3 Reasons Home Inspections Kill Deals

As a real estate agent, a home inspection can be daunting after putting in weeks, months, or even years of effort with a client. While there are various reasons a deal may fail, such as credit issues, appraisal, or buyer’s second thoughts, a failed home inspection is a common cause. However, it can be prevented. Here’s some advice from an experienced inspector’s perspective on how to avoid home inspection leading to contract termination.

Inspectors Are Not Killers

Home inspectors are curious by nature. We like to know how things work, and we enjoy teaching. As a seasoned home inspector with over a dozen years of experience and conducting more than 5,000 home inspections, I’ve observed a common pattern that leads to transaction cancellations. Contrary to what some real estate agents may believe, the house or the inspector is not often at fault. The problem usually stems from the buyer’s expectations needing to align with the home inspection findings.

The client is expecting something different than what the report reveals. They are entering the transaction with the expectation that their 1957 home on a crawlspace is perfect because it has new granite countertops. Imagine their surprise when they discover a long list of issues they’ll need to consider. It may seem tempting to point fingers at the inspector for being too thorough in conveying the house’s condition, but this implies ill intent on the inspector’s part. The better solution is for buyers to understand the property before signing the contract.

I’ve recently dedicated much of my time to creating educational content for agents and clients. I can tell you that out of 5000+ homes, I’ve never wanted to kill a deal. I want to avoid dragging a buyer from house to house. In fact, the third inspection is FREE because I actually would like the buyers to find a home just as bad as they do.

Through my experience, I have identified 3 reasons buyers cancel a deal after the inspection. By being aware of these common pitfalls, agents and buyers can take proactive steps to ensure a smoother transaction.

1.Better Reporting

The home inspection process has undergone significant changes in recent years. The home inspection industry is still evolving, and technological advancements have led to rapid innovation. A quality home inspector now provides buyers with a comprehensive report comprising 40-80 pages of detailed information. Reports often include high-resolution color photos, videos, diagrams, and links to additional resources. And Home inspection resources have greatly increased, and the level of available information is leaps and bounds beyond what was available 12 years ago. I, for one, certainly know more than I did when I started.

This abundance of information and data can be both beneficial and overwhelming for homebuyers. On the one hand, they have access to more information about the home they’re considering than ever before. But on the other hand, they may need help processing all the facts presented in the report.

This is why agents are crucial. They help buyers navigate this information overload, guiding them to make informed decisions during the home-buying process.

2. Unprepared

Unfortunately, there are no courses in high school or college that educate individuals on the workings of a house or identify potential risks in residential buildings. Even professional real estate agents often receive limited training on evaluating properties and detecting issues, mainly relying on on-the-job experiences. This lack of education has become even more pronounced with a new generation of homebuyers who may have yet to have hands-on experience in home maintenance and repair. This lack of knowledge and experience can create challenges for buyers and agents alike.”

3. Expectations

The home buying process has become even more complex with the evolving expectations of buyers. Today’s buyers now demand a higher level of luxury and comfort in their homes, which starkly contrasts with what was considered acceptable just a few decades ago. People want more expensive and sophisticated properties. As a result, the focus is placed on visual aspects, and functional components are neglected. Both when preparing a house for the market or even owning one.

Moreover, the current market conditions characterized by tight inventory and high competition add an extra layer of stress to the buying process. In such a fast-paced environment, buyers have less time to make informed decisions, leading to an increase in multiple offers and impulsive buying. This rush in the decision-making process increases the likelihood of buyer’s remorse.

Real estate agents must be equipped with the right knowledge and skills to guide clients through this complex process, ensuring they make informed decisions and avoid any regrets later on.”

A Better Approach

As discussed, the primary reason why deals fail after a home inspection is due to the mismatch of expectations between the buyer and the actual state of the house. Unfortunately, this can often result in blame being placed on the inspector or the property itself. This is why it’s crucial to approach home inspections with a realistic understanding that all houses have problems. However, the right house is still a great find for the right person.

As a home inspector, I have seen many properties that are in deplorable conditions. I will inevitably write a 100-page report with red flags all throughout. The client will get the report, send me a great review, and buy the house! And here is why they don’t back out… a house in that condition announces that it has significant issues. All the client wants to know is what the issues are. On the flip side, on a well-built little starter home with a handful of deferred maintenance issues, I will write a modest report with zero red flags, and the buyer will walk away. This is because the buyer is not prepared that all homes have issues.

I am asked every day, “Would you buy this house?” And my answer is almost always the same. I joke about it not having enough bedrooms and then say that is not a question I am prepared to answer for you. I don’t know how long you’ve been looking, your finances, or any other qualifiers. I am just here to accurately document the property’s condition so that you can make a well-informed decision on whether to buy it at the desired price.

Are Home Inspectors Sometimes Responsible For Killing Deals

Home inspections are essential to the home-buying process as they thoroughly examine the property. This is done to identify potential issues or red flags that need to be addressed and to educate the homebuyers. A home inspection process is subjective; what one inspector finds to be an issue might be ignored by another. We can often report on the same problem differently. It is important to remember:

Not all reports are the same.
Not all inspectors are the same.
Not all standards are the same.
Inspections are not all-encompassing.

Because of this, there is sometimes a perception that home inspections can hinder the buying process, causing delays and causing deals to fall through. As stated earlier, the difference in a client’s reaction to a report is based on their expectations. Another example would be the more recent practice of making offers where the buyers can inspect but won’t ask for repairs. The buyers expected they wouldn’t be able to ask for things in the report, so they were fine with that outcome. And in this recent market, they were happy just to get an accepted offer. So the buyer’s expectations were the deciding factor, not the report findings.

The home inspection industry could take steps to prepare inspectors for their role better. Providing more experience and resources to inspectors would help ensure that they are better equipped to relate their findings clearly, concisely, and with context. A home inspection’s aim is to help buyers understand the significance of the issues and how they may affect the property in the long term.

In addition to improving inspector resources, the real estate industry can also do more to educate buyers and agents on what to expect during a home inspection. This can help buyers come to the inspection with realistic expectations, leading to a smoother, more positive experience. One of the biggest challenges first-time home buyers face is their lack of experience in buying a home. They often start at the lower end of the market and may be unaware of the issues commonly found in older or lower-priced homes. A better-informed buyer will likely be more satisfied with the home-buying experience. An example is; seasoned homeowners are rarely deterred at all by an inspection report because they know all homes have issues.

I am not aware of what specific requirements real estate agents must meet in Kentucky to get licensed. However, I believe that increasing the education and training available to agents would benefit everyone involved in the home-buying process. An agent who has a greater understanding of the ins and outs of a home and its systems can provide valuable insights to their clients, helping them make better-informed decisions.

In conclusion, home inspections play a crucial role in the home-buying process. Helping to identify issues and allowing buyers to make more informed decisions. Educating agents and buyers on the home inspection process can help ensure that home inspections are seen as a positive, helpful step in the home-buying journey. This will lead to happier clients, better referrals, and more prosperous home buyers.