MY OLD BUYER GAVE US A BOGUS REPORT JUST TO GET A DISCOUNT. WHAT SHOULD I DO WITH IT?

February 2nd, 2012 at 6:48 pm

One of the most common complaints I hear from listing agents is about inspection or repair reports that they are convinced are bogus. Specifically, the seller and listing agent often believe that an inspection provided by the buyer is really an attempt to negotiate a reduction in the purchase price. As a result, the seller and listing agent often believe that the inspector looks for problems to identify, or to blow out of proportion, that don’t really exist. For example, in a call I received today, the listing agent received a report identifying close to $100,000 in repairs. According to the listing agent, the inspector who prepared the report never actually visited the property. Further, the vast majority of the listed repair costs were only needed “if” certain conditions exist. Of course, since he never visited the property, the inspector didn’t know “if” those conditions existed. To no one’s surprise, the seller refused to give money for these “repairs” and the deal was cancelled.

As a result, the question I got was whether this report needed to be sent to buyer no. 2. This is common, and normally includes the seller telling us that we cannot give the report to anyone since they are sure it was just a negotiating tool and not a real statement of the property’s condition. So, what should you do?
The first part of the answer is obvious and answer: Give the report to the buyer. We are not contractors or inspectors and should not be judging the work of others. They are theoretically experts in areas that are beyond our knowledge. That being said, there are some additional things we can do if we really believe that the report is not accurate. First, we can describe whatever facts about the report’s preparation that we think is appropriate. For example, in the story above, we should tell the new buyer that the person who prepared this report never visited the property and therefore could not know if the conditions upon which he bases the report actually exist. Obviously, those facts must give pause to anyone wanting to rely on that report.

Additionally, we often recommend that the seller hire their own inspector to prepare a report on the same system as is referenced by the report you object to. For example, if the report you object to relates to the property’s roof, then bring in another roofer and have him prepare a second report. When you do that, you give both documents to the buyer so she sees both the old buyer’s position, as well as the seller’s. In that case, as it should be in all our deals, the buyer has all the information available and can make her own decision.

So, if you get a bad report, don’t let it cause you to do the wrong thing. No matter how much you doubt it, give the report to a new buyer. But also give him the other side of the story. Get another report, from a legitimate inspector, and pass that on too. That way, you have done your job, and the buyer can make their own decision based on all the facts in our possession. Such a decision will be theirs alone, and therefore not our responsibility.

As always, please contact us with any questions you may have.

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