What’s the Downside to Hiring an Inspector?
This is Part 2 of Should the Seller Hire an Inspector? Feel free to offer comments and suggestions.
I just did a quick search of the internet looking for disadvantages for sellers who have used pre-listing inspections and discovered that, in the virtual world at least, there are no downsides to having a pre-listing inspection. I disagree. The prevailing thought is that you are laying off the risks to the inspector who is carrying Errors and Omissions insurance as protection against lawsuits and judgments. There are two problems with this perspective: first, that the assumption that the inspector is insured; and, second, that the aggrieved buyer will only name the inspector in any potential litigation. The truth is that a third or more of the inspectors do not carry insurance. It is not required in most states and is expensive to hold so many inspectors skip it. The other issue, involving litigation, is that lawyers tend to name everyone they can in a suit - the inspector, your agent, you -even your dog if the lawyer thinks they have an monetary value. So, what are the risks...?
The major risk is that the inspector finds a material defect that you were not previously aware of. Once you know you have a material defect in the property, you will be required to disclose it. This can substantially impact your sale price even if you repair the defect. Obviously, if the buyers discover it, it will have the same negative effect.
There is a second risk as well. Let’s assume that you hired an inspector, he did his inspection and gave you the report. You look it over and are relieved - there’s not much to be fixed. You do the light repairs and, when you get and offer, confidently invite the buyer to get his own inspection. Then you get the inspection report back and the second inspector has found multiple problems with your “clean” home. What just happened?
Probably one of two things and, unfortunately, only one you can directly control. The first possibility, the one not fully under your control, is the inspector for the buyer feels he needs to create issues to justify a fee. The second is that you hired the wrong inspector. That you can control.
The final installment of this article, Should the Seller Hire an Inspector? will be posted on Monday, September 30, 2013