When to do Inspections?
It's been my practice in the past to have Buyers Agents not do inspections until after the Written Approval has arrived. I know that some other "Superstars" recommend getting the buyers to do inspections earlier, to get some "Skin in the Game". I met with a person from Pillar to Post yesterday. He states that he has been doing inspections for Short Sales, and the lien holders are actually paying for this. Of course, there are documents signed in advance that if the lien holder doesn't pay, they will still get paid. I love the concept of have an advanced inspection, but it's a very expensive endeavor. Anyone using this concept? If yes, how do you end up not paying for this process out of commissions?
Replies to This Discussion
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Permalink Reply by Jayne Sanders on
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I think you are all reading too much into a short sale. How is a short sale different than any other transaction...you need the approval of the lender...that's it. Whether you are a Seller or Buyer agent you should know a reasonable sales price and be able to advise your client accordingly. I have been doing short sales for 6+years exclusively and and my addendum calls for inspections within 7 days, it also states that the offer will not be submitted to the lender for up to 10 days after contract. This gives the buyer time to be sure they want to go forward, adjust the offer price if something shows up and also gives me time to get my package completed, including addressing inspection issue that affect price. The buyer must put up the deposit and it is non refundable if they pull out within the first 90 days other than because of the inspection results. It is RARE that I lose a deal. My job for the seller is to get them out of the property as quickly and as cleanly as possible. How am I serving them responsibly if we wait 2-3 months with the property basically "off the market" for an inspection then lose the buyer because they did not like the inspection result. I would rather lose them in the 1st few days. Either they want to buy the property or they don't. There are more than enough good buyers out there that want to buy and if they are serious and not just bottom feeders or whim buyers then they follow the rules of engagement. If you are the listing agent your fiduciary is to your seller and to do what is their best interest. You are being paid to be their leader...it's time for many off the agents out there to read read and follow the code of ethics...or get out of the business. JMHO
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Permalink Reply by Ray Singhal Team, CDPE,SFR, CRS on
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Jayne..Thanks for articulating is much better tha I have. I support your methodology 1000%. We practice SS the same way and have been able to close almost 100% of our SS listings over the last 4 years. Thanks.
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Permalink Reply by Mike Rizzo on
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I'm assuming then you supply the seller disclosure to the buyer upfront as well and disclose all material facts concerning the property. Would you be willing to pay for the inspection if the seller didn't disclose something in the Seller disclosure that came up in the inspection? When the market switches back to a buyer's market, I doubt you'll have as much success with your hardcore requirements. If I had a buyer 2 or 3 years ago, I'd avoid listings like yours to protect my client. There's no easy way to make everyone feel good about a short sale transaction because the approvals take too long so people come up with ideas to "protect" their client and stop working the WIN-WIN philosophy.
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Mike. What's with the "I'd avoid listings like yours to protect my client" - I can't believe that you would actually put that in writing! Does this mean you DON'T show properties that YOU don't like the rules? I sure would not want you as my Buyer's agent....Seems you like to make DECISIONS for your buyers. From your comments I assume that you are not too well versed on Shorts Sales and looking through the same rose colored glasses that you give your clients. I have had almost 30 years in the business and and did my 1st short sale back in the 80's so I know what I am talking about. I do get a little resistance from some Buyer agents but they soon change their tune after a brief discussion with me and realize the value for both the Buyer and Seller, after all those are the parties who are making the sale decision.
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You know exactly what I mean by my statement. You give the facts and let the buyers decide. Enough said.
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Permalink Reply by Bill Sloss on
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Im a buyer Jayne and Ive dealt with agents like you and Mike. No offense intended but I go with Mike every time. I completely understand your fiduciary logic but the issue is "get them out of the property as quickly and as cleanly as possible"
"it also states that the offer will not be submitted to the lender for up to 10 days after contract"
Why would I want to wait 17 days? "if they are serious and not just bottom feeders or whim buyers then they follow the rules of engagement." Jayne with all due respect Im the buyer, the guy with the money I make the rules of engagement. If you dont like them find another buyer and explain that to your seller whos fiduciary interest you say you represent as they enter forceclosure . I know the ethics. I think you owe Mike an apology.
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Permalink Reply by Nate Gerard on
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I require buyers to do inspection up front on my listings and always require my buyers to do the same thing when making an offer on a short sale.
Here's how its done and why. I have an agreement with a couple different inspectors that they will refund the buyer's money if the sale is not approved. That eliminates the cost objection.
As a listing agent I tell both buyer and seller that my team will not go to work when a buyer has the option to pull out due to inspection. I also tell them that the inspection will support the proper offer price and I've used inspections that buyers have provided to negotiate the approved price down to where it should be.
As a buyer's agent I tell my buyers they want to know if they want the home before they wait for approval and they want to know if the price they offering is supported by the condition of the home.
To do this any differently is a potential waste of buyer, seller, and agent's time not to mention title company and loan officer.
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Permalink Reply by Celeste ODea on
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Nate, your inspectors give the money back if the deal doesn't go thru? Does that mean the buyer has to use the inspection company that you have this agreement with?
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These companies offer the deal to anyone so it is not just with me. I give the buyers (whether mine or another agent's buyers) the two companies and let them decide for themselves if they want to use either of them or go with another company.
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Now that's an idea that I could live with. Where do you find inspectors willing to possibly work for free? Lastly, if something that was working during inspection is no working at final walkthru, who repairs the item. The property is being purchased as-is, but the seller still has the responsibility to keep the property maintained to the same level as when the offer was made. This could be several months down the road since the inspection was performed.
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Excellent point! One of the companies charges $75 more for their refundable inspection and due to that,they also come back and do a quick check of the home after approval from the seller's lender.
These inspectors use this as a competitive advantage and they came tome and other agents. Considering that they get many more clients due to this and short sales have a better track record of approval now, they seem to do very well.
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I require buyers to do inspection up front on my listings and always require my buyers to do the same thing when making an offer on a short sale.
You might want to look into the ethics section that says present all offers.
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