Why do realtors call some home inspectors deal killers?
Friday, July 13, 2018
Realtors label a home inspector as a “deal killer” when they feel that the inspector has unfairly exaggerated the defects in a house, frightened the buyers, and caused them to cancel the contract. Home inspectors like to say that “I didn’t kill the deal. The house did!”; which is the other side to this issue.
Let’s start with what the realtor is contending with during a home inspection. They have probably already shown the customer a dozen or more houses, and it’s likely that at least one contract has already fallen through. They have a lot of time invested in that customer. But they do not get paid by the hour, by the number of house showings, or even how many contracts they write. A realtor only makes money at a closing table when a house is sold.
On a typical $200,000 house the buyer’s realtor gets 3%, or $6,000, and their brokerage takes about a quarter of that on average, leaving them with around $4,500. The seller’s realtor gets the same commission. If the realtor has both sides of the the deal, the gross commission is $12,000. That’s nice paycheck and the home inspection is one of the very last hurdles before they can sit at the closing table and get paid for all their work.
So, of course, the realtor is anxious for the inspection to go smoothly. We expect that. And when the inspector finds defects that cannot be worked out between the buyer and seller, it means starting the home search process all over again, or possibly even losing the buyer altogether.
Like any good home inspector, we have occasionally been called a deal killer by a realtor, but never by a high-volume, successful one. The realtors that sell millions of dollars worth of homes every year know that a bad inspection is going to spoil some of their deals, and they expect it once in a while. Also, a smart realtor works hard after a problematic inspection to get both sides to reach an agreement and hold the deal together.
In our experience, it’s the realtor that sells only a few houses a year and is desperate for the next check that blames the inspector for losing their sale or making them wait longer to get it. The drama often begins when we arrive at the house, when they take one of us aside and whisper “These buyers are very sensitive. Please don’t upset them!” Next, while we are doing the inspection, they walk around the house and pronounce loudly to the buyer or anyone within earshot things like “Isn’t this a wonderful kitchen?” Or maybe, “I really love this house. Don’t you? And what a big backyard!”
As we point out defects to the buyer, they attempt to argue with us about whether they are valid or even worth mentioning. A typical comment would be “Oh, you can fix that yourself for ten dollars. I don’t know why the inspector is even going to put it in the report.” Or “I have a handyman that can fix that hole in the roof for you for less than $100. So don’t worry about it. And, by the way, he can also spray some bleach on the mold. Good as new!” Sometimes it’s downright comical, with even the buyer smirking at the theatrics.
At the other end of the spectrum, a busy, successful realtor takes notes during our inspection, arranges to get prices for big-ticket items, asks lots of pertinent questions, and begins planning the next step with the buyer right away. The environment is calm and moves forward logically.
However, to be fair, there are inspectors out there that see a home inspection as war between them and the realtor. They savor their confrontations and the dramatic flourishes when demonstrating ugly defects. One local inspector actually loves to boast “They call me ‘THE DEAL-KILLER!” as an incentive to hire him and, yes, it is possible to overstate the seriousness of defects.
An unfortunate part of our job is that we sometimes see a customer walk away from a perfectly good house because they are spooked by a minor defect, and all of our explanations as to why it’s really not a big deal will not dissuade them. Then, on other occasions, we try desperately to communicate to the buyer—and in this case, it is usually a first-time buyer— that the house is not a fixer-upper, it’s a hopeless money pit. But they buy it anyway. We try to calibrate our presentation to the seriousness of the defects in a house and the cost to repair them, but the report is not always received the way we think it should be.
One of the things an experienced realtor does that we appreciate is prepare the buyer for the inspection by telling them that the inspector always finds a few things, they can review the final report together later, sort through it and decide what to do...and that everything is going to work out just fine.
Also, see our blog post What questions should you always ask before hiring a home inspector?
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