Investor · Excelsior, MN · Member since 2017 · 85 posts · 37 votes
So I am not totally sure if this is way out in left field but has anyone ever purchased an inspection from someone who backed out of a deal due to inspection contingency? My thoughts are that it would be a way for the initial person to recover a few $$ of the inspection cost and it would allow me to put my best foot forward in negotiations. I would already know what is going on with the house and could eliminate that contingency from my offer to make it appear "stronger" to the seller.
Thoughts? How would I go about doing this? Is it just simply a matter of reaching out to the buying agent?
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
In theory, any defect uncovered in an inspection from somebody who backed out is now a material fact that the agent and owner know about and would thus would be legally obligated to disclose to all future buyers. In practice this rarely happens, though.
Who says that the inspection has uncovered any material problems? The buyer could have had another issue and wanted to back out.
I sell my houses waiving all disclosures. I do this because they are investments and I do not know as much about the house as someone who would occupy the house on a full time basis. That just means the buyer will likely get an inspection because I am not claiming anything works.
I have had a person back out of purchasing a house after an inspection and they didn't want to give me the inspection report, said they would sell it to me. This was 10 years ago and my realtor didn't say anything about them having to pass it over and of course I didn't buy it.
If the inspection uncovers a problem that makes the Disclosure Statement incorrect you likely have an obligation to disclose the information or correct your written disclosure statement. Requiring someone to pass on an inspection report seems ridiculous.
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
9y
@Account Closed
You wouldn't want to do that.
That inspection was for that individual at that time. A different inspector could arrive at different findings and a different buyer might have arrived at a different conclusion.
Buyers also back out of deals for non inspection related reasons (cold feet) and use the inspection period as an excuse.
Investor · Excelsior, MN · Member since 2017 · 85 posts · 37 votes
9y
@Christopher Phillips I guess I just don't see your logic here. Of course the inspectors would be different but they are all bound by law to report their findings.
My purchase wouldn't be solely based off an inspection obviously, as I have already been through the property twice. It just allows me to get a "professional" opinion by seeing the inspection and possibly (depending on what it says) to eliminate that contingency. In my past purchases I have eliminated that inspection contingency and that ended up being what got me the property according to the agent.
My thinking on this is that I may be able to gain an advantage on other buyers by purchasing the inspection and knowing what underlying problems there may be. Might save me half the cost of having one done myself. It could also show me that there are things I wouldn't want to deal with and save me 20+ days waiting on inspections myself.
Rental Property Investor · Gainesville, FL · Member since 2015 · 1k+ posts · 432 votes
9y
Originally posted by @Account Closed:
@Christopher Phillips I guess I just don't see your logic here. Of course the inspectors would be different but they are all bound by law to report their findings.
My purchase wouldn't be solely based off an inspection obviously, as I have already been through the property twice. It just allows me to get a "professional" opinion by seeing the inspection and possibly (depending on what it says) to eliminate that contingency. In my past purchases I have eliminated that inspection contingency and that ended up being what got me the property according to the agent.
My thinking on this is that I may be able to gain an advantage on other buyers by purchasing the inspection and knowing what underlying problems there may be. Might save me half the cost of having one done myself. It could also show me that there are things I wouldn't want to deal with and save me 20+ days waiting on inspections myself.
That was something that I considered after looking at a house that went under contract and then the buyers backed out for financing reasons. My agent said it's something that can be done to save $$ on since home inspectors in our area all prepare very detailed reports.
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
9y
@Account Closed
Inspectors will give you different levels of opinions. The best inspection will always be one you paid for yourself and walked through with the inspector.
At the end of the day, the inspection is just an opinion. You should hire the person that you trust.
Many inspectors aren't engineers. Some states don't even require a license. I only recommend inspectors with engineering backgrounds. When I walk through the house during the inspection, I can have an educated conversation about the problems, what's potentially causing the problems, and ultimately if the problems are deal killers are not.
Got ya. Always good to go with the most educated and knowledgable people. I was just looking for an advantage over other buyers who might be hesitant after something comes back from a inspection contingency.
Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Christopher Phillips I would respectfully disagree - unless you have a trusted inspector on your team. I have an inspector that I always use, but I didn't, the likelihood of getting a quality inspection from the previous buyer would be about exactly the same as the one I'd get from the phone book inspector.
@Account Closed How are you going to find the previous buyer? I was going to suggest that you just ask the listing agent for a copy (lots of times they have it and will share it), but are you looking to bypass the agent until you come in with your offer?
Real Estate Agent · Garden City, NY · Member since 2016 · 3k+ posts · 1k+ votes
9y
@Account Closed
I will usually have a conversation with the listing agent about why the buyer backed out. Sometimes there isn't a clear reason, but usually there was a negotiation around certain items they couldn't agree on.
Investor · Excelsior, MN · Member since 2017 · 85 posts · 37 votes
9y
@Jason Hirko Yes, that was the plan. I was totally going to bypass them until I wanted to present an offer. I wasn't sure how to find the buyer and that was part of the reason for posting this here. My intention was to PM someone who had gone through the process and find out how they went about it.
My only option at this point I think is to ask the selling agent who the previous buying agent was in hopes that they would share that information. Which I guess would totally defeat the idea of bypassing them hahaha
Lender · San Antonio, TX · Member since 2016 · 1k+ posts · 1k+ votes
9y
@Account Closed It is a good idea, if you know who the buyer is. I doubt any listing agent is going to share who the buyer was as they could share the contract price or other pertinent information that they would rather control
Investor · Woodland Hills · Member since 2016 · 82 posts · 33 votes
9y
Ryan, it is the way to go. I did something similar with my first property, but seller's agent was gracious enough to provide me a copy unlike your scenario. But back then, my agent recommended to get a new inspection nevertheless, which I did. And guess what, both the inspections reports were almost similar and I ended up wasting $500. And I never worked with that agent ever
If you can get your hands on it, and are ok with the inspection report, don't bother about inspection contingency
Property Manager · Brecksville, OH · Member since 2014 · 486 posts · 464 votes
9y
Not a bad idea... but one small problem... Buying an inspection report from anyone other than the Inspector who wrote the report is usually called stealing. Neither the original buyer of the report, nor the listing agent, nor the buyer's agent have any rights to "sell" the report to someone else; because there is almost always one of these at the bottom of every page:
Woodridge, IL · Member since 2017 · 18 posts · 6 votes
9y
My inspection contract has a confidentiality clause in it that I have always presumed is common. At times I have referred to it with third parties. I don't have a duty to them. The way you write, Bob, is very good for the inspection industry, so thank you!
Flipper/Rehabber · Allentown, PA · Member since 2011 · 1k+ posts · 701 votes
9y
The PA state contract says a seller is entitled to receive the report upon request. If that buyer backs out, the seller would then disclose that report to the next buyer. Otherwise you would have to write everything in that inspection report into the seller's disclosure. I'm not sure how you could protect that report from getting to a third party by law, at least in PA.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
9y
If you want the inspection report from the buyers agent than the best way to do that would be to hire the former buyers agent to be your agent for the transaction. Otherwise why would that agent waste 1 second with you?
If some dude or even another agent contacted me out of the blue for an inspection report for a property that they don't have under contract yet I wouldn't likely get involved.
Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
9y
@Account Closed check your state laws, but I'd have to guess they're the same as Ohio in this regard. If a previous buyer backed out of a purchase contract after an inspection was performed, most of the time the listing agent and/or seller were provided a copy of the report. At a minimum, they were given a list of items that the other buyer wanted fixed. Disclosure laws in Ohio require that the listing agent and seller disclose any and all items in that report or repair list to all potential other buyers.
It's a big enough deal here that some agents specifically tell selling agents to NOT send them inspection reports.
Investor · Excelsior, MN · Member since 2017 · 85 posts · 37 votes
9y
@Sean Cole It is the same in Minnesota when it comes to disclosure. If the buyer backed out and provided the selling agent with details and/or the inspection, then they would have to disclose those problems to future parties.
As for me "stealing" that inspection, that wasn't my intentions at all. I was merely trying to get the most information about a property without showing my hand. To me, once a person has knowledge of a problem (in this case a previously interested party), it is their information to do with it what they want. It very well could be unlawful to sell the inspection but if I can find a way talk to them regarding the property I don't see the problem.
@Michael Noto Thank goodness not every shares your views. Some agents would very willingly let a buyer (even one with a different agent) know to stay away from a money pit.
Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
9y
@Account Closed You know what, I actually agree with you. There are a lot of buyers agents out there that will completely waste their time with issues like this. I am not saying that to be a wise guy, it is definitely true.
Lender · Denver, CO · Member since 2009 · 1k+ posts · 597 votes
9y
@Account Closed I would absolutely ask for a copy of the report and offer to pay up to $150 for the report. This is why - the buyer is out the money regardless - so that would help them out a little bit. I do agree that every inspector has a different level of knowledge, but most are within the same playing field and you can at least see if the items would be of concern to you.
If there was anything material reported in the inspection, the seller would need to disclose - sometimes sellers don't want to see the report for the reason of not disclosing.
I wouldn't offer more than about $150 because you don't know what you are getting and for a little more you can just get your own inspection.
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
You are trying to nickle and dime the purchase process. There are ways to go about this without "showing your hand" such as writing an offer with a different LLC or individually. You could write your offer, subject to inspection, and back out after paying the $500 for an inspection.
If you are looking to spend $150 on a report (that means nothing to you) it would only save you $350 over doing it legitimately and without hassle...
I purchase most of my properties without and inspection contingency - the only ones I do get an inspection on are properties where I want to highlight issues and badger further. There is value in putting in an offer, especially on a cash only deal but I would do it the right way. If you need an inspection to purchase the property, pay for an inspection.
Investor · Cincinnati, OH · Member since 2012 · 506 posts · 331 votes
9y
@Account Closed if you know it's required for the listing agent to disclose, why be worried about buying it from someone else? You're literally insisting on paying for something that is required to be given to you for free!
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
9y
@Account Closed I had one situation where the seller gave me the inspection report for free that they had received from the buyer that backed out. Since the buyer backed out of the agreement, they just gave the report to the seller. As a buyer if you back out and get all your money back, it seems only right to give the report to the seller so they can remedy the problems. I have never heard of somebody selling a report in this case.
Keep in mind most home inspection reports come with a guarantee, but that is only going to apply to the person who paid the inspector.
Investor · Orange County, CA · Member since 2015 · 2k+ posts · 3k+ votes
9y
In theory, any defect uncovered in an inspection from somebody who backed out is now a material fact that the agent and owner know about and would thus would be legally obligated to disclose to all future buyers. In practice this rarely happens, though.
Flipper/Rehabber · Minneapolis, MN · Member since 2016 · 1k+ posts · 1k+ votes
9y
In theory, any defect uncovered in an inspection from somebody who backed out is now a material fact that the agent and owner know about and would thus would be legally obligated to disclose to all future buyers. In practice this rarely happens, though.
Who says that the inspection has uncovered any material problems? The buyer could have had another issue and wanted to back out.
I sell my houses waiving all disclosures. I do this because they are investments and I do not know as much about the house as someone who would occupy the house on a full time basis. That just means the buyer will likely get an inspection because I am not claiming anything works.
I have had a person back out of purchasing a house after an inspection and they didn't want to give me the inspection report, said they would sell it to me. This was 10 years ago and my realtor didn't say anything about them having to pass it over and of course I didn't buy it.
If the inspection uncovers a problem that makes the Disclosure Statement incorrect you likely have an obligation to disclose the information or correct your written disclosure statement. Requiring someone to pass on an inspection report seems ridiculous.
It depends. I'm in a non disclosure state. It wouldn't matter why the previous buyer backed out.
In a disclosure state, you are correct, that would be a material fact. However, that's assuming the issue was material.
Everyone has to remember, buyers back out all the time during the inspection period due to cold feet. Buyers will read a report that says the roof is about 10 years old and back out because the seller won't replace it.
Sometimes buyers will complain they don't like the brand new carpet choices and back out because the seller won't replace it.
If you see something during the original tour and then complain about it after the inspection, there is something else going on and the buyer just has cold feet that has nothing to do with the actual "condition" of the property...
Yeah, I see a lot of homes selling "As-Is" these days to avoid all this stuff. Sellers are basically saying they won't fix anything so don't bother to ask. Obviously, minor things are always negotiable, but in the end you buy the house or you don't.