As our housing market enters a healthier balance, sellers no longer have the luxury of bidding wars and all-in offers, which have no conditions attached. Some sellers are now encountering the nasty surprise that the offer they thought they had accepted is not actually the offer they will get. This is because most offers made by buyers today are conditional on a home inspection. When the dust settles, and the other buyers have already left the table, some buyers will use this opportunity to renegotiate, using even minor items uncovered during the inspection as an excuse.
So, is the answer do away with conditional offers all together? Well, that’s not really possible if you want the best price. However, a pre-sale home inspection can go a long way in stacking the negotiations in the seller’s favour. For this article, I sat down with Orangeville’s home inspector, Gabor Makula, to better understand the importance of a pre-sale home inspection, and how this can prevent sellers from getting into the pitfall of shady renegotiations.
Gabor shared with me one of his encounters. Meet the Collins family, their grandmother unexpectedly passed away and the family was left to sell the family home. The house required a little work, but nothing major. However, due to the stress of her passing, the family really just wanted to get things finalized. There were three offers received on the house, the two highest were less than $5,000 apart. On paper, both had the same conditions, conditional on an inspection. Therefore, they went with the higher offer. Only to find a week later that the buyer wanted to offer $20,000 less due to “items” found during the inspection. By that time, the buyer with the second highest offer had already moved on.
“When the market tips more in the buyer’s favor, there is less incentive for buyers to close the deal. Items uncovered during a home inspection can sometimes become the scapegoat for renegotiation. I always recommend my clients to get a pre-sale home inspection, because it is like insurance to prevent this sort of tactic. Once done, I usually sit down with the owners and their realtor to go through the major and minor items, and a sales strategy” says Gabor.
“Depending on the issue, it can either be easily corrected or simply disclosed to buyers. The important thing is to negotiate while all buyers are still at the table. This way, the winning bidder cannot use these issues as bargaining chips later in the game.”
“If time permits, it also makes sense to fix some of the issues. Sometimes even structural items that can seem like a big issue, such as a cut joist, can be corrected relatively easily by supporting both sides. Buyers will often make a big deal about things like that and how much it would cost to fix, when the solution is actually quite inexpensive. Finally, when the buyer sends you their inspection report with a list of complaints, you also have your own inspection report written by a certified home inspector to refer back to.”
All these tips made a great deal of sense to me, pre-sale home inspections should really be a standard industry practice, especially if it can hedge against potential shady renegotiations. For further information, you can visit Gabor, the Orangeville Home Inspector, at his website www.orangevillehomeinspector.com.
Article by Philip Payton