Inspections: A New “Scam” to Hurt Sellers

I’ve had two recent examples of this, so it’s on my mind. In the first case, a buyer made a ridiculously low offer on one of the homes I own. Rejected of course and with no hard feelings on my part. It’s his business to buy as low as he can, just as it is mine to sell as dear as possible. But many less-experienced sellers would have been deeply offended; low balling is often counter-productive for a buyer. Eventually he raised his price enough so that I felt comfortable in making a counter offer and we finally settled on a price fair to all.

Then comes “Exhibit A” (Suspicions Confirmed Department). I was up there to mow the lawn, left to go down the road a bit to get reception for a phone call, then returned - to see the car ahead of me turn in the driveway. So I turned in as well. The car was from Connecticut, which is where my buyer was from, so I figured it was them, come back for another look. I asked them what I could do for them and they replied that they’d seen the For Sale sign and stopped in to take a look. I identified myself as the owner and offered, several times, to let them in so they could really see the police. But each time they turned down my offer but seemed in no hurry to leave. Odd. Making conversation, I mentioned that I used to live in Connecticut; what part were they from? New Haven. That surprised me, as my buyers were from New Milford and I was virtually sure that’s who I was talking to - it was too unlikely to have another Connecticut person just happen to drive by. No, this had to be the buyers. But why would they lie? Why not just introduce themselves and be upfront?

They had an inspector out to do his job. This did not worry me as it had been inspected a few months prior for another buyer and I had spent $6000 rectifying the issues unearthed, ones that had caused the previous buyer to bow out. Then I was told I was not to be around for the inspection. I have never been told this before - I prefer to attend as there are always questions and explanations that come up that only I can answer. So, agreeing,  I did something else that day. And wondered just what they were instructing the inspector to say.

Let me interject a bit here. Inspections are basically a mechanism to notify a buyer if there are major issues he should be aware of but may not be able to recognize without help. If something too expensive is discovered, the buyer can withdraw from the contract without penalty. Or the seller can offer to make it good. Or something in-between. A good inspector will understand that building practices and materials change almost yearly and he will take this into account in his report. You don’t hold a century old home to the same standards as a new home. Cutting edge 1870 is not the same as it is in 2025. 

In my case, like usual, it was an old home I’d spent a year remodeling. We were proud of the way it came out. The only concerns I had was a perennially wet basement and sloping floors, things I made sure were mentioned everywhere I advertised. If this is a problem for someone, let them not waste everyone’s time to see it.  It had been un-lived in for a few years and I was concerned there would be contamination in the water system during this time. In the system, not the water. This is common and the way it is addressed is to put good old bleach in the well, run it into the pipes, let it sit for some time while it does its job, then run it out, so the water in the pipes is free of the bleach and can be properly tested. 

I ran into a problem. After running the water for a time, it trickled down to almost nothing. It was late Friday afternoon. I could find nothing wrong inside the home, feared the worse, and went to my calling point down the road to try to find someone who could come and fix the issue. I found someone and they were out Monday morning. We ended up replacing the submersible water pump, not a cheap solution - but it was needed. I made sure to inform the  other side of these developments.

My wife has long complained of me not detecting smells that she notices and I accept that I have an “inaccurate” sense of smell. Once the water was going full blast again, I was unable to smell the diluted bleach in the lines. Couldn’t taste it either. So I ran water for an hour, turned everything off and went home. I returned two days later to run it out, ran the water for another hour, and hoped for the best.

At the inspection, they did not do the water test as they could tell there was still bleach in the lines. They were not a bit happy about this. I wasn’t either. (They came back a second time, following another long session of running water to clear the lines, and still did not take the test, for the same reason.) But they did everything else.

In due time I was informed of the negative results the inspector had unearthed. Quite a few, and not just ones the first inspector found. The first guy had found Powder Post Beetle damage (this was historic, but could also be due to something on-going though not present when the first inspection had been done) and I’d hired an exterminator to take care of that, and put his guarantee on the counter so any prospective buyers would be notified that this had been done. The other agent said it wasn’t there. I drove over to check and, sure enough, someone (the buyer?) had removed my written guarantee. So I forwarded her a copy of the receipt to prove that I was aware of this and had taken the appropriate steps.

The inspector also suspected mold in the basement. This was never confirmed, nor was the species identified. I asked for this so I could take appropriate steps to remediate it if it were indeed there. The presence of mold in an old home never surprises me and in this case, the basement is famously wet for much of the year. Great conditions for supporting mold. I have learned not to fight water, you can’t win against it. I took steps to lessen the amount entering, added a fan  to circulate air in the less ventilated spaces, and a dehumidifier to remove moisture from the air. Wet air over the last century had rotted support beams, which I had removed and replaced with pressure treated joists. Now we had the wetness confined to the cement floor where it would be an annoyance but could not cause damage.  Not a big deal as the basement is a horror hole, small, low-ceilinged and with too many support posts to be useful for anything but a place for utilities. No one is ever going down there without a purpose.

 And he didn’t like the roof. The first inspector had no problem with it. Let me describe the roof. It is all steel and was put on in three different eras. About half was basically new, less than 4 years old. Steel, I should add, has no expected lifetime limit. The issues it faces are two-fold: keeping nails tight (new roofs now use screws, which solves this problem) and when it starts to get rust, you keep it painted. There is a special paint one should use, very thick, like a very gooey silver tar. A responsible owner cannot allow rust to get too far advanced as that will damage things. An older part of the roof was in front, a section leading to and over the front porch. The ribs on the steel are a bit further apart than those on the new section, so a close inspection easily reveals it was from another era. It had slight rust, so we painted it. Driving by, you’d never notice. We also installed new flashing along the part that touched a wall to the second story.  Behind it, in the back was the oldest section of roof, a corrugated part, not ribbed like the newer roofs have. You cannot even get this corrugated stuff any longer, so it looks old. But being that old, it also happened to be a much thicker metal than one gets these days. We touched it up along a trough area and put in a new trough (that was needed). In short, the roof is shiny everywhere, holds water out perfectly well, and is perfectly functional, good to go for 10-20 years before new paint might be needed again. But the three eras of roofing are obvious to anyone who examines it.

Well, the buyer came back to me with these things and gave me prices he’d gathered to bolster why I should drop my price to account for this. The amount I was asked to lower the price just happened to bring the total back close to the initial low-ball offer figure. Interesting.

My counter was threefold. 1) I’d already treated the powder post beetle issue. 2) Tell me for sure what mold is there and I’ll get that professionally treated (for a much cheaper price than what he’d quoted me). 3) The roof: I am not going to do anything about it. He gave me a $17000 figure for removing the roof, putting in new sheathing below it and re-topping with asphalt shingles instead of steel. Remember, half the roof was new within the last 4 years; he proposed ripping that out as well. Three years before, I’d replaced the roof on a similar-sized home and it cost me $6500. Am I going to spend an extra $10000? I don’t think so. Nor do I think the buyer would actually do it either; this was just a wedge designed to get the price lower.

Of course, I have seen these kind of things before and my response is always to offer to do the work rather than issue a credit. First, I can do the same job cheaper using my own carpenter and contractors I have established relationships with. Secondly, in most of these cases, I suspect the new owner will never get around to making the repairs they claim are needed. I’d long decided that since these people had lied to me for no reason when I met them, so I had zero reason to trust them and, further, felt this new proposition of their’s left them with many opportunities to leave me with a very short end of the stick and with no assurance that these “repairs” would ever be done once they got the place.

A lawyer I worked with for many years used to say, “Sometimes the best deal is the one not done.” A perfect example. We’ve now gone our separate ways. As anxious as I was to get this sold, it was better for me to hold on to it and look for someone new.

The other case involves folks I have known for a while, a well-educated “do it by the book” couple who’d invested in an apartment house, then realized afterwards that this was not the right business for them to be into. They wanted it sold and wanted the sale done correctly, according to Hoyle.

We started with a bang, 4 showings on the day it was first available to show. And the first party offered full price, a cash sale, contingent only on an inspection and attorney approval. I groaned when I learned who their attorney was, someone I never recommend. I try to be friendly with him because he has a large business and I have to deal with him from time to time. But he is famous for being glacially slow, is sometimes ridiculously pedantic, and frequently causes unneeded difficulties. He started off with difficulties. He discovered the building was in a flood plain (the owners did not know this and their insurer never caused difficulty for that - the stream was bone dry at the moment and the flood zone engulfed almost the entire commercial district for the village). OK, that was good legal advice. The other half of his complaint was not. He cited a “major” electrical issue that could result in massive penalties. There were 3 apartments, each with their own electric entrance. Heat and outside lights were on one of the entrances. This is common to see and I was flabbergasted to learn that it was such a no-no. So I called the power company to find out directly. What I learned was far different. An arrangement such as they had with the tenant whose electric ran the furnace was perfectly fine as it was, provided the tenant was aware what was happening and agreed to it. They’d always been upfront about this - you adjust it in the rent. No issue, despite what the attorney claimed. And no fines and penalties either Power companies don’t fine you. The lawyer had cited these things then said his clients would accept them - for a $49000 cut in price. We did not agree and finally got past this stumbling block, only to run into a bigger one - the inspection.

The inspector was very careful to let me know how experienced and qualified he was, bragging about his many real estate holdings. In a personable way though. He completed the outside before the buyers showed up. Before he went inside, he asked me to step aside while he talked with them. So I sat in my car for 20 minutes. Then he went inside. I no sooner got inside when he asked me to go somewhere else and not accompany them. Huh? I was only able to join them when he’d finished the upper 3 stories and went into the basement. What good am I doing the owners if I cannot hear what he has to say?

Later on his report, he inserted an entire paragraph saying how uncooperative and unprofessional I was. I’d not had a word with him that was not friendly and had instantly agreed to all his requests. I later searched the internet to find out what the accepted protocol for this is and learned there is no agreed-upon protocol. Some expect the seller and his agent (me) to keep out of the way, and some prefer them to be there. The best practice is to attend but spend much more time listening than talking, assisting when I can, not interfering when I can’t. In the future, I have decided to let buyers and inspectors know right away that I will be accompanying them so I can tell the owners from my own perspective what was found. And will be a third party who can witness and assert that neither he nor the buyer stole or damaged anything.

The gist of what he said in the basement was reasonable. It was an old home and of course there were problems, but not ones that were critical or in need of immediate attention. It was built and repaired properly,  considering the standards of the time. These things were noted in the report. But the buyers blew them out of proportion to how serious they actually were.

Let me talk about them. They are old house lovers, a professional couple with city jobs and a (old) summer home nearby. Very personable and friendly folks. And were highly sophisticated buyers, willing to play hard ball to get what they want. Nothing wrong in that per se. They used their sophistication to their advantage, emphasizing parts of the report that were hardest to dispute and most expensive to change, while agreeing to accept a myriad of  minor flaws, so they kept an aura of friendly reasonableness. They also harped on the fact that the local Code Enforcement fellow had not issued permits for work the owners had done. I knew the CEO,  a uncooperative ball-buster when he wants to be (frequently the case), and am thankful he’s been fired from many of the towns he worked for in the past. The owners had applied for permits and he told them, rightly, why they were not needed. So they did not get any. The Village was good with the way it had been handled. But the buyers weren’t.

The owners were aghast at all the problems.  Their thought was, “How could we have missed all these things? How could we in good conscience allow anyone to live there in the future?” No tenants had complained and these were largely not issues their own inspector had unearthed when he saw it only a few years prior.

Me - I wondered what had been said in the hours where I was not in the presence of buyers and inspector. If the parties want to collude, it is easier to do that in person than on the phone. By attending I can inhibit but not stop collusion.

The owners had some discussions between them, but they were spooked with all the problems touted by the buyers. They just really wanted to be done with things and were willing to take a loss to achieve that. Philosophically, they said, “We’ve always made money on our real estate dealings; this is the time we didn’t”. They agreed to discount the price but had to decide how much. Husband and wife each had their own idea about how much that was, but eventually they agreed to accept the buyer’s figure. Which just happened to be the same number his lawyer had used in the first place. Coincidence? 

My own suspicion is that was what the buyer had really wanted to pay all along and by agreeing to pay full price on the contract, they stymied the competition. Without competition, they could then work on the price as their leisure, getting it down to the figure they had actually intended to pay. They used their lawyer and their inspector (and a later structural engineer) to bolster their case, all the while implying that if the sellers only agreed to that price, then all other problems would disappear and the sale would go through quickly. Which, once the sellers gave in, seems to be happening.

What is the takeaway from all this? First, inspectors do not all see things the same way. Secondly, they may be influenced by the wishes of their employers, the buyers. Third, there is not much a seller can do about this. Normally, you can’t deny a buyer the right to an inspection without someone feeling you are covering something up. The only protection a seller gets from an inspection is a clause inserted that any defect costing less than $XXXX is one the buyer agrees to accept. Expensive flaws are subject to further negotiation or a dissolution of the deal. Fortunately, the vast majority of buyers are reasonable people and are willing to accept flaws at the price agreed upon.

All these kind of manipulations are legal, but as I’ve said before, “legal” and “ethical” are not the same thing.