Unethical inspector?

Question

we just completed our first flip. We had a licensed general contractor do the skilled work. We had the electrical panel updated by a licensed electrician. A permit was pulled, and the inspector passed the work, no questions asked. We received a good offer at the first open house, and negotiated a fair price. All cash. They had a home inspector come out. He has found fault with the electrical work. There is a long list of "concerns," one of them being that the basement stair height is unsafe?. It is a 1950's home, and the stairs are structurally sound. The don't bounce and the wood is in good condition. The buyers now want a 5k reduction, which would bring the price down to their initial offer. We were not present for the inspection. In fact my agent called me after the inspection was done. I didn't even know it had been scheduled. We had settled on the price Monday. Inspection was done Tuesday.

We have sent an email, agreeing to make certain upgrades, but we are obviously not going to install new stairs.

My questions are: Do you make it a point to attend inspections? How do you refute the findings of an inspector? Does this all sound suspicious to you? We are not willing to reduce the price, especially since it has only been on market a week.

Here is a link to a video of the property. Hope it is ok to post it. http://m.youtube.com/watch?v=A0zVYU9NODA

Thanks for your input!

We have sent an email, agreeing to make certain upgrades, but we are obviously not going to install new stairs.

My questions are: Do you make it a point to attend inspections? How do you refute the findings of an inspector? Does this all sound suspicious to you? We are not willing to reduce the price, especially since it has only been on market a week.

Here is a link to a video of the property. Hope it is ok to post it. http://m.youtube.com/watch?v=A0zVYU9NODA

Thanks for your input!

Bryan L. · Answer

Home inspectors are going to find stuff.  He was not necessarily unethical.  The best thing to do is to prevent problems like this during the offer/negotiation phase.  What I will be doing on my future retail flips is to include language in the purchase/sale agreement that basically says something like this: "If you choose to get a home inspection, I will only repair or replace 2 items at a total cost to me of no more than $500.  Any additional repairs that you want will result in the re-opening of negotiations on the purchase price and may result in a higher purchase price".

Andrew S. · Answer

@Johna Medeiros

- do you have any room to just compromise on say 1-2K off and be done with it?  Sounds to me like the buyer is just using the report to squeeze as much as he can get, but he may settle for splitting the difference.

Additional inspections to "settle the validity of the first inspection" are fine but they cost you time and money without certainty that you will like the outcome.  If the buyer skips out you'll likely have additional cost to re-market, hold, etc.

PS: Even if you are at the inspection, the inspector will still write what he wants - he is working for the buyer, not for you, so he may not be willing to discuss any of his findings with you at all.

Bryan L. · Answer

Did you use a Realtor with standard, state association approved forms?  In my state of TN, the standard form says something to the effective of "buyers can not require sellers to make repairs that are solely for the purpose of bringing older houses up to current codes" and "home inspections are not for the purpose of finding items that are purely of a cosmetic nature".  This may not be in your standard form, but you can add it on future deals.

We have a problem here that our APPRAISERS now think that they are home inspectors.  I recently did a rehab/flip and we had a kitchen drawer cover that was still missing at the time of the offer (it had to be custom built and was taking a little bit of time).  The buyer put a clause in the contract (purchase and sale agreement) that we had to replace it (we agreed since we were going to do that anyway).  Then, the appraiser came in (with a copy of the agreement), and would not sign off on the APPRAISAL until this $50 job was completed.  Kind of pissed me off.  Now, I usually list my finished rehabs slightly below market anyway, and often wind up paying for buyer's closing costs too, and this goob was holding up the closing because of a $50 repair. The house could have easily appraised for several thousand more than the purchase price as-is.  Ugggghhh.

Steve Babiak · Answer

All inspection reports are an opinion; all appraisals are an opinion.

Johna Medeiros · Answer

I agree Rob. Dick move.  The buyers jumped on this house. Saw it Sunday, made offer Sunday. Interest point about the GFI. They can't expect a home built in the 1950's to conform to ALL of the new construction building codes.

Johna Medeiros · Answer

@Andrew S.  @James Wise Thanks for your replies. I reviewed the list of findings with my contractor. There were a few items that were justified. They were things that we did not touch-the washing machine hookup should be GFI protected, and a small repair to the sill on the bulkhead. But for the most part, the items seem to be bogus. The electrical work that was done was inspected and approved.  We did not cut corners. We remodeled this house as if we were going to live here. We would never do anything that was unethical, or try to sell a home that was unsafe. If the findings really did pose a hazard, why did they ask for money and not repairs?

Wayne Brooks · Answer

Nothing unethical jere.  Since inspectors are paid by the buyer, most see their job to find as many potential "concerns" as possible, to make their buyers feel like they got their money's worth, and to give them additional ammunition.  If there is a real issue, address it.  As for concerns, "too bad, as is".  I had an inspector recommend changing the supply line valves, that were not leaking, because they were 30 years old.  Just respond that you find the concerns irrelevant, or they were taken into consideration in the pricing, and the price is what it is.

James Wise · Answer

Out here where I live some of these inspectors are a joke. Any schmo off the street can become a home inspector.

I would tell the buyer you believe that this inspector is wrong in his evaluation of your home. I would then have them find any 2 home inspectors they want and offer to pay for them to complete a home inspection. If they come back with different reports then the first guy you should be good to go. If they come back with the same report, well you may need to reduce or fix the issues to sell the house.

Derek T. · Answer

I don't go to inspections however I definitely go for appraisals (separate topic).  I would just tell them you will make a few repairs and give them a concession of a few thousand.   If they don't agree tell them you will put it back on the market.  Remember they are lucky to get your house.

The inspectors job is to find as much wrong with the house as possible and buyers normally use this as ammo to lessen this price.  If there are legitimate repairs then make them but don't give in too much.   Control the buyer,  don't let them control you.

Johna Medeiros · Answer

Update: we offered to make a few repairs. I made it clear that we would be more than happy to put it back on the market if the buyers still wanted a reduction. The buyers accepted our repairs and want to close as soon as possible. Looks like they really wanted to house.

Thanks for all of your responses! You really helped me think this through.

Unethical inspector?

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