The Tar Pit of Inspections

Recently, we’ve been hearing from agents that, while the market has improved, prices have increased, and inventory remains low, many buyers and sellers have grown surly and assumed a black and white posture as if they had one hundred percent of the leverage on every issue in a transaction.  Of course, over the years we’ve all had client or two like that, people all being unique, but for whatever reason, the percentage of such “win at all cost” folks seems to have grown over the last couple years.

And one of the primary areas of problems these days is that tried and true tar pit of our business:  the inspection negotiation.  Real estate wisdom—or at least real estate urban legend—tells us that far more contracts fall apart due to inspection disputes than any other issue, and from what we’re hearing it’s gotten even worse.  Transactions seem to be breaking up on the rocks of dripping faucets and closet doors that don’t close, or even on major system problems where a seller refuses to address an air conditioning unit that no longer works to spec, or mold problems that might easily be contained.  And worse yet, both sides are claiming the earnest money when the deal falls apart, no matter, it seems, the merits of their position.  Bad news.

But the worst news is when we, as agents, get stuck in the middle and our clients become unhappy with our services and even blame us and maybe consider taking stronger action against us.  Ugly news.

So how do we provide excellent service to our clients and help them steer through that tar pit?

Stephen R. Covey, of course, gives us a potential roadmap around that pit in his The 7 Habits of Highly Effective People.  Remember Covey’s guidance on time management and his pointing us to focus on Quadrant II activities—those things that are IMPORTANT but not yet URGENT.  While we all probably mention some aspects of the inspection process to our clients before we reach that stage, I wonder if we can take a more proactive and detailed approach—something important but not urgent yet—that will both educate our clients as to the legal rights they have—and don’t have—under the terms of the purchase agreement, as well as educating us in advance as to the personality type we’re dealing with.

Bottom line, we all know the term Major Defect is the key, and yet, in many cases it’s a rather gray area as to exactly what constitutes major!  None of us are attorneys—well, at least I’m not—so we won’t attempt a legal definition other than what’s already in the contract.  However, one thing we’ve heard folks mention to clients in explaining this conundrum is that a Major Defect is something that an objective third party would consider as such; NOT something the buyer just personally doesn’t like or, worse yet, feels the seller owes them.  Something, in other words, that’s a subjective opinion.

We like to think that most clients will recognize the difference in those terms, and the more we prepare them to think that way, giving a few careful examples, the less likely, perhaps, will be a trip into the tar pit for everyone involved.  So put on your Quadrant II hat and keep your boots clean!

David M. Hassler

Director of Coaching