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Reader Question: I lost a sale over a home inspection. ​I am the seller. My agent got me an offer that required a home inspection. When the investigation took place, they determined the electrical breaker box needed replacement. This discovery caused the buyer to back out. Now, can I sell my house without this upgrade and negotiate the price accordingly, or must I make the repairs and have that reflect on the cost of the property?

​Monty’s Answer:​ It is common to hear from sellers that lost a sale over a home inspection. You have a choice to either make the repair or leave it as it is. If you make the repair and have the paid receipt available (a buyer may ask to review it), you have eliminated the electrical issue with your home. You have also removed the possibility of time constraints on repairs when there is a deadline in an offer-to-purchase. Many homebuyers do not want to deal with repairs and replacements. Theoretically, you have more potential buyers if you replace. If you decide to wait, the electrical issue will resurface. Allowing credit for the repair is only half of the problem. Taking time to identify, hire, and oversee the work is the other half.    

Reasons sellers do not repair.

Agents often discourage a pre-inspection. It is a chore to identify the contractor, hire them, and oversee the work. Then having an expenditure that may not be recoverable in a future sale. Sellers know homebuyers sometimes complain that the seller used cheap labor or parts, which resulted in substandard repairs or replacements. The cost may negatively affect your cash reserves. You may not feel qualified to question potential contractors. Always have your home pre-inspected. Here is a sample of what is included in a home inspection.

Three problems with home inspections 

Based on my personal experience: 

  • What the law requires and what home inspectors deliver is different. Home inspectors vying for customers in a competitive environment set or confirm unrealistic homebuyer expectations to attract customers. The law in my state requires only identification of unsafe, unhealthy, or expensive defects that reduce a homes’s value or components at or near the end of their useful life. Many inspectors will point out standard maintenance or component characteristics that appear as a home ages. Such items are often not unhealthy, unsafe, or failing. 
  • Timing with the home inspection is poor. Amazingly, real estate agents will spend weeks or months to find a buyer for a home when no one knows its condition. It makes more sense to have the house pre-inspected for unsafe, unhealthy, or expensive defects. The seller would eliminate potential objections before a buyer makes an offer. A buyer learning the condition of the home from a well-trained and objective inspector before submitting an offer makes them a better-informed buyer. 
  • Home inspectors often create relationships with real estate agents as a source of business. Many of these relationships are arms-length, and many are not. Here are two articles that mention the issue, one from Consumer Reports and the other from House Detective. Do not ask a real estate agent for a referral. Instead, bookmark the Consumer Reports article mentioned above.   

Had you initially invested in a pre-inspection, your home would now be sold.