A multi-million dollar home buying disaster just happened in Paradise Valley. I was not involved in this transaction, which is unfortunate for the buyers because the house has very expensive defects, yet their agent let them close on it. The most unconscionable part of the story is they had no inspection performed before closing. This was not a rookie agent who represented them, either, so the situation is mind-boggling as well as tragic.
To prevent this sort of terrible thing happening to any of my readers, I want to share a relevant excerpt from my upcoming book, on the importance of the inspection and how to choose the right inspector:
Most people who are purchasing homes aren’t experts in construction, maintenance and the various systems that make up the infrastructure of a house. There are really only two types of homes in the world: those that have problems that you can find, and those that have problems you haven’t found. So they all have problems, and consequently I make a dedicated effort to work with inspectors who are very, very thorough and methodical.
It can cause a certain element of consternation for my clients when they start hearing about all kinds of worries that they had never previously considered. Hence I always try to preface the inspection by saying that I guarantee that the inspector is going to find some things wrong. It's better to hear all the problems up front than to learn about them days, weeks, or months after closing.
From the seller's standpoint the inspection period can be enlightening as well, because for the most part if you've been living in a house for a long time, you wouldn't have any reason to fix something unless it became an obvious problem. It's not as if you're going to be searching every crevice of your home with a flashlight to try to find every tiny problem. Typically, an owner only fixes something in their home when it's a nuisance.
Importantly, this is a point in time where you may reopen the negotiations, so that's another reason why inspection deserves serious attention. The inspection report can change the financial terms of the agreement if there are material problems that have been discovered. This is another phase where disagreement can potentially derail a deal, because if you can't get the buyer and the seller to agree upon what's significant and what should be fixed, then the deal can come unhinged.
Thus it's worth making sure you have an inspector who is not only thorough in the inspection that they perform, but also provides a report that is very clear. There is great variability in reports produced by inspectors, unfortunately. I expect to see a properly formatted document loaded with pictures, that clearly delineates significant problems versus minor issues. Too many inspectors provide a laundry list of problems with no context, which severely limits the utility of the report.
If you're presenting an inspection report to someone on the other side of the table, you want it to look professional and credible, so that you can get any and all reasonable concessions.
To ensure you don't ever have to deal with your own "money pit" nightmare, please keep these critical issues in mind, and don't hesitate to call me before you start looking at homes.