Joined: 06/17/2014 09:32 PM EDT
Location: Carmel, IN
What if an Agent or Seller Questions the findings of a Home Inspection?
Recently I had a question come in from a Texas real estate agent, an agent representing a buyer, who had responded to an inspection contingency about issues found at the inspection and requested repairs (in this case, in the form of an allowance…more on that later). Nothing about the inspection was particularly unusual – and none of the defects that were discovered were particularly unusual either. It should have been like any other transaction except for one thing: The listing agent called into question the credibility of the findings of the inspector and further questioned his authority to even look for the issue that was found.
Let me put that another way and give you the specific issue I was asked about yesterday just to make sure we all have an understanding of what we are talking about here: The listing agent does not believe that the sewer line with indications of tree root intrusion is a problem currently and is indicating to the Buyer’s Agent that the seller will not make any concessions for this issue.
Now let’s take this whole thing apart and put it back together again so we can make this a learning moment. Keep in mind this could apply to any defect in a home.
Can a listing agent and/or seller call into question the findings of a home inspector?
In short, absolutely, and there could be many justifications for such. As an example, let’s say that an inspector says that there is an electrical problem. The seller has never experienced the electrical problem. The seller calls a qualified electrician who indicates he cannot find the problem. This would be one of many examples where the issue is either unclear or not apparent, and it would be totally reasonable for an agent to respond to such an issue either looking for clarification or simply denying that there is an issue citing the electrician. In the most diligent and responsible of follow ups, the agents involved might request that the inspector and contractor either converse or meet at the property to avoid issues of miscommunication that could lead to harming the client (financially or otherwise).
There are other findings that could be called into question. For instance, if an inspector attempts to hold an old home to a new home standard and the buyers start asking for upgrades…this would be out of bounds. There is plenty on that topic available at http://www.InspectionGuide.net .
In this case though, the listing agent isn’t disputing the findings of problems with this sewer line based on the words of a plumber or doing anything to ensure the issue isn’t going to be a problem for the buyers. Instead, the Listing Agent is simply denying there is an issue and then going a step further to suggest (I’m not making this up) that the Buyers had no right to have their inspector look at the sewer lines at all without permission. She even questioned the inspector’s legal authority to perform sewer scope inspections in the first place – as if that would be anyone’s problem other than the party who paid for and received the services.
So what is the problem with calling into question the Inspector’s Authority to inspect certain components of the home?
I can’t think of anything more ill advised for an agent to do with regards to defects in the home than simply denying their existence, especially when the agent has no specific knowledge about the system, regardless of the reason. When you look at liability in real estate, much of it has to do with property condition issues (see http://www.TheSavvyAgent.net for more information on that), so an agent’s job when it comes to home inspection and any sort of investigation for defects should be to ensure everything possible is disclosed, on the table, and totally transparent. Doing anything to deny the existence of, hide, or otherwise thwart (regardless of the reason) any discussion of or dealing with a known defect, even if in question, falls in the category of a really bad idea. Beyond the potential for being brought up should there ever be a lawsuit, it could certainly become a reputation problem and we live and die by our reputations in real estate. If you’re a Buyer’s Agent that would like to ignore issues, that will be a problem for you. If you’re a Listing Agent that would like to live in denial of them, that will become an even bigger problem as you represented the party with the Disclosure obligation. I resisted the urge when asked by this agent what they should do to report the Listing Agent for ethical violations or worst yet to go ahead and have their buyer close and seek damages under Disclosure Law. It’s better to just get these issues on the table and sort them out on the front side of things.
Even with this so called authority issue being brought up in this case, the response from the listing agent really did nothing to disprove the issue. Here are the facts: The inspector has pictures and video showing indications of tree root intrusion into a sewer line on a house built in the 60’s. He noted that this could “potentially cause issues” in the future. The agent both questioned his verbiage suggesting that it must not be a problem now (nice trick on semantics, but this is a real issue) and questioned his authority to look at pipes – which isn’t at issue at all. I’ll give her credit for one thing – she found somewhere a parroted version of a suggested regulation from the Plumber’s Board in Texas that went outside of their authority that they have since disavowed. (More on that here http://homeinspectionforum.net/posts/list/3859/I'msuingtheStateofTexasonbehalfofHomeInspectors,andHere'swhyyoushouldcare ).
But let’s say hypothetically that he didn’t have authority to look at the pipes…so what? Does that make the tree roots imaginary? NO. If you think his opinion is off, then have a qualified plumber come out and dispute the findings. That would be the way to handle this professionally and without causing liability for yourself as an agent. It does bring up an interesting question though…
Do Inspectors have the “authority” to notice issues outside of their scope?
In short, absolutely they do. It doesn’t matter what the issue is. If a home inspector wants to report that the back yard of a home is inhabited by one very large insane clown posse and that this could lead to “potential problems”, he can do so.
Now let’s address an insane clown posse in the same context in which this agent is addressing the sewer line defect;
[i]“You didn’t have the authority to check for a posse of insane clowns – also we don’t agree there is a problem.” (This agent is essentially saying)
There are a lot of issues here if you really want to get nit picky about authority and qualifications. For one, the inspector is not a psychiatrist, so the mental capacity or condition of the clowns is really outside of his expertise. There’s technically a license for determining if someone is sane. It doesn’t stop there – unless this inspector is some sort of circus and live entertainment expert I’d love to know how he determined that these were bona fide clowns. They could just be pretend clowns. I’m not sure there’s a license for identifying clowns, but it seems subjective. Finally, the determination that these allegedly insane alleged clowns are a “posse” is presumptuous. They may not even know each other!
Of course to analyze an insane clown posse would be the second most ridiculous thing you could do with an insane clown posse. The first most ridiculous thing you could do is ignore the problem. Whether in a real estate transaction or not, clowns are a serious matter. They should be removed especially if there is a whole posse of them on your property regardless of their mental state. Just like a tree root in a sewer line.
Which brings us back to the sewer line. No, a plumber (who works on pipes) didn’t look at the pipe. No, an arborist (one who is an expert on trees) did not look at the roots in the pipe. A Scatologist (an expert on poop) wasn’t even called in to look at the contents of the pipe. In fact an inspector put a camera that costs many thousands of dollars down a pipe and documented what appears to be roots intruding into a pipe from 1960.
So what do I do as a Listing Agent in this case?
You have a few options really. Let’s a assume this is a standard residential real estate deal. Here are the options:
1. Fix the issue.
2. Have a licensed professional come in and dispute the issue.
3. Ignore the issue and simply respond that it won’t be paid for and be prepared to lose the deal.
4. Deny that there is a problem with no supporting proof and ultimately take on liability for it yourself.
(Questioning authority to find a problem wasn’t on the list as it essentially amounts to the same result as #4 above).
So what do I do as a Buyer’s Agent if a Listing Agent is living in denial of an issue?
The first thing to do: Take a breath and take stock of things. Realize that most agents – and I’m not insulting I’m simply giving a statistical fact – do very few transactions and have very little knowledge about real estate transactions generally. Less than 10% of agents have even taken the time to look at getting educated on real estate inspection and risk management matters from the literally free certifications available out there (like the CPE Certification at http://www.CPEcertification.com ).
So it’s likely they don’t realize how big the liability is that they are causing for themselves or how harmful what they’re doing is. So take your time, explain it to them, share some resources with them, and talk through the issue. At the end of the day remember one thing: Any offer you give has to be presented. It will ultimately be up to the seller to either agree to pay for repairing an issue or making an allowance or not. The only thing you can do for your client is present the facts as clearly as possible for the Listing Agent. If they want to put themselves on the hook for issues of disclosure in the process, to some extent you have to let them and just advise your clients.
Should we (all) want allowances or repairs?
I promised more on this and as the guy that handles inspection and warranty claim issues on around 15-20% of all real estate transactions throughout the U.S. and Canada…I really have no preference unless the issue tends to be one that would have underlying damage or consequential issues like tile problems in a shower or issues with an older HVAC unit or anything having to do with leaks and water penetration or rot.
Irregardless...both sides have to eventually agree on terms and there are certainly times where the convenience of allowances permits that to happen easier. Then it comes down to everybody's number