How Buyers Can Take You To the Cleaners (July 2021)

You got the offer. It's accepted after what felt like delivering a baby of a negotiation. Awesome 🥳 But here comes the inspection...(insert discharged bricks here).


Has this happened to you as a seller? You've gone through one of the most intense negotiations of your lifetime, for the entire sale to be conditional on the inspection? I'm here to share some tips, tricks and hopefully prepare you for this condition and how to handle your buyers.


But of course, if you are new, I'm Aly a Calgary real estate agent for the last 6 years. I focus on helping first-time home buyers find their new homes and assist sellers across the city with their goals for their real estate investments.


Thanks for visiting! Now let's get to it.


I'm absolutely certain your home doesn't look this one. But to your buyer, this is what they are hoping to find to some degree.


The Calm Before The Storm


After you get the conditional sale, usually the very first step after the acceptance of the purchase contract is delivery of the deposit (earnest money). This can range from $5,000 to $10,000 or more depending on the home sale. After this is delivered, the buyers are now in time crunch mode to fulfill their conditional requirements. These are usually financing and inspection (and in condos, a condo document review).


In an ideal world, you would hope that everything is scheduled and planned right when the accepted offer comes through. Working with sellers I can tell you this is a dream come true.


But consider the buyer's perspective. They are needing to fulfill two conditions. One of which is not in their hands whatsoever in financing.


Ever heard the saying, "give a finger, take a hand?" That is what banks do with time during our transactions. They look to squeeze every moment of the sale as possible to accurately review everything with the mortgage and the buyers. In a market of faulty mortgages like in 2008, this is welcomed for the most part by everyone in the transaction. No one wins when the banks don't approve a mortgage.


But you might be asking yourself this question. If the buyers' banks are working on the approvals, why aren't the buyers being active and getting the inspections complete?


Would you want to spend $500+ on an inspection that you might not get approved for?

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So what do most buyers do? They wait until some kind of verbal or final approval comes from the lender. Which in most cases is the very end of the condition period (finger - hand)


So now we are ready to get the inspection done. Is your home spotless and working in all the right places?


Tornado Touchdown

The inspections are a very intrusive review of your home. From the roof to the basement HVAC components and everything in between.


Inspectors go on the roof (or use a drone), check your furnace for how clean it is, leaks throughout the house, cold spots, cracks, etc.


As a seller, especially first-time sellers, this can be a very traumatic experience. Here are these buyers that have told you they loved your home to the point of writing an offer now have this third party come in and tell them everything that is wrong with your home with the utmost scrutiny.


Of course, they are going to come up with some issues.


Not to mention, some older fashion negotiation tactics promote the inspection as a second round of negotiations to give a bit more on price or other concessions regardless of the size of the repairs needed.


Inspections are important, don't get me wrong. Working with many first-time buyers, having this third party show them everything they need to consider with the home is extremely important. However, if you have a great inspector, they also know that this is a very frightening time for the buyer and one of their biggest investments. Taking your time, walking them through the issues, and providing some reassurance to them goes a long way to give them peace of mind with their purchase.


But if there are major issues like roof repairs, water tank failures, HVAC problems, most sellers are receptive to this and will make the effort to have these repaired.


But there are ways to avoid getting taken to the cleaners by the buyers when discussing these items.


The Aftermath


So once the inspection is done, a conversation about the critical items is held by the agents and their respective clients. Here we discuss what kind of costs we are looking for for the repairs, getting quotes, creating amendments to the purchase contract that is acceptable to both parties, and moving forward. But because these discussions happen so close to the due date it feels like another baby in the delivery room.


But during these discussions, for example, a water tank might be failing. The question becomes, who is repairing it and at whose expense? If maintained prior to the inspection, this could be a cost saved by the seller through regular maintenance. But now the urgency of getting it repaired might cost the seller more Worse yet, they may concede a larger amount than the price of the repair to the buyer to relieve themselves of the headache.


This is how buyers can use the inspection to take sellers to the cleaners.


So what can you do? Here are some tips you can due regularly in your home to protect yourself when the time comes for your home inspection.


The List

  • Ensure your furnace and ducts are clean and serviced regularly. This $200/year or every two years will save you thousands in having to replace failing furnaces that have been working overtime to push air through dirty ducts.

  • Use minimal filters in your furnace to allow for maximum airflow. Furnaces are purposed with pushing air, not filtering it.

  • Ensure all the window drains are cleaned and not dirty. Those little holes in the bottom of your windows are drains for any water buildup. Keeping these clean will get you in good graces with the inspector.

  • Ensure all your bathroom fans are working and clean. A simple addition of cleaning these to your cleaning routine will save you the hassle of replacing these items after an inspection.

  • Make sure there are no leaks in any of the drains in your home. In fact, make sure there is no water where it shouldn't be in your entire home.

  • Ensure all the appliances are in working order from the refrigerator to the washer and dryer. Everything needs to be in working order and not having any leaks.

  • Consider replacing water tanks and furnaces (if needed) two to three years before considering selling your home. This way you are able to make some use of the expense of this replacement.

There are many more items I discuss with my buyers and sellers when we are completing inspections than the list above. But if you have anything to add, please feel free to leave a comment below!


Inspections can be costly both mentally and financially for buyers and sellers and to ensure they are done right, maintaining your home is the key to an easy and simple inspection to save time and money for both sides.


If you'd like to get a pre-inspection done on your home, I work with some wonderful inspectors that can go through things with you, help you find things you can improve, and potentially help you save thousands down the road.


Feel free to reach out to me at aly@calgaryareahomes.ca if you have questions or are considering buying or selling your home. I'd love to help!


Take care,

Aly

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