If you work as a real estate broker or agent long enough, you will eventually get dragged into a lawsuit over some kind of issue the buyer has with the property he/she purchased. If the lawsuit is even remotely related to questions about the adequacy of the seller’s disclosures or some other issue involving the condition of one or more components of the home in question, you may find your salvation comes from an unusual source…the buyer’s home inspector. Yes, you read that right. Whether you represented the seller or the buyer in the sale, your ability to walk away from the lawsuit unscathed may depend in large part on how good the home inspector was. Many of you reading this undoubtedly think home inspectors actually deserve the title “deal killers” that gets tossed around whenever a seemingly minor issue derails a smooth closing. However, after reading this and reflecting on the reality of what a home inspection really does, you may find yourself looking more and more often at home inspectors as your saviors. If this sounds ludicrous, then by all means stop reading now and slip back into blissful ignorance. After all, how is it possible for a home inspector to do anything that would ever help a listing broker or agent? On the other hand, even if all you are is mildly curious then please read on.
In a typical post-closing dispute between a buyer and seller, the buyer is looking for someone to pay for repairs involving a leaking roof, water in the basement, rotted wood, etc. In short, the only thing really at risk is money and that is why E & O insurance was invented...to defend you from the claims of others. In many of the cases involving items first surfacing after closing, the buyer may be the responsible party due to his/her failure to do even the most basic home maintenance in the year following the purchase. In these cases the home inspection may be helpful in showing the condition in question was fine on the date of the inspection and must have manifested itself long after closing. In many other cases, the home inspector may have identified the issue during the inspection and suggested professional follow up and/or repair only to learn much later the buyer simply elected to either ignore the advice or wait until after closing to deal with the issue…only to find the roof repair was a $5000 issue and not a $500 issue. In far fewer cases (thankfully), the seller really did it and failed to disclose a known defect, tried to repair the defect personally and failed, took steps to conceal it from even his/her own broker/agent, or some combination of the above. In these cases, even the home inspector can be fooled and miss the issue. Remember, the home inspector usually works for the buyer and cannot cut holes in walls, move furniture, or do anything the buyer cannot do until after the closing and transfer of possession. All of these cases involve bruised egos and damaged wallets, but that is pretty much the extent of it.
However, what if the condition in dispute resulted in serious injury or even death? What if the beam used by the seller to prop up a weak floor failed and someone fell through into the basement and broke a leg? What if a bad electrical panel caused a fire and a child died? It’s probably safe to say no commission you ever will earn is enough to make up for the anguish you will feel if a bad inspection report misses a material defect and results in major litigation involving everyone on both sides of the transaction. Imagine how much worse it might be for the broker who had agents on both sides. Lawsuits involving major defects and personal injury almost always seek damages well in excess of E&O policy limits and put not only your personal assets at risk, but also could result in your license being revoked. How then can a good home inspection help you avoid being drawn into such a catastrophic situation? The answer is quite simple. Whether you represent the buyer or the seller (or both), you want the home inspector to use his/her professional experience and training to thoroughly identify those defects which not only might impact the value of the home, but also (and perhaps most importantly) the safety of the home. Keep in mind the average home inspector will do between 250 and 350 inspections each year and most will be in a relatively concentrated market area. Compare that to the average real estate agent that will participate in maybe 24 sides each year and you should get some sense of why even listing agents should want every buyer to use a good home inspector. Here are just a few examples of actual photos taken by home inspectors who were “just doing their job and represent a fair sample of the types of unbelievable issues home inspectors encounter almost daily. (Thanks to Dave Kogan from the American Society of Home Inspectors for his help finding these photos).
Military ordinance in the attic
When in doubt, use spindles
Subterranean water heater
Draft, what draft?
In case you want a bigger bottom shelf
And the grand finale….
Using a 30 amp service to feed a 100 amp panel
As you can see the types of issues found by a good home inspector can truly involve a matter of life and death. Won’t you sleep better if you know a good home inspector is looking at every real estate transaction you touch, no matter which side you are on? In conclusion, this is how one person’s deal killer becomes another person’s savior. The next time you feel like a home inspector is ruining your peace and tranquility, just turn back to these images and be thankful the buyer hired a good inspector to watch everyone’s back.
Now, in memory of Leonard Nimoy, go forth and prosper.
Author: Brian L. Trotier, JD, is the Executive Vice President and Chief Operating Officer of FREA and a former practicing attorney with more than 30 years experience in real estate and risk management.
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