Who buys the house you left behind?
ARDELL on 06 30, 2007
A few times, and for some reason most, most recently, we have had to walk away after a home inspection. Every time this happens, the buyer wants to do something to warn the buyer behind them. Every time this happens, the buyer wants to stand outside with a big red flag saying, “Don’t buy this one unless you know about X”! And every time the buyer is amazed that the house sells, often within a few days, at full price or close to it.
One: house with rotted rafters
After all new energy efficient windows and brand new siding with lots of insulation the house could no longer “breathe”. All of the moisture in the air, being trapped up in the attic, caused all of the wood to be thick black mold and rot. Worst thing was, there was a brand new roof, a second shingle placed on top of the first and on top of the rotted rafters.
From the seller’s perspective it was “NEW ROOF”; from our perspective it was “ROTTED RAFTER HOUSE”.
Since the agent and seller just kept answering the rotted rafter question with “It’s a new roof”, we just walked away.
Two: rain water IN the house
We had been questioning the method of water drainage since before the offer was written. Driveway slopes down. Standing water in the drain at the bottom near the garage door. Seller working to unclog it was the answer.
Home Inspection comes and we go inside and there is water in the house. Now water in the house is HUGE here, as the big two car garage has to fill to 2-3 inches, before the water can make it into the living areas.
Many inappropriate responses. When the seller answers inappropriately, there is almost no way to resolve an issue as the seller doesn’t agree that it IS an issue. When the agent simply acts as a courier pigeon, and keeps repeating the unsatisfactory response as if saying it ten times will make it sink in, we just have to walk away.
Saying “It doesn’t usually rain this much” ten times is NOT the answer to there is water in the house.
Three: House falling down cliff
I love this one. Foundation shows ten patches to keep the house from falling down into Lake Sammamish. Seller knows nothing about foundation problems so we look at the Form 17. Nothing about the foundation patches. Seller says someone must have patched it ten times while he lived there, without his knowledge. Not a problem. Never was a problem. Has no idea who might have applied the band-aid fixes to the “not problem” LOL
Four: LaBrea Tar Pit house
Another foundation issue. This one over in Queen Anne, but much like the roof problem in number one, new stacked on top of problem. The entire main and second floor were spectacular. Massive remodel. Well over $100,000 in improvements. This is definitely the best house until we go to the basement. My God, I felt like I as visiting the LaBrea Tar Pits. I had never seen a basement floor with so many cracks and rises and falls. It looked like an earthquake aftermath down there. Scared me, and I don’t scare easily.
Agent response: New foundation poured all the way around existing foundation and remodeled main and second floors laid on top of NEW foundation. OK. Call inspector. ONLY ONE CORNER of foundation is new and the rest was a bunch of band aids about to pop off. Call agent and tell him only one corner is new. Oddly enough, he is not at all surprised. I ask if he has the paperwork from when the new foundation was poured. Once in a while an inspector is incorrect. Answer: “the seller’s attorney advised them not to release the engineers report regarding the foundation.” Yikes! Run!
Important to note, agent’s demeanor throughout and up to that point was “Seller wants NO contingencies. Seller wants loan contingency to expire in 10 days. Seller wants this and that. Yes the sale fell apart once already, BUT it fell apart on financing (right…best lie in the business. Pulling out on the finance contingency might have been the METHOD of cancel, but not the reason. Watch that one.) Big agent, very busy, very hoighty toighty. Pushing everything through in command mode LOL. Command mode is fun to encounter. Makes you look even harder for why he’s pushing everything in the wrong direction in such an aggressive manner.
So Who Buys The Houses We Leave Behind? The buyers always want to know how the house sells at full price or almost full price behind them when they leave. They want to go find the new buyer and tell them what they found out about the house.
I don’t have an answer for that one. Maybe someone else does. Oh, Craig will say “Give me the addresses so I can help the new owner sue”. Or maybe we should go write it on Zillow pointing out that someone got taken. Morally it may seem appropriate to warn the next buyer, but that is up to the seller and the seller’s agent. That brings up the subject of another topic: WHY is the inspection report not required, and almost always not given, to the seller if the sale falls apart on inspection. Seems like it is so that the seller can click off “Don’t Know” on the Seller Disclosure Form.
If we are really focusing on getting real estate transactions lifted above the status quo, the contract should REQUIRE that the buyer give the seller the FULL inspection when it is available. In fact why don’t inspectors automatically give a copy of the report to ALL parties? Shouldn’t the seller be fully advised of what is wrong with the house when the buyer cancels on inspection? Seems the form favors sellers vs. the next buyer coming down the pike.
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ARDELL,
In Florida, I write on our cancellation form: “The buyer is cancelling because of the rotted roof trusses”….or whatever.
Then, as a part of that fax, I fax the inspection report to the seller’s agent. They now know.
I thought if something was disclosed on an inspection, the seller would have to update their Form 17 because they would have knowledge of the issue?
You better hope the eventual buyer isn’t the type to hold a grudge, because if he finds out I knew and didn’t warn him his house was likely to fall of a cliff, I would fear for my loved ones, and rightly so.
I don’t really know or care what the law says or what the standard operating procedure is for Realtors, but it seems pretty straight-forward that I absolutely have a strong moral obligation, as a human being, to do all you can to expose fundamental defects in a house that aren’t being declared by the seller.
Of course everyone is correct. But in this area the seller only gets relevant portions of the report if the sale is to proceed and the buyer has a request.
That is why I like to attend the inspection on behalf of the seller, but recently I was kicked out of the inspection. The inspector refused to SPEAK with me in the room. So if the buyer doesn’t give me the inspection report and I am perceived as “an intruder” at the time of the inspection…
Quite frankly I was livid when I needed to know about the electrical issues (old house with some knob and tube wiring) and the inspector said the information was “confidential” and only the buyer who hired him could hear what he had to say. LIVID! But I left quietly as it would not be in the best interests of my seller client to tick off the buyer, who of course would think that was standard for an inspector to say. It is NOT and I think the seller’s agent has a right to be at the inspection for reasons like this.
Oops…off on a tangent. Livid doesn’t even describe how I felt at the time.
Kevin,
Our forms are designed to “ask no questions” if it the sale is cancelled on inspection. Lines and copies of relevant inspection portions (not even the whole inspection) are only filled in and attached if there is an inspection request.
Yes I do make sure, as you do, that the other agent knows and sometimes I go over their head to the broker when the agent looks like they don’t care. But going to their client or someone else’s client is beyond our authority. We’d be fined and maybe even lose our license for that.
Rhonda,
That’s the point. The form says “check here to cancel” with no line for why and no report attached…
Actually we went to great lengths to make sure the seller’s agent was fully aware of the bad foundations, and we later learned the seller was told it was a plumbing problem on one of them. Or at least that’s what he heard.
The point is, due diligence is important. VERY important! Seems seller disclosures never contain the things we find either before or after we find them. Very few people put really bad things on Seller Disclosure Forms, and yet we find really bad things.
Mr. New Roof was still saying “New Roof”, of course. The way “the system” works, it is the next buyer’s obligation to do their own due diligence. Since the agent for the buyer is not even shown in our MLS system, we can’t even after the fact make sure that they were informed. It’s all hidden. If I could see who the agent for the buyer was, I would pick up the phone and tell them. But NWMLS only shows agent for the seller.
Biliruben,
What you say, of course makes sense, and it is exactly how the buyers who are walking away feel. Exactly.
But it is the next buyer’s job, and their agent’s job, to do what we did. There is no way to convey, except through the seller’s agent, the information.
It’s like a divorce. Say your attorney found out you were hiding assets from your wife so you fired him. Could he call your wife because it is “the right thing to do”? Sure it would be better for your wife and kids if he did that…but we represent the parties or we don’t, just like attorneys.
Clearly if I know something and I represent the buyer or the seller, there are NO confidences as to material facts. But once we cancel, we have no authority or standing.
Think of it this way. Sometimes the next inspector passes it. So which inspector is “wrong”? Sometimes hard to tell.
I remember a case where the seller DID disclose the problem and lost a lot of money and then found out the inspector was not correct.
You would figure any inspector sticking his head up in the attic would see all the black rotted mold…but…apparently not.
Do you have the right to stand in front of a restaurant with a big sign saying I got sick on this food. I don’t think so. The police would probably take you away. Neither can you stand in front of a house and say “this house is falling down the cliff”, as in saying it on Zillow, which is the equivalent of standing in front of a house with a big sign.
“Do you have the right to stand in front of a restaurant with a big sign saying I got sick on this food.”
Yes. Absolutely you do. In this country if you got sick on a restaurant’s food, you can actually go and say that you did, and no harm will come to you. Amazing country we live in.
In fact, we have a database in King County where you can look up any restaurant and see their inspection report.
If we could only convince King County to pay Zillow to serve a similar function, as a clearing house for inspection reports, it would be absolutely fantastic.
The buyer-seller relationship is an antagonistic one. To expect the seller to disclose faults that will cost him potentially hundreds of thousands of dollars is moronic.
When you see someone buy a house at full price that you know is about to fall off a cliff, don’t you feel a small pang of guilt?
Very scary, Ardell.
Do you ever talk to the buyer’s agents after the house is sold and ask about the problems you saw? How many agents will allow the sale to go though just to make the commission?
Is there any law against publishing an inspector’s report publicically? Say on the web?
The County putting a B in the window or putting that on a website is a lot different than someone standing outside with a sign telling people not to eat there. What if you had the flu? Do you really think it is OK to ruin the restaurant’s businss for however many days you want to stand outside with a sign?
I don’t think anyone should rely on the seller disclosure. But why is it not OK for the buyer to do his own inspection?
Maybe the person who bought the house on a cliff with half a foundation and the rest weakened is going to tear it down and build a new house. Maybe they are going to lift it and put a new foundation and set the house back down on it.
Even the inspector will say they have patched this for years and it hasn’t fallen yet. It could stay that way with fixes for a hundred years…or not. I would think anyone who buys a house on a cliff will get a really good inspection.
One thing I’ve learned from all the inspections I’ve been to is that even inspectors can’t always tell if something is still moving, or the moving has stopped and is old. If there is a big crack in the foundation, often they tell you tio fill the crack and check it to see if it separates again. If it doesn’t, the movement is old and over. Could be from a previous earthquake. Could be original settlement and will never move again.
One buyer will walk, another will say that’s OK I’m going to tear it down anyway. Same with other defects. One person will run screaming into the night and another will say, no problem, it’s an old house and I expect these things and I have money to fix them.
Not every report is the same and no two people react the same way to the same report. But clearly the County does not have the right to cast negative aspersions on the homeowners of the County on a website.
As I’ve said before, you can have four inspections and they will not match one another. So giving a report to the County puts the seller in a very bad position. Rarely does a buyer not attend the inspection, because the inspector always says a lot more than he writes in the report.
I believe there are different issues involved with a public facility licensed to operate by the County vs. a private home. The lawyers might be able to address that issue.
Alan,
I have seen an inspector post the report on the web. Thought it was odd. I just Googled for it and it is no longer there. I found it by accident when I googled the buyer’s name a year after the sale. Surprised me to find it there.
As I said earlier, in NWMLS we don’t see the buyer agent’s name ever. Only the seller agent’s name. But I have made sure that the broker of the seller’s agent is aware of the problem if it is severe. I still have no assurances that the agents told the seller.
Sometimes the buyer can pay less for no written report. If they find a “deal breaker” problem in the first 20 minutes, they can pay the inspector a fraction of the cost and just leave. No full inspection and no report.
A lot of times the seller doesn’t believe the inspector and thinks the buyer is just trying to get money from him. Sometimes he’s right
The seller discloses what they know from living there, and don’t believe the buyer’s inspector. I’ve seen that happen more than once over the years. Many think inspectors are just big trouble makers.
Lately I have seen many inspectors make the problem look way worse than it is “to help the buyer negotiate a lower price” or a big credit. As if they are hired for that purpose.
That is why some don’t want the listing agent to be present. They write the report to make it look as bad as possible, even if they tell the buyer it’s probably not that big of a problem. Lots of inconsistencies.
Ardell, correct me if I’m wrong:
If the buyer submits part of or the whole inspection report to the seller, or agent, and there exists any material defect, then seller and agent are required by law to disclose this known defect.
I don’t really understand where you’re coming from when you get livid that the buyers inspector will not let you sit in for the inspection or review. Isn’t it the buyer who the inspector is representing?
If the seller wants to do a pre-sale inspection can’t they just hire an inspector themselves?
We had a transaction killed by an inspector raising engineering concerns on a custom built home. Didn’t matter that we were able to produce the blueprints with engineers stamp. The damge was done and the buyer was scared off. This inspector has neither an engineering or builders background. The inspection report has no box to mark for ’superior’ or ‘excellent’. If the home is better than others the sellers almost has to prove it on their own by doing some kind of professional anaylsis prior to sale.
Different inspectors find different faults and overlook different faults. Not good. Isn’t it true that if an inspector makes a huge mistake their liability is limited to their fee? Not good for the buyer if the foundation crumbles and the house falls down.
Bob
Bob,
You said in paragraph 3 that the inspector raised concerns which the seller believed to be “unfounded”. Now go to your first paragraph where you ask if the seller needs to disclose anything on an inspection report. If the seller disputes the finding, I doubt the seller would disclose it as something the seller “knows” is wrong with the house.
The buyer clearly has the right to have the property inspected by an inspector of their choice. If I am present, I can tell by the manner in which the inspector conveys the finding whether he is sure, correct or guessing. If he conveys the defect as “I’m not sure but I think…” then I might have a specialist check that defect before agreeing to a credit. If the defect is to be repaired prior to closing, the repair has to be done by the seller, and it is most helpful if I can readily show the seller exactly what and where the problem is. Easier to do if I saw the inspector pointing to it and explaining it.
Being present is also very helpful if something happens after the buyer purchases the property. I have had situtations where something happened weeks or months after the buyer purchased the property. Having been present at the inspection makes me an eye witness to the fact that the inspector did not miss the problem, and it wasn’t a problem at the time of sale.
Some sellers want to be present. It is their home. I don’t recommend that the seller be present, and usually they are OK as long as someone who represents the seller is present.
I don’t always want or need to be there. But in Seattle our homes can be quite complex when the property is 100 years old with years of tinkering with wiring etc. Often the report itself is not descriptive enough to explain the problem to the service provider attempting the fix or to the seller. As the buyer’s agent or the seller’s agent, being at the inspection is most helpful to explaining the findings to a 3rd party who was not present at the inspection.
All inspections break down into four categories. 1) things that must be corrected 2) things that should be upgraded 3) things the buyer should prepare for that will need replacement in x years 4) maintenance items. After the inspection there is a negotiation, and better for your client during that negotiation if you were present at the inspection. What the inspector says often determines which of those categories things fall into.
Some inspectors say volumes more than the report, and the report is just a checklist of poor, fair, good and excellent with minor explanation and wording. For liability purposes an inspector almost always says more than he writes. Best if both agents representing both parties can hear what the inspector is saying.
There seems to be a public outcry that the agent for the seller should be happy to show the property to buyers of other agents, as good representation of the seller. To ask the agent to come and show the property and then tell the agent to leave during the inspection? Didn’t seem like a match. Just because there is a licensed person in the room, doesn’t mean there was an agent in the room. An agent should be present.
So to those who say the agent for the seller should be happy to spend hours showing the property to the buyer of another company. Do you think it is fair to then turn around and say thanks for showing the property, x times, now get lost and you can’t be at the inspection to represent your seller well?
Seems to me if it is right for the seller’s agent to show the property, it is also right for the agent to be at the inspection, since no other agent was present in the property with the buyer up to that point. That’s were the “livid” comes in, Bob.
Ardell, I now understand your ‘livid’ feelings. I agree that by being present it is much easier to get the ‘right’ items corrected the first time, the right way.
In my example, the homeowner demanded that he be present for any following inspections to ‘correct’ the inspectors concerns.
The disclosed material fact issued I raise was borne from a session at EDCON a couple of years ago. We were left to believe that by submitting the inspection, the sellers were then required to disclose. The real question to us is similar to the point you make; who decides if a defect is perceived or genuine and how does one prove or disprove it.
“I agree that by being present it is much easier to get the ‘right’ items corrected the first time, the right way.”
That says it all, Bob. Full disclosure equals all relevant parties being present. Or at least not “banned” from the room. I have only had a couple of inspectors balk at an agent being present. Usually it said more about the inspector. We stood at the electrical panel and he refused to speak on the basis that the information was “confidential”. What the heck is confidential about an electrical panel? Makes you wonder if he thinks his job is helping the buyer dig up bogus negotiating points, doesn’t it?
That said, I do agree they should be allowed to put duct tape on my mouth
Falling down cliff house came off market for a bit after our cancel. We have no way to know if the seller corrected things after we left, so clearly there is no way for the buyer who walks away to poke their fingers into the next negotiation between a different buyer and that same seller. It feels like they should…but I think we all know they really can’t.
“who buys the house you left behind”
The simple answer is a Greater Fool.
Matthew,
If something is resolvable, we don’t usually walk away. So it really is a significant issue when we’re walking. That is not always the case. Sometimes buyers use the inspection as “an out period”, so I’m not suggesting that falling apart on inspection is always as big of an issue.
When the repair involves risk, credits are not a good remedy. When the fix could extend well beyond what we can readily see, it is better to have the problem fixed prior to closing.
On the “water in house” issue, it could have been as simple as replenishing and revitalizing the drain field or as difficult as reconstructing or bypassing a deteriorated cement underground drain system.
Replacing a hot water tank is easy and can be a credit. But when the problem is partially concealed as in underground or behind a wall, a credit resolution is often insufficient, as the repairmen will not guarantee a price quote.
Most often the problem gets more expensive as they “dig deeper” into the cause of the problem, which makes taking a credit not an option.
Usually I don’t like credit for hot water tank for other reasons. If it blows there is resultant damage, so better to get it replaced before closing depending on how old it is. Always the safer method in a condo of if the tank is in an area where the water could cause mold consequences. Even if the tank is in a garage, if it blows it could cause mold in the garage walls down the line. So finding someone to replace the tank that is willing to get paid at closing, is usually the best remedy.
The whole practice of taking credits and not showing repairs in contracts, has undermined the whole system, which works very well if everyone interacts honestly with all parties, including the lender.
Apparently most people who read this blog are real estate agents, but if you are not an agent, it is worth pointing out that you absolutely can go and talk directly to the seller. Your agent cannot due to the mls rules, and will advise you against it, but it can still be in your best interest in a lot of cases (you’ll have to look up their phone number or stop by the house if they are still living there). Keep in mind the agent will probably be pretty pissed off though. If you send a certified copy of the inspection agreement to the seller, then they would have to be pretty dumb to not update the form 17.
A friend did talked directly to the seller one time when it looked like the agent was holding out for an offer from an agent with their company/broker. My friend talked directly to the seller, and the agent hadn’t ever given them the offer. They were able to resolve the issue and close successfully.
e,
That is true, however in negotiations of price and repairs from inspection, the seller has hired an agent to perform certain functions. You are correct that a buyer could knock on the door to convince the seller to agree to a lower price, or to make more repairs or credits at time of inspection. But isn’t that why they hired an agent in the first place? To have someone buffer them from an aggressive buyer who might talk them into more than they really want to give?
Your example of offer not being presented at all didn’t address the topic of this post. But within the topic of this post, which is when a buyer and seller don’t agree, I would really have to disagree.
Let’s take it from the buyer’s standpoint. Clearly the seller could likely have talked some buyers into overlooking the issues in this post. They could say the drainage was a small problem and it probably won’t rain this hard again and convince the buyer to proceed. But how is that in the buyer’s best interest?
How does one side convincing the other side not to listen to professional advices, represent the best interest of the other party?
I had an agent get very angry once that she couldn’t bypass the listing agent and go straight to the seller when she was purchasing a home for herself. She knew she would get a better deal if she did. She was correct that she probably could have outmatched the seller if she were able to negotiate with the seller directly. She was not happy that the seller’s agent was “in between” working a lesser deal for her and a better deal for the seller. But really. Isn’t that what agents are for?
I see your point that the consumer has no barriers to after the fact knock on the door and tell the seller, or even the person who bought it, after closing. Yes, that is correct. And likely they are the only ones who can. However if the information is incorrect, it might put the consumer at some risk.
It’s one thing to believe an inspector enough to walk away and say, “Whether the inspector is right or wrong, I don’t need the headache”. Often the inspector is giving worst case scenario of what could possibly happen, and it is not factual at all.
There was plenty of evidence for the buyer and their inspector to find these things on their own in all of these cases. So likely it would be the buyer’s negligence to do their due diligence, as Russ has pointed out in the past, regarding recent changes in WA laws.
Nothing will ever replace the buyer doing their own due diligence nor should any buyer rely on anything less.
” we are really focusing on getting real estate transactions lifted above the status quo, the contract should REQUIRE that the buyer give the seller the FULL inspection when it is available. ”
It would be a cold day in hell before I gave the seller any more information than I absolutely have to. If I pay for the inspection, then why should I give them a free inspection report so that they can use it to sell their house to someone else? Let them pay for their own or let them pay the inspector for their own copy.
Gooby,
The inspector can’t sell a copy to the owner without the buyer’s permission. Clearly you don’t have to hand it over, and many if not most do not.