01-30-2013 04:11 PM
This is a hypothetical question, but one that I have wondered about ever since I went through the process of purchasing my home. Now when I consider the idea of selling, I wonder if this could turn around to hit me from the other side.
When you make an offer to purchase in MA there is usually the clause that you have some number of days inspection period to have the home inspected.
My question is whether a professional, licensed, inspection MUST occur during that time, or not, in order for the buyer's side of the obligation to be fulfilled to the point that they can say "no thanks"?
Real Example: I put an offer in on a home, later that day torrential rains started in the area--we received something like 2" of rain in a day, and the area was already saturated... I went to drive by the home the next night and found that several of the roads leading to it were flooded out--a river about 1/5th of a mile away had crested its banks... I was able to route around the flooding (and through some of it) to get to the neighborhood. It was dark out, but I could see the yard was not flooded... however I did see the sump pump discharge hose leading to the street running full-time... I watched for about 5 mins and it never stopped... I proceeded down the street and--whoops!--had to stop because 3 houses down the road was flooded and those houses/yards were underwater. The house I was interested in had a yard that was only about 1-2 vertical feet higher, but that had been enough to spare it.
I felt obligated the continue with the $500 inspection scheduled for a couple of days later even though that night I had made my mind that I did not want to live in an area that this could happen.
Could I have "bailed" out on the house without having the inspection?
One of the reasons I felt obligated was because at the time I was not using Redfin (mistake) and my buyer agent was trying very hard to convince me that this was a "100 year storm" and that I should not back out without performing the inspection...
Now, as a potential seller, I wonder if the inspection period can be a tool used by aggressive buyers and buyer agents to lock other buyers out of a property while they continue to view other properties or work out other considerations unrelated to actually inspecting the condition of the house...
01-31-2013 08:35 PM
Well, I've only gone through the house-buying experience once, but until someone more knowledgeable shows up here's my two cents:
(1) The inspection clause is something that Is put into the contract by the buyer, not the seller. The buyer couldn't care less how you perform your inspection, whether it's a mere walk-around by buyer, or a thorough inspection by a professional inspector, or by a dozen inspectors, or no inspection at all. The seller is giving you, the buyer, the time YOU asked for to inspect the house, and how you do that is pretty much left up to you and is not his concern. In your case, your drive-by gave you all the information you needed to reach a decision, and you could have saved yourself the time and money by just bailing out then and there.
(2). As for buyers trying to use the inspection period to lock other buyers out, the inspection period comes after an offer has been made and offers are generally accompanied by sizeable "earnest money" deposits of around 3% of the offering price. So the buyer does have some "skin in the game" by the time they get to the inspection. In fact, the reason that earnest money deposits are common in real estate offers is probably to prevent the kinds of "games" that you just described and make sure that the prospective buyer is sincere.
02-01-2013 04:19 AM
Great question and it only gets more important in the super-competitive market we have today ( if you are thinking of selling by the way NOW is a great time) where there are so many buyers and fewer homes to buy. First with regard to the first part of the question: "Who can perform the inspection if the language of the inspection clause does not require a licensed 'home inspector' ( most clauses do not have this requirement) can anyone can inspect the property? Massachusetts is a "quitclaim deed" state (i.e.. you buy the house and is yours and there is no turning back or going after sellers that have not disclosed something), so it is up to the buyer to inspect a property thoroughly to protect himself/herself from unknown or hidden problems with the property. This period is open for all kinds of inspections, licensed or otherwise, contractors or friends, thorough or not thorough. Having someone view the yard from the street would suffice as long as a buyer withdraws with the requisite language that, "based upon an inspection of the property, I withdraw my offer." It may not make a seller happy that your "inspector/you" only drove by the property during the rain and that your withdrew "based on a visual inspection of the saturated yard and active sump pump during the rain" but the seller is out of luck and has no choice but to let you out of the contract and return your deposit..
Now on to part 2 of your question. 'Do people use the inspection period simply as a contemplation period, or a way to nail down this house while they try for another , or try to work out whether they really can swing it?' Well all of those scenarios I have witnessed first hand, but the vast majority of buyers and their agents are hoping the inspection is going to be OK so the deal works for everyone. For most it is a contemplation period and if the buyers change their minds (whether they have had a formal inspection or not) , you as a seller should probably be glad it happened early in the process and move on as painful and annoying as that is. As to whether this is a tactic by a buyer agent, the answer is generally not. A buyer agent will frequently encourage a buyer to nail down the purchase before every last question they have is answered and to leave some of this discovery process for the inspection, but it is a rare buyer agent that is intentionally hoping the deal won't go through or is using it as back-up plan -- it happens but again it is rare. Most buyer agents know that few buyers will actually go through with buying their 2nd choice -- instead they keep looking for the "one."