home with defects. It will come back to bite us in the ass.
Should you have questions or comments, please refer to the comments section at the bottom of the page. As well, to view past articles, click here.
Next article: Mental preparation to sell a house
State Of The Market
CPI today (inflation rate) 4.3%
Bank of Canada interest rate 4.5%
With interest rates in a holding pattern at 4.5% and inflation slowly reducing, there is an indication that the housing market is rebounding as buyer and seller confidence increases.
According to a recent May 5, 2023 report in the RBC Housing Market Update, resales rose 12% month over month since 2022. Buyers and sellers appear to have the impression that the market is bottoming out, which means more property for sale, more buyers to buy and rising values with lower carrying costs.
‘With interest rates in a holding pattern at 4.5% and inflation slowly reducing, there is an indication that the housing market is rebounding as buyer and seller confidence increases.’
However, there is also an indication that there may be one more interest rate hike in 2024 if the inflation rate has a hiccup and rises. This is the feeling from RBC and other economists but keep in mind this is speculation and not guaranteed. Therefore, be optimistic but be wary.
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Joseph Marovitch has worked in the service industry for over 30 years. His first career was working with families from Westmount and surrounding areas, hosting children between the ages of 6 to 16 as the owner and director of Camp Maromac, a sports and arts sleep-away summer camp established in 1968. Using the same strengths caring for the families, such as reliability, integrity, honesty and a deep sense of protecting the interests of those he is responsible for, Joseph applies this to his present real estate broker career. Should you have questions please feel free to contact Joseph Marovitch at 514 825-8771, or email@example.com