Written By Robert Axselle
We know it can be tough to get an accepted offer, especially in today’s market, and it’s frustrating and disappointing when the offer is rejected but waiving an inspection for your offer to be more attractive may put you in a very difficult position.
We are going to talk about a few of the ramifications here, including the facts around how many people die each year from common occurrences in a home that are often detected during a home inspection, so read on and learn what you can do to protect yourself.
In addition to the safety aspect of home inspections, the inspection industry and the inspection process provide agents, sellers, and buyers a layer of legal protection
In today’s hot sellers’ market, some real estate professionals are telling, advising, or pressuring clients to waive their inspection in order to make their offer more attractive. That’s a great way to get sued if you are a real estate professional and it’s a great way to own a lot of unforeseen deficiencies if you are a buyer. Believe it or not, you can be sued as the home seller after closing.
The entire reason the inspection industry was started was because buyers used to purchase a house without an inspection and then some of them would walk into a money pit. They suddenly owned a house with structural and safety issues and real estate agents were getting sued for selling houses with undisclosed deficiencies. Waiving inspections opens that door once again.
Agent friends, there was a court case that held the real estate agent responsible for damages even though the client signed an inspection waiver. The appellate court ruled that clients are making the biggest investment of their life and the real estate professional should show a very high standard of care. Convincing, or even allowing someone to waive an inspection is not showing the care a client deserves.
Lets talk about a few of the actually life or death safety hazards.
What if there is a carbon monoxide leak that was not detected because the inspection was waived? On average, 50,000 people a year go to the emergency room due to carbon monoxide poising and over 400 people actually die.
What if there is some faulty wiring and the house catches on fire? More then 500 people a year die from electrical fires and there is more than 1.3 billion dollars in damage done.
Here is a less obvious defect that many will not consider. What if spindles on a second flooring handrail are six inches apart and a baby crawls through the spindles and is seriously injured or dies? Did you know that they are only supposed to be a max of 4 inches apart?
If you are the real estate agent, do you really think some lawyer is telling their client not to sue you because they signed a waiver? What’s likely to happen is the client is going to say, “My agent pressured me into waiving inspections to make my offer more attractive”. Or the clients will likely say, “My agent ADVISED me to waive inspections to make my offer more attractive “. Either way you will be legally liable for damages because some sympathetic judge or jury isn’t going to care about some signed waiver. Also, how many of you are sleeping well at night if your client or their kids get injured?
Somewhere along the line the real estate industry developed the seller’s disclosure as a way to protect agents, sellers, and buyers. Experience tells us that form does not really limit the listing agent or seller’s liability, it is more of a deterrent and can provide some protection, but it certainly does not offer 100% protection. It also does not protect buyers or give them some of the important information about the house they should be getting. Often that form has the “Don’t know” box checked in a lot of areas. How can someone live in a house for ten years and not know if their foundation or roof leaks? Maybe they are not aware, or maybe they are not being truthful, either way that disclosure form is not delivering the protection some might believe it is.
There is a court case where a listing agent and seller were sued because everyone just relied on the seller’s disclosure form. You probably know about sellers and agents in your own market being sued after closing, don’t you? If not, a little research should uncover it for you.
Here is the bottom line, the inspection process should never be skipped. It’s only around $500 on average.
We have advised for years that the best thing to do in order protect everyone in the transaction and streamline the process, is for the house to be inspected before it’s listed, and to use that report as a form of full disclosure.
This is one of the most befuddling things we hear from some real estate agents, “I don’t want to do pre-listing inspections because I don’t want my sellers to have to disclose what’s wrong.” Wow, just wow. Ok imagine standing in front of a judge and saying, “Your honor I only relied on the seller’s disclosure vs getting a pre-listing inspection done”. Judge says, “Well, from what I understand many agents across the country have houses inspected before they go to market. Why didn’t you advise a pre-listing inspection be performed?” “Well, your honor I didn’t want my seller or myself to have to disclose everything that was wrong with the house.” Sounds like a great defense and a wonderful reason to not advise getting a pre-listing inspection, doesn’t it?
With a pre-listing inspection, sellers can dictate up front what they are fixing or not fixing, and they don’t have to be worried about the deal falling through or being blindsided by unknown deficiencies. The seller and agent have more legal protection because they can say, “Not only was a disclosure form provided but, we also hired an independent inspector to verify the condition of the house, AND we didn’t prejudice the buyer from getting their own inspection….in fact we encouraged the buyer to get their own inspection.”
Buyers can and should still get their own inspection, but no big surprises will be found. The entire reason buyers are waiving inspections is to make their offer more attractive by taking away the possibility of the deal falling through, or a bunch of repair requests being made at the last minute. Well, the pre-listing Inspection addresses those concerns.
Now, if buyers do waive their own inspection, the agent can at least demonstrate he/she met a higher standard of care by having an independent inspection performed by a neutral 3rd party licensed home inspector, and this was done to fully disclose what was wrong with the house vs just relying on the seller’s word/disclosure statement.
The practice of pre-listing Inspections are becoming more and more popular and, in some areas, every house which is listed for sale has a pre-listing Inspection performed.
Now you can listen to our advice or not. We are just trying to help and be a voice of reason.
If you are a real estate professional and you are advising clients to waive inspections after reading this article and get sued, well, we tried to help.
If you are a listing agent and are only relying on the seller’s disclosure, without a buyers inspection being performed in this super-hot seller’s market and get sued, once again, we tried to help.=
Thank you all for your time and we hope this article serves some folks well.