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Topic:   Recommending credits from sellers - 2270 visits (1 today, 4 this week)

Andy Lambert
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posted February 03, 2006 11:59 AM            

I have an inspection tomorrow and the home has a cesspool. The city I am performing the inspection requires that once the cesspool fails it cannot be rebuilt. The homeowner would have to connect to the city sewer by way of a grinder pump as the home sits at the bottom of a hill. I plan on informing my client regarding this requirement because it is estimated to cost about $5,000.00 to connect. Should I include in my report that my client may want to consider asking the seller for a credit from 1/2 to the full cost of installing the system? It doesn't seem fair that my client not get compensated for the not-to-distant failure of the cesspool. I know we are not supposed to discuss any financial aspects of the sale and stick with the inspection but would it be better if I inform my client verbally and not in writing that they should ask for a credit as part of the p&e agreement?

Any help you can give me would be appreciated. I don't want to end up in legal trouble. Thanks

[This message has been edited by Andy Lambert (edited February 03, 2006).]

Joe Nernberg
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posted February 03, 2006 12:24 PM            

Andy,

How does it make you feel when the real estate agent steps into your field of expertise? Maybe the client is getting a really good price on a very crappy house. The seller may be giving some concessions already. Maybe the seller wants to credit your client the full price of installing the sewer and you suggest only half. "Thanks Andy," is what I would say. Suppose you forgot to mention the fused neutrals at the electrical panel. Your client may later suggest that you were more concerned about the transaction than the health/safety issues.

Find a phone booth, remove your cape and get back to the Daily Planet.

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Joe Nernberg

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Jerry Peck
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posted February 03, 2006 12:30 PM            

Telling them the expense to expect to incur when that needs to be done is no different than telling them the expenses they should expect to incur when the roof fails.

And you do that, right?

Did I answer your question?

That in NO WAY involves you in the "financial aspects" of the sale, you are only giving them the knowledge they are paying you for.

Now, if you told them not to buy it because of that cost, THAT might get you some real dirty looks, but just telling them what it costs? You should not get any dirty looks from anyone who is ethical - they should thank you for bringing that point up ... they may not "like it", but they should thank you for being ethical, nonetheless.

Kind of like today, you have to do what is right.

I called a plumber about the house we just purchased in Ormond Beach to so some work. I brought up the fact that the water heater (electric) in the garage was not 18" to the element above the floor, the plumber's response "You are the second source I heard that from. Just last week I took a continuing education course and it was mentioned there and raised much discussion as we (licensed plumbers) had never heard of that before, but, yes, it makes perfect sense." We then had a nice discussion of everything else it covers, washers, dryers, etc.

Finally I said "How much to raise our water heater on a stand, and to put a pan under it, and drain the pan to the exterior?"

He figured it up and told me "$312.00" .. "OUCH!", I said "But I *have to do it* because I*I am always writing it up on houses *I* inspect. It is only right that *I* do it for my water heater too."

Oh the costs for knowing what is right and calling it out for others to do.

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Jerry Peck
South Florida

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Andy Lambert
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posted February 03, 2006 05:01 PM            

Hmmm. Two different viewpoints. I will suggest to my client that based on my experience these things can run into thousands of dollars. That way there I am not giving an exact ballpark. Also, I don't feel that letting my client know that they can be expecting a potential large expense when the cesspool lets go is infringing on the realtors expertise. And if I did so what? I am not there to please the realtor. All I know is if I had that potential expense waiting for me I would want to know. I guess informing my client that they can ask for a credit is something I should not do however. I will tell them of the costs of converting and leave it up to them. Thanks for your input.

Jeff G. Hooper
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posted February 03, 2006 07:38 PM            

I will stick with Jerry Peck.

If I know of anything that the purchase of the house will effect the client, I disclose it.

"Did you know that there is a landfill less than three blocks from here and the water table flows this way?"

"There is a pedophile living in the neighborhood and I noticed you have three small girls"

Yea, I tell them anything I know. I am 100% client orientated. I do not believe people that have an interest in sales, or selling, give a rats @## about buyers. I always put myself in my clients shoes. What would I expect?

Andy Lambert
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posted February 03, 2006 09:08 PM            

I agree with you and Jerry. My report always has a final evaluation and I include anything that I find to be beyond wear and tear, a more detailed description of the safety issues, or a potential near-future big expense. It never says that the client should ask for a credit however but it does point out the possibilities that a looming big expense is forthcoming. I just wanted to know if it was beyond the scope of an inspection to mention the fact that they should ask for a credit. I mentioned the $5,000.00 because that's the ballpark I got from the city's public works director. Anyway, I appreciate your help (that's why I love this site!)

By the way I am also providing a copy of the state regs regarding cesspools. Our state considers all cesspools substandard and once they fail the owner must apply for an ISDS permit from the department of environmental management(and some of us know what a lenghty and costly thing that is).

[This message has been edited by Andy Lambert (edited February 03, 2006).]

Loyd Dobbler 1
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posted February 04, 2006 09:20 AM            

I would not put into the report that they should ask for a credit. I think that is beyond the scope of the inspection. Not much different than when a property is over priced, in my opinion.

The price and details of the transaction for the property are between the two parties. I've got enough to do. Give them all of the facts about the property and let them make up their mind.

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Jim Robinson
Assured Home Services
New Mexico, USA

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Jerry Peck
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posted February 04, 2006 01:15 PM            

"I would not put into the report that they should ask for a credit. I think that is beyond the scope of the inspection."

MOST of what MOST His do is "beyond the scope of the inspection" if you are referring to HIs SoP standards.

Gosh, if advising your client that something is going to cost major bucks when they have to do it, then ... well ... then what are we even there for? To tell them that a receptacle is not GFCI protected, which can be corrected for under $50, but we should not tell them that they will need to spend over $5,000 when ... fails?

Something is wrong with that picture.

"The price and details of the transaction for the property are between the two parties."

No one here has said otherwise.

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Jerry Peck
South Florida

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Dan Cullen
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posted February 04, 2006 03:16 PM            

Jerry....Lloyd did not say that the buyers should not be told about the need for a grinder and connection to the muni sewer, and he did not say that they shouldn't be told what the rough estimate is for the work. He said that the home inspector has no business saying who pays for what and I agree 100%. We inform, they decide. As long as the buyer knows all the costs why does he need a home inspector to tell him/her how to negotiate the contract? Now, if he specifically asks, "Should I ask for a cash credit at closing so I can get the sewer connected?" Then I would respond, "I would!!!" But to put a narrative in the HI report stating that the seller should pay for a certain repair is sorta silly and presumptious.

Andy Lambert
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posted February 04, 2006 08:47 PM            

"I've got enough to do. Give them all of the facts about the property and let them make up their mind."

Loyd, I do think that telling my client the potential exists that they will need to spend aprox. $5,000.00 in the near future is giving my clients the facts. They need all the facts before they can make an inteligent decision. That's what I'm there for. I protect my clients against sellers and/or agents who would rather not discuss major issues such as the one these folks are getting into.

I feel good after I complete an inspection like this where I can save my client thousands of dollars. I did not include in my report that they should ask for a credit though. Dan, anyone who challenges me (agents, sellers) will be told that the client asked for the information regarding whether they should ask for a credit (if I so choose) regardless of if they did or not. It is really none of the agents business what goes on between my client and I. My client certainly will stand with me on this one.

My report states that there is an issue with the cesspool that will cost thousands of dollars. I gave them copies of the muni and state laws regarding cesspools (even though I had enough things to do). I would be cheating them if I didn't mention it. In any event I informed my client that they can have the seller connect the sewers now at their expense (highly unlikely) or ask for a credit.

Actually the cesspool is in very good condition and will not need to be replaced for some time to come but my client is aware that it will be expensive to connect to the muni system. I did the same thing with the asbestos covering the old steam boiler and distribution pipes. I told them that this will be expensive to abate once they decide to upgrade the 1943 boiler. They are both one in the same.

Oh and Joe, I love it when an agent tries to step into my field of expertise. They usually end up with a dumb look on their face when I ask them to explain themselves further so that I can get a better understanding of what they are talking about. They end up dribbling, stuttering and mumbling to themselves. I usually do this in front of my client (and I give my client a wink while doing it). Shuts them right up and makes me look even more professional. I love it!

Andy

[This message has been edited by Andy Lambert (edited February 04, 2006).]

Loyd Dobbler 1
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posted February 05, 2006 08:21 AM            

I think you missed my point in my post. Of course I would tell the clients about the problem, and if I knew how much it would cost, I would tell them that as well. I just said that I would not put in the report that they should ask for a credit from the seller. We're all on the same team here as far as I can tell. Dan got it, but Andy and Jerry missed my message. If they asked me if I thought the seller should pay for it (which happens all the time) I give them an honest answer, depending on the situation. My usual answer is they will never pay for it if you don't ask them for it.

I thought I was answering the question that you asked, but apparently the thread has morphed into another issue.

Andy Lambert
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posted February 05, 2006 08:08 PM            

Loyd

I (and I'm sure Jerry) did not miss your point. I think we deserve more credit than that. I will speak for myself however. I have stated that I will not include any reference regarding credits and who should pay for what in the report. Re-read my post. I clearly state this. I don't think any inspector would want to do such a thing in writing.

I informed my client in writing that the estimated cost CAN BE $5,000.00 or more. I think we are all on the same page regarding that issue. I then verbally told her that she could ask for a credit or have the seller fix it prior to purchase since the purchase was made subject to the home inspection. I told her that buyers back out of deals all the time when an inspection reveals major expenses that neither the buyer or seller were willing to compromise on. I also told her to check with her lawyer to make sure that she can get her deposit back if she walks. Most of the time the deposit (by law) is refunded to the buyer.

I also told her to be prepared to lose the deal if the seller doesn't want to negotiate down. Most of the time buyers are googly-eyed and only see themselves sitting by the fire in their new home once they move in only to realize later that the house isn't what it appeared to be. I don't look with googly eyes. That is what I give them for their money. I inspect the house hoping I find something wrong for them to negotiate about.

Usually it pays for the inspection five or ten times over. I don't just hand them a report and move on. I sit with them off site and discuss all their options. I have never received a negative feedback from a buyer or a buyer's agent. I have personally inspected over a thousand homes in my 1 3/4 short years as a full time inspector and no negative feedback other than the normal request 1 or 2 years down the road after the inspection is made for a new roof.

I paid 1/2 for a new roofing job once because I missed something that I should not have so I went halves with the buyer even though it didn't leak until a year later. I responded to a gurgling toilet a year after a buyer moved in in another case. My point is that I am not a cut and run inspector. I give them the full service they deserve and if it means going beyond the scope of the inspection so be it. I'm sure you wouldn't do it any other way either.

The last sentence in your post concerns me though:

"I give them an honest answer, depending on the situation". Do you not give them an honest answer all the time or are you telling me that you are sometimes dis-honest? I hope you give them an honest answer all the time.
Andy

[This message has been edited by Andy Lambert (edited February 05, 2006).]

Loyd Dobbler 1
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posted February 06, 2006 07:19 AM            

Sounds like we operate the same way. No, I don't give them a dishonest answer. That phrasing in my post wasn't quite what I wanted to say. My answer depends on the situation at the house, as to whether or not I would ask the seller to pay for a problem or if I would just deal with it myself. Some things are simple enough that it's not worth haggling with the seller over.

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New Mexico, USA

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Craig Martin
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posted February 06, 2006 03:35 PM            

Dan Cullen:

Now, if he specifically asks, "Should I ask for a cash credit at closing so I can get the sewer connected?" Then I would respond, "I would!!!"

Hi Dan - I would be careful with statements like that. In Illinois, you cannot make statements that would influence the buyers decision to purchase or not. I know that a home inspection report in itself, is a "statement" that will influence the buyers decision. But - if a buyer asks you point-blank, "would you buy this house", you cannot answer yes or no. I think your example above would influence the purchase. You can offer your opinion on what it costs to repair or replace something, but that's where it should stop.

Craig Martin
East Dundee, IL

Jerry Peck
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posted February 06, 2006 05:56 PM            

Craig,

"But - if a buyer asks you point-blank, "would you buy this house", you cannot answer yes or no. I think your example above would influence the purchase. You can offer your opinion on what it costs to repair or replace something, but that's where it should stop."

Client asks "How much to fix this?"

HI in IL answers "I dunno, I think it's a tear-down-and-rebuild type problem, what's the price of the house again? THAT'S how much it might cost."

Client "Oh." (long pause) "OH!, I get it!" (wink, wink)

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South Florida

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Dan Cullen
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posted February 06, 2006 06:39 PM            

Hi Craig....thanks for your input. How does asking for a credit translate into buying or not buying the house? I'm not even saying that the buyer should ask for a credit...only that I would if I were the buyer. I think you may be a little over-reacting to the whole thing. I am fully cognizant of the proscription regarding advisibility of purchase and totally agree with it. I often couch my advice to a client with, "I'm not speaking as a home inspector" if I feel that I am anywhere near the 'buy, don't buy' area. You know sometimes we have to remember that we are dealing with human beings who need advice.

Jack Feldmann
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posted February 07, 2006 04:24 AM            

I get asked all the time "Would you buy this house?".
I have a stock answer. "No I wouldn't. I'm not looking for a house, and really don't like packing, so, NO I would not buy this house".

This usually lightens the mood and they know I can't really make that decision for them.

As for getting a credit for something, I tell them since there are lots of variables, they should really discuss this with their agent.

The only time I do give an opinion is when I ma doing a radon test and they are scheduled to close before the results will be in. I tell them that they may want to escrow an amount for a system in case the results come back high. This scenerio is pretty common here, and most agents are doing it that way. I usually try to start radon two days before the inspection, but can't always coordinate it.
JF

Jerry Peck
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posted February 07, 2006 05:40 AM            

Me, I have (numerous times) said "I cannot tell you if you should or should not buy this house, but if you were my mother/father/brother/sister/son/daughter (as applicable) you would only buy this house over my dead body ... but ... your situation may be different than theirs. " (give them a big smile)

I got that years ago from Walter Jowers over on the ASHI forum and modified it slightly.

Well, SOMETIMES I add the "... but ... your situation may be different than theirs. ", other times I just let it stand.

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Denise Canter
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posted February 08, 2006 12:49 PM            

If it were me, I would tell the client in general terms what I know, as someone previously said "This may cost several thousand dollars", and then tell them any contractual issue they have should be addressed to their agent. That way, you let them know, but don't go outside your area of expertise by telling them how their contract should be written.
As for the old "Would you buy this house" question, I won't answer that, I think it's dicey to do so, I grin and give a non-answer like "I'm pretty happy in the one I have!". I'll give them an opinion such as "it needs a lot of work", or "it's in great shape and has a nice backyard", something like that. They need to make their own decision based on the price, amenities and the findings of the inspection. I feel it is better to remain neutral and just present your findings. You don't know all the ins and outs of the contract and deal, you are stepping out of your boundaries by telling them yes or no.

David Banks
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posted February 08, 2006 01:53 PM         

There is just to many variables between people to to answer that question.
Dave

Jerry Peck
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posted February 08, 2006 02:15 PM            

Off to a slight tangent, but it is similar ...

Agent arrives at today's inspections and says "HI, I am (gives name) and I am in charge."

Now, that IS NOT something an agent tells me even after we've met and been there for awhile, but especially not the first thing out of his mouth.

I told him "NO ... THE BUYER AND SELLER *are in charge*."

He responded "NO ... *I* am in charge."

I replied "*NO* ... THE BUYER AND SELLER *are in charge* ... and *THE CONTRACT* rules all ... *YOU* are just like I am, *WE* are just incidental to the deal."

He was a tad mad after that.

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Jerry Peck
South Florida

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David Banks
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posted February 08, 2006 02:39 PM         

Great one Jerry.
Dave