Eastern Massachusetts, and other areas, have experienced a long period of seller’s market. That’s when there are more buyers (demand) than houses or condos for sale (supply). Sellers and their agents have the upper hand. Because of this, sellers and their agents are trying ways to get the most advantage over buyers. But pre-inspections should not be one of those ways. Real inspections are a win-win for buyers and sellers.
First a little bit about the law, and real estate agents.
An agent is responsible to act on the behalf of their client to get that client the best price and terms in the deal. That means, the seller’s agent should be working to get the seller the highest price with the least risk; the buyer’s agent is aiming for the lowest price with the least risk.
The client is responsible for the actions of the agent, if the agent does something illegal, the client can get sued, too. For example, neither the seller nor the seller’s agent can hide something that is materially wrong (an expensive problem) in the house. If a seller or seller’s agent knows that something is wrong with the house, they must disclose that to the buyer.
You can’t have an inspection = bad for the seller
Sellers have a legitimate reason to dislike home inspections. If a buyer has an inspection, they can cancel the offer and get their deposit returned, if there is a big enough material defect (like the inspector finding sill damage due to termites). The seller must disclose why the buyer withdrew to future buyers. This leads to an opportunity for the seller to be accused of hiding a material defect.
Sellers would rather not tell the next buyer that there is sill damage, but to hide that is against the law. I can’t count how often I’ve been told that there was nothing really wrong with the house, and that the buyer got cold feet. At that point, my clients had a home inspection to find out if something was really wrong; sometimes it was cold feet, sometimes not.
At the beginning of this seller’s market, buyers were being told by listing agents that they couldn’t have an inspection. They were told that if they asked for one, the seller would reject their offer. At first, it seemed like a good solution for sellers who had the upper hand in the market. But then, it became clear that they were stopping buyers from doing their due diligence. It left the sellers open to accusations of hiding material defects. They could get sued.
Enter, the pre-inspection
A pre-inspection is a full or partial home inspection that a prospective buyer does before they put in an offer on the property. The “pre” is pre-offer. The seller does not get a copy of the inspection report, because the inspection is not connected to a contract with the seller, since there won’t be an offer if there is termite damage to the sill (for example). So, the seller cannot be accused of hiding anything.
Getting off the hook for legal liability would be perfect for the seller, but that is not all that can happen.
Why pre-inspection can be bad for sellers
- Many sellers hate open houses. It is a huge invasion of privacy. A home pre-inspection is a further invasion of privacy.
- By inviting pre-inspections, sellers are giving away information about the quality of their property maintenance to people who may not purchase your house.
- Sellers do not own the inspection result information, and the buyer can do whatever they choose with it.
- Is the seller required to disclose that the house was inspected by people who withdrew? That may be a lawsuit, too.
- The prospective buyers can write to the agent and say “we are not making an offer because there is sill damage due to termites.” If they do that, the seller and their agent are obligated to tell other prospective buyers about this defect. If you don’t, you are hiding it. Guess what, that’s against the law. Again.
The takeaways:
- In any market, sellers need to make their home available to inspection unless they want to be open to a disgruntled buyer suing them for hiding a defect.
- Pressuring buyers to waive home inspection does not protect sellers from such accusations.
- Allowing anyone to inspect before the offer deadline is an invasion of privacy that does not protect sellers from such accusations.
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