Know your risks: A World without Home Inspections

Know your risks: A World without Home Inspections

Sellers: Do you think you should get a “pre-listing” home inspection before selling your home? You’re ecstatic because you have an offer with no home inspection contingency?


Buyers: Are you being told by your agent that if you want to present an “offer worthy of acceptance” you shouldn’t include a home inspection contingency – whether or not a pre-listing inspection report is provided?


You guys, this market has gotten so intense! So many Buyers are being either urged by their agents, or enticed by listing agents, to assume the home in the current condition. The Buyers are relying on the Seller’s disclosure; without exercising their own due diligence by obtaining their own, independent, home inspection. And many Sellers are being told that by offering a pre-listing inspection report, Buyers will be less likely to include a home inspection contingency, and that’s a good thing for a Seller. Is it?!


So far this year, every single listing that our company has pushed live has had multiple offers. And anywhere from 25% - 75% of the Buyer’s submitting these offers are NOT opting for home inspection contingency. Whitefish Bay real estate Attorney, Carol Krigbaum says “A Buyer’s post-closing claims for misrepresentation by a Seller can be weakened by the buyer’s failure to exercise their own due diligence prior to purchase, especially when accepting a property in an ‘as is’ condition”. 


Early on in my career, at other brokerages, I was told that waiving an inspection could be a way for my Buyer clients to win in competition. As a Broker Owner, neither I nor my agents, advise that Buyers waive the inspection contingency. In the event our clients come up with that decision on their own, we will have them sign a disclosure explaining the risks. 


I was also told at other brokerages that it could be wise to suggest the Seller to have a “pre-listing home inspection” and then to share it on MLS along with the Real Estate Condition Report. Attorney Krigbaum warns against posting any inspections or condition reports on MLS.


Why is sharing a “pre-listing home inspection” on MLS a potential liability? Well, all home inspectors are different. Therefore, what one might find…another might not find. And who is giving the suggestions of home inspector to the Sellers? Is it the agent who is telling the Seller to get a pre-listing inspection? Some agents know the home inspectors who might be a bit more forgiving. 


According to Attorney Krigbaum, “A Seller’s exposure to post-closing litigation claims increases, because now the only information about the condition of the property that is available to the buyer prior to closing is in the seller’s real estate condition report, or pre-listing inspection; the Buyer’s have no other sources to rely on.”


When a Seller is presented with multiple offers, it is the listing agent’s responsibility to present each offer in a fair and unbiased manner. Reviewing multiple offers takes a long time, often the Sellers and I have lengthy discussions. The Sellers weigh all the pros and cons. Ultimately, it is our clients, the Seller, who will chose the offer they would like to accept. 


Believe it or not, I have actually had Sellers choose offers that DID include a home inspection contingency over those that were not contingent on inspection. I’ve even had Sellers counter back offers that didn’t included them, to give the buyer the opportunity to have an inspection prior to closing..


I also have seen Sellers choose to accept offers without a home inspection, because in the Seller’s opinion there were other terms of the offer that the Sellers liked (often cash with no appraisal, or maybe a more attracting closing/occupancy timeframe). They Seller’s felt that it was the Buyer’s choice to not make the offer contingent on an inspection. 


Attorney Krigbaum warns, “A real estate licensee, and their brokerage, may be potentially liable for steering a client into a situation that was not in the client's best interest. I suspect a lot of claims of ‘my agent told me I couldn’t include an inspection contingency’ or ‘my agent made me counter out the home inspection’ will be raised in future litigation cases where no inspection contingency was available to a Buyer.”


The majority of the homes that we sell at Corcoran Realty & Co. are in Milwaukee’s North Shore & South Shore, which includes Whitefish Bay, Shorewood, Fox Point, Glendale, Bayside, Bay View, East Side and west to Wauwatosa/Brookfield. These homes can date back to as early as the late 1800s in some cases. We also deal with a good amount of new construction as well, having a home inspection on a new construction home is equally as important. 


So Sellers, if your agent is advising you how to disclose the condition your property and Buyer’s if your agent is saying you don’t stand a chance with a home inspection…know your risks!

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