Our buyers have already had inspections on three of our houses this week:
1. The Full House is scheduled to close on Friday and underwriting came back a couple days ago and flagged the fact that the buyer never did an inspection. Unfortunately, FHA requires inspections, so this was something that needed to be taken care of ASAP. The inspector came to the house yesterday and we received the inspection report last night — other than a BB hole in one of the windows (how did we miss that!) and a couple minor electrical issues, everything was good. Our electrician will be at the property today to do the electrical repairs and the window is being replaced in the next day or two.
2. The Ticket House buyers had their inspection over the weekend, and it ultimately caused a very weird situation. The agent called us and told us that due to a couple inspection items, the buyers wanted to back out of the purchase. This has never happened to us before, so we were a little confused. We asked the agent to send us the inspection report so that we could see what the problem was — given that this was just a cosmetic remodel, I couldn’t imagine what issues were so major that the buyers would back out. Well, a couple hours later, the agent calls us back and tell us that the buyers were just having cold feet, and that he’s trying to convince them to move forward with the deal. Additionally, he sent us the inspection report, and it literally had only 6 minor issues noted. Specifically:
- Gutters need to be cleaned
- An exterior flood light needs new bulbs
- The front and rear hose bibs (water spigots) are loose and need to be caulked
- The backdoor threshold needs a piece of wood under it to keep it from bending
- A nail is poking through the sheetrock in the living room cathedral ceiling
- One of the windows is missing a small, plastic trim piece
Ultimately, this is one of the lightest inspection reports we had ever received, so it’s laughable that the buyers were trying to use it as an excuse to back out of the deal. If they want out of the deal, they have every right to back out (they are still within their inspection period), but we’d obviously prefer that they were just honest about the fact that they were just getting cold feet. We’re not sure if they still want to move forward or not, but given that we have a few other potentially interested buyers, I’m not sure I want them to move forward. We’ll see what happens.
3. The Unexpected House buyers had their inspection over the weekend. It took several days to get the report and request for repairs back to us, but we finally got it today. There were a whole lot of minor issues, but happily nothing major. The buyer is getting their loan through NACA, and NACA requires that most inspection items are repaired — so we’ll be addressing about 20 minor issues, everything from a sagging gutter to poorly insulated doors to some additional caulking around exterior entry points. Nothing major, and we should be done with the repairs in a couple days.
Nothing like an agent lying about the real reason for the buyers to back out to boost his professional reputation…
Dude those are the sweetest inspection reports I have seen. You got it made 🙂
Looks like on that easy inspection, the inspector had to find “something” to show buyers they were getting their monies worth. The Ticket house is squeeky clean house. Do you have your flips inspected after the rehab so they can find something you missed before listing it?
Loved hearing about those reports. About that BB hole: it could have happened recently. But my experience with cleaning crews, especially window crews is that they don’t report anything. They just clean and go. I don’t know if it’s fear of being blamed or maybe they really don’t notice? But the cleaning crews I’ve worked with really have to be encouraged to to report anything. Most crews won’t know that it matters to your sale if there is a hole or crack or is something is not operational.
I know FHA strongly encourages a home inspection, but do they now actually require one before the loan is approved/guaranteed ??
I remember awhile back in one of your post you mentioned how some flippers “leave a little something” for the inspectors to find, because if they don’t, the inspectors will try harder to find something to justify their job…
I noticed a few things that keep coming up on several of your inspections, water hot and cold reversed, and outlets wired backwards. Kind of made me chuckle after about the 3rd house I read it about, wondering to myself if J Scott is doing this too?
Great inspection report for the cold feet buyers. They need to grow a set and be honest. Hope they or one of your other buyers work out quickly.
Dennis, it is my understanding that they will require an inspection specially if the house has been owned for less than 90 days.
Hey Shane,
We always leave a few little things for the inspectors to find — as you mentioned, mixing the hot/cold water lines is one thing (though sometimes our plumber doesn’t that unintentionally :)) as well as miswiring an outlet or two. Sometimes we’ll leave a filter out of the furnace or not put an expansion tank on the water heater.
Hey Dennis,
FHA insures loans, so it’s up to the lender to ensure that a property meets minimum FHA guidelines in order for them to be confident FHA will insure. An inspection will prove to the lender’s underwriter and to FHA underwriting that the house met all minimum requirements, which basically means that the house was move-in-ready and had no safety issues. Oftentimes the FHA appraisers will inspect as well, but many underwriters want to see a real inspection in addition to the appraiser’s inspection.
Hey Kristine,
My project manager actually thinks it happened a few days earlier when our landscaper was cutting the lawn. He thinks a rock got kicked up by the mower and hit the window — this would explain why we missed it previously and also makes a lot more sense than a BB or something intentional (this is a quiet neighborhood).
Sanjiv –
We don’t have the properties professionally inspected prior to listing, but my project manager does have a pretty extensive checklist that he follows at the end of every project. He basically checks for most of the things an inspector would look for, and we won’t list the property until everything on the checklist is completed.
Howdy J
I am sitting on earnest money from a buyer that backed out. She had me worried on her second visit (after we were in contract) that she was trying to back out just from some of her comments. The school district had some layoffs and she claimed she was one of them therfore she dosen’t qualify. I asked for her lay off notice over a month ago. All I have received is the termination of contract from her realtor.
Don
Hey Don,
What does the contract say about her financing contingency period? Did her agent send you the termination prior to the expiration of the financing contingency? If so, she should get her money back; but if he didn’t terminate prior to the end of the contingency period, you should get to keep it.
This deal has all kinds of events.
First of all, I doubt the buyer is being completely honest about losing her job. I sensed some feelings on her second visit that she wasn’t as excited about her decision as she was when I was presented with her contract. After lot’s of back and forth with my own descisions, I have decided to give the earnest money back. I think it will give me a better reputation with the buyer’s broker. I said broker because at the same time I was informed the deal was off, that her agent was no longer with the agency nor on this case. I still haven’t heard what happened there. So, reguardless of what the contract said, I want to have a reputation of being easy to get along with. This agency and broker is a pretty big deal in Little Rock.
One other thing I will tell about (knowing people come here to learn)….I was dooped by the advertised square footage when I bought this house. It actually is about 350 sq feet smaller than what all of my numbers and guesstimates were based on. It has cost me about $7000 of my profit. Always measure!! Don’t trust the disclosed sq ft. Specially from FNMA.
Thanks for your advice. As usual, it is spot on.
Don