Sellers and Listing Agent's Beware
We finally get a contract on our listing and we are very excited to bring it to the seller. After days of negotiation, we finally have a meeting of the minds. Our sellers are ecstatic!!! Then we hold our breath for the inspection period to end to make sure that they buyers do not find anything that they just cannot live with.
The inspection is done and the buyer brings a list of repairs to be done, based on the inspection report that are longer than your arm. The first thing that most agents do is ask to see the report to verify the repair requests. I caution each and every one of you to re-think asking for these reports. Once you and your seller see everything that the inspector just found wrong with your home, you are not obligated to update your seller disclosure documents to reflect this new information (if it was not already incorporated in your original documents).
This is something that many do not think twice about. Unless you are prepared to make this new report a part of your seller disclosure obligation, I would not ask to see the report. Bottom line for the seller is that the buyer has asked for the repairs and it is up to the seller if they want to make them or counter back with a different list of repairs that they are willing to do.
As the Buyer's Agent, you should also be aware that if you review the report personally and then pass it on to your buyer, you are then also obligated to disclosure to any other potential buyers for that property what you know about the property from the report. If for some reason the original buyer backs out of the purchase based on the report and you happen to have another buyer who wants to put in a contract on this home, you must tell them what you know about the house based on the report that you reviewed.
The review of the inspection report should be handled just as the loan application process is handled. The buyer should deal directly with the inspector and ask you, as their Realtor to ask for the repairs that they feel are necessary to move the contract forward. Take yourself right out of the middle of this and don't review the inspection report unless you are willing to disclose everything that you learn from that report to any other prospective buyers for that home. If another potential buyer finds out that you knew information about that home and did not disclose that to them, you could find yourself defending that action in the future.
Some buyers are very confused when they get this huge report and have to decide what to be concerned about and what not to be concerned with. This is why I always encourage my buyers to attend the inspection so that the inspector can show them the concerns that he/she finds and explain what the findings mean.
Christine Stalsonburg, Realtor
231-944-0854
www.northernmichiganrealestatecs.com
Coldwell Banker Schmidt Realtors
402 E. Front St. Traverse City, MI 49686
Christine Stalsonburg, Realtor
Re/Max Bayshore Properties
231-409-4140
I would want to read the inspection and pass along anything that maybe in question. My sellers need to understand I will disclose material facts!
We had a class where an attorney took the opposite approach and said not seeing the report was active neglect on the part of the selling agent. Personally I agree with you but there you go
Additionally, you do NOT want to be at the inspection following the inspector around. I was unaware of this until I went through the 2nd part of my GRI training. If you need to let them in, by all means unlock the door and go back to your car or sit on the porch! This helps to keep you from being liable in the future!
I have been in classes with attorney instructors and have been given the same information that Charlie received. Neglecting to review when an inspection has been completed can be construed as negligence on the part of the selling agent.
Dorie & Charlie:
I would ask what those attorney's opinion would be on reviewing the type of loan that they buyers are being given by their lender. That is way out of our area of expertise (just as is the home inspection). If we were trained experts in those two areas, we would be doing those services for our clients.
You cannot always review the inspection report since it was done for and paid for by the buyer. Does the attorney still feel you are negligent?
Unless it was the attorney on retainer for my company giving me that advice, I am not sure I could support it.
As a matter of practice, any report generated during a transaction, if that transaction is be canceled or falls out of escrow is given to any subsequent buyer. You can't un-ring a bell. This information has to be conveyed if the report was generated on the property. In California, as part of the statute Seller disclosure of what is being conveyed and any know conditions, Transaction Disclosure Statement ( TDS) the first paragraph asks if the seller is aware of any reports generated on the property and if so to include them as part of this required disclosure. Taken literally, that suggests that the report must be given. If the previous TDS is used for the next Buyer , it should be ammended to be accurate and up to date.
California has much different disclosure laws than most states. If a buyer in most states orders an inspection, that report belongs to the buyer only and they are not required to give it to anyone. Just as an appraisal in most states is not a document that must be given to all parties.
I like the disclosure law in CA but that is not the case in all states.
I'd like to hear how the conversation goes when a buyer agent tells their buyer that they can't/won't read the inspection report because there might be another buyer on the same property in the future.
Sometimes that update to seller's disclosure is the last thing the seller wants to acknowledge, but once they know the truth they have to be up front about it. It can buy the buyers a little more time too. I encourage buyers to be at their home inspection, but I don't want to be there myself.