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Using an inspection to back up a reduced offer

2,509 Views | 17 Replies | Last: 3 yr ago by Skillet Shot
94chem
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I have a 20+ year history in a neighborhood, and I know exactly what is wrong with all the houses. There are several for sale that would make good rentals. Is it a good strategy to make a high offer, then go in and have the inspector just tear it apart? I know the wiring issues, breaker box, all sorts of good stuff that needs to be fixed. Once it's documented, don't they have to make the inspection available if they reject my offer after I reduce it?
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
evestor1
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you live north of north park - do i remember that correctly?


if so, then definitely offer high b/c houses are flying in the lowest price ranges. wait it out then try to pick on inspection for sure. otherwise negotiating will be tough b/c appraisal will be no issues right now.
94chem
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evestor1 said:

you live north of north park - do i remember that correctly?


if so, then definitely offer high b/c houses are flying in the lowest price ranges. wait it out then try to pick on inspection for sure. otherwise negotiating will be tough b/c appraisal will be no issues right now.


Used to live there. Sherwood and Elm Grove are pretty hot now, I guess. There's always been huge value there. People probably surprised by what they can still get for $200K.
94chem,
That, sir, was the greatest post in the history of TexAgs. I salute you. -- Dough
ATM9000
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AG
94chem said:

I have a 20+ year history in a neighborhood, and I know exactly what is wrong with all the houses. There are several for sale that would make good rentals. Is it a good strategy to make a high offer, then go in and have the inspector just tear it apart? I know the wiring issues, breaker box, all sorts of good stuff that needs to be fixed. Once it's documented, don't they have to make the inspection available if they reject my offer after I reduce it?
Pretty sure the answer is no but they have to reveal any material defects found.
Rustys-Beef-o-Reeno
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AG
If the market is hot enough as a seller I'd probably take back up offers and tell you to walk.

Tried something similar when I bought a house in a scorching market. Seller told me he had 4 people in-line that will take it if I don't want it.

When the mkt is that hot sometimes it becomes home sold as is..
jagvocate
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AG
There's two factors to what you pay: price and terms.

Try making a cash offer (deepest discount), a financed offer (reasonable discount), and an owner-financed offer (you can make thisvirtually market price if you agree on a monthly payment for a period of time and leave interest % out of it).

So many people think about getting a deal on price that they neglect getting a deal on payment terms.

Good luck.

Rustys-Beef-o-Reeno
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AG
You really think asking them to owner finance in a hot market is a good idea?
jagvocate
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Rustys-Beef-o-Reeno said:

You really think asking them to owner finance in a hot market is a good idea?


Don't ask me, ask my portfolio. Of course most people NEED the money and creative offers don't work. But sometimes ...

Yesterday
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AG
We had this happen to us three months ago. We had 6 offers three of which were over asking and two of those three did not have a contingency. We took the best one and of course they tried to come down 10% after inspection due to 30 windows "needing" to be replaced. We contacted our backup offer and asked if they had an issue with the windows. They did not. So we relayed that to the current owner and they proceeded.

Granted this strategy may work for foundation or mold but I doubt it will do much if its minor things people can live with.
agnerd
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AG
ATM9000 said:

94chem said:

I have a 20+ year history in a neighborhood, and I know exactly what is wrong with all the houses. There are several for sale that would make good rentals. Is it a good strategy to make a high offer, then go in and have the inspector just tear it apart? I know the wiring issues, breaker box, all sorts of good stuff that needs to be fixed. Once it's documented, don't they have to make the inspection available if they reject my offer after I reduce it?
Pretty sure the answer is no but they have to reveal any material defects found.
Agree. They will take your report and fix everything wrong or hire an electrician/plumber/etc to say that it isn't actually a problem and not disclose anything.
Win At Life
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AG
I had an inspection by a buyer where he listed many things as defective, such as lacking AFCI breakers, window heights, etc, that were not code requirements when the house was constructed. I knew enough to call BS on this, but why is there no legal responsibility for an inspector to claim code violations that are not actually code violations?
HerschelwoodHardhead
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AG
Win At Life said:

I had an inspection by a buyer where he listed many things as defective, such as lacking AFCI breakers, window heights, etc, that were not code requirements when the house was constructed. I knew enough to call BS on this, but why is there no legal responsibility for an inspector to claim code violations that are not actually code violations?


Because they will typically have a limitations section on their report that absolves them of having to actually be correct. Inspectors are just another form of price negotiation on a sale.
CS78
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Sounds like a good way to waste a bunch of money on inspections.
Diggity
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AG
Inspectors are required to inspect to current code. Older homes are not required to be updated to current code. Tell the buyer to fly a kite.

A good inspector will indicate to the buyer what is a real issue and what isn't, but the "deficiencies" are mandatory to report.

Absolute
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AG
Diggity said:

Inspectors are required to inspect to current code. Older homes are not required to be updated to current code. Tell the buyer to fly a kite.

A good inspector will indicate to the buyer what is a real issue and what isn't, but the "deficiencies" are mandatory to report.


This.

Generally speaking, as an Inspector, the OP strategy probably won't work 99 percent of the time. Really not the point of the inspection and the transactional contracts and processes don't really lend themselves to significant reductions in the price. In this market especially, there are multiple ways for the Seller to deal with it other than lowering the price and they will.
Jason C.
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I thought a section of the Seller's Disclosure (it has a table below the question if I recall) asks specifically for inspections within the last so many (5?) years. The form then instructs you to provide those.

Or am I misremembering the SD?
Absolute
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Jason C. said:

I thought a section of the Seller's Disclosure (it has a table below the question if I recall) asks specifically for inspections within the last so many (5?) years. The form then instructs you to provide those.

Or am I misremembering the SD?
Yes it has that requirement, 4 years. I have people call for a copy of their old report periodically. Like most things in the disclosure, though, it is very loosely enforced and a lot of people probably,y ignore it.

As an inspector, I would advise anyone to put very little faith in a 4 year old inspection report. not really worth much after time has passed.
Jason C.
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Absolute said:

Yes it has that requirement, 4 years. I have people call for a copy of their old report periodically. Like most things in the disclosure, though, it is very loosely enforced and a lot of people probably,y ignore it.

As an inspector, I would advise anyone to put very little faith in a 4 year old inspection report. not really worth much after time has passed.


Of course, I don't even put much faith in new ones haha. I like old inspection reports in conjunction with newer ones when buying from an inexperienced HO or agent. Can always turn my $500 inspection fee into a few thousand dollars off a sale price (in markets where you have a few weeks, at least!). As a seller when faced with a bad inspection finding it's the other way around ("Oh that's grandfathered." "Nah, that's only like a fifty-dollar part, I'll fix that for you, next?") Inspections - like most things in life - can make or cost you money depending on your level of ignorance/familiarity.

I make a point to ask in writing for all inspections, separate from the SD, especially where I know a house has been under contract before. "If you received an inspection you're obligated to send that to me." I want people to know I'm being serious. The obvious trick if you're a seller is never to accept or get a copy of a buyer's inspection and tell their agent not to send it to you.
Skillet Shot
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94chem do you have a recommended inspector experienced in Kingwood area? We are looking for a similarly priced home in kingwood now that lumber prices have made our plan to build on acreage a financially bad investment.
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