Latest / LeadingLane Podcast / Inspection Negotiations: Why Being Brutally Honest Saves Deals | LeadingLane Podcast | Ep 95
Transcript
- Steven L Burch (00:00) Welcome to the leading lane podcast. Really, let's dive into it. Cause the world's wild right now. And I think inspections are freaking crazy and you have some stories and a little turbulence that is happening actually. So how's it going with inspections? Ashley (00:16) Yes, it's a little wild. I think what, today is Thursday and I think we've had maybe six transactions in our office that have fallen out of transaction, data inspections are on their way there. ⁓ You know, I think that there was a time if we all remember when no one was doing home inspections. Which also in these inspections, when I see them, I think to myself, all those people that didn't have an inspection, they actually missed. But I don't know about other people's market, but our market is very different now. I would say that nine times out of 10, there's still an inspection. Maybe if it's a multiple offer situation or newer build, someone will throw one out. But I would definitely like to say that inspections are back and they're probably here to stay for a while. But with that, I think that maybe Sellard You know, heard a bunch of people aren't doing inspections. I don't have to do any repairs. It is what it is. If I don't want to make repairs, I'll just put it back on the market and someone else will buy it the next day, which also is not true. ⁓ So I think that sellers are maybe less negotiable than maybe what they should be or at least be open to. And I think agents might be having a hard time. Steven L Burch (01:19) and Ashley (01:42) discussing that with their clients as far as like what happens, you know, if you don't make the repairs, why are people asking, can we try to do a meet in the middle type thing instead of an immediate, nope, I'm not doing anything. Steven L Burch (01:55) Do you think it's really like they really know they don't want to do anything or is it that they've just been fed this information that it's going to fly off the market tomorrow? ⁓ Ashley (02:08) Yeah, like combining a little bit of both. Steven L Burch (02:12) So do you think it could be handled better with setting higher expectations upfront from the agent? is it like, how would you handle that if you have a seller that says, no, don't even, not even entertain it. Don't even talk anymore. Nothing's wrong. Ashley (02:25) So we do get that a lot. And then I always like to follow it up with, can we at least get some estimates? Because I think that that is also a lot of times why they're hesitant right away is they're not contractors. So they think a repair is going to cost $10,000. But in my head, I'm like, that's like a $900 repair. Like, let's not fall apart over $900. So I have found that when they are adamant right away, if I just ask, you let me get some inspections? And then they get them back. And then they're like, Steven L Burch (02:35) next Right. Ashley (02:54) it's not as bad as I thought it was going to be. They tend to be a little bit more negotiable. but I do think that probably has a lot to do with it. And let's be honest, there are some sellers that it doesn't matter. You could tell them the ministers, it won't matter. But I do think at the point of discussion that, you know, you may have heard that people aren't doing inspections. You may have heard that buyers don't ask for repairs. And I just want to be upfront with you that It's not really reality today. So we want to be prepared for that. I know we've had a podcast before about ⁓ pre-home inspections, which we on it. I'm pushing that more and more, which would alleviate a lot of these issues halfway through a transaction. So I think prepping them, but then also not being overly biased when you're presenting them. Like, yes, you're working in the seller's best interest, but if you start that conversation with. you're not going to believe what they're asking for or, you know, I think instead it's more of a, so there's a couple things we're going to have to go over. You you might not like what you see, but this is just an initial request. It doesn't mean that we can't go back with something else and we meet in the middle with something. Steven L Burch (03:50) Right. It's a negotiation point. think that sometimes that, you know, even at an appraisal standpoint, like, doesn't mean one party or the other party is responsible. Like you still need to be able to negotiate it out and not just assume it's another way to be able to leverage, you know, different things of changing some of the things that, you know, from the beginning of the base contract, some things that maybe that the seller didn't like and now can get those back or whatnot. So do you... When you have, when you go into like these listings and you're going to work with the seller, do you call out these different things that you're seeing? ⁓ as far as, know, peeling and shipping faint paint is huge for VA or roof. You're having tons of roof issues. Like how do you make sure that you call as much as you possibly can out upfront? Ashley (04:45) Thank Yeah, I think a lot of agents don't like to do that. I think that, you know, they think that a seller might be offended, where I would rather have had that conversation with them and maybe we priced it accordingly and they disclosed it and that's another situation. But otherwise, if I did discuss it with them that I had a little bit of concern about it and then it comes up and then inspection, you know, it's an easy part to say like, remember we talked that this might come back through, but you know, I do feel like Steven L Burch (05:06) Sure. Yes. Ashley (05:20) They're looking to us for our expertise, right? So like one thing here for roof is we had a large hail storm two years ago that we are still dealing with rough issues, specific part of town. So when I go to that part of town, I ask if they've had a new roof. And when they say no, just say, we might have a problem, which we have. And ⁓ sometimes we were able to remedy them. But you know, other things. Steven L Burch (05:43) Great. Ashley (05:49) I think the other thing is people just get so set in their homes that they see it every single day for the last 20 years, where we have a new set of eyes, you know, like pointing out chipping paint or pointing out a fogged window or a chipping hazard, you know, those types of things. GFC eyes are really easy to point out. I think that, you know, if you can show sellers that you're that aware of what an inspector or an appraiser is going to point out, I think that, you know, that could help them choose you if you are up against someone. Steven L Burch (05:54) Yep. Ashley (06:18) I would rather go that route than be the, I think your house looks perfect. I don't see anything that could come up on the inspection. And then you get the inspection, right? I do always tell people like, I'm not a trained home inspector. These are just things that I can see that I could maybe see an inspector pointing out. I also have to tell them like, I'm not going up in your attic. I'm not going in your crawl space. Those are where a ton of problems land. So that's what an inspection is going to be for. Steven L Burch (06:36) Mm-hmm. Ashley (06:47) And I think, again, just being upfront and also just letting them know that if they aren't going to make repairs, that is a disclosure. So sure, you might get an inspection and you might want to back out of it, but now you do have to disclose that to the next party, which likely is going to affect the next offer that comes in. Steven L Burch (07:06) Yeah, it's a compound effect. It's gonna, it's gonna ripple on through. ⁓ it's not like it's going to go away and you know, there's, I'm sure that there's some people that are going to think that they don't ever have to disclose that and that, and even if they think that the home inspector or the report is wild and don't agree with it, now it's documented. Now we, as agents, we have no knowledge. It's also our responsibility to be able to disclose those things to the client as well, to make sure that. you know, we're covering our bases. So yeah, absolutely. We have to put that out there. Ashley (07:42) So what do do if a seller, you get an inspection and they just look at it and be like, I hope this fires on asking for any repairs or refuse to do anything. How do you try to minimize that damage? Steven L Burch (07:54) Really, I first, I I always try to negotiate right up front when I'm taking on the listing. ⁓ you already said this as far as making sure you're calling this out, but I feel like if I don't call anything out or if I just try to go in there and low smoke and say, everything's hunky dory. Like I'm giving false expectation and false hope. So really when something later on arise, like, it falls through or something happens, I think it's my fault at that point. So I try to call as much as I can out upfront. And I also asked the sellers. How much are you earmarking or how much do we need to earmark in our estimate of cost here to make sure that we have these different cost covers and negotiations and whatnot. you know, a lot of times people are so fixated on just the top number of what you're going to put it up for sale. But I made sure that I have that in there. So then, you know, I try to get these repairs and there's not repairs, but estimates together and. So I can see if I'm going to be able to meet that inside of that line item that we already earmarked out and say great news. We, this actually came in less than what we already earmarked. So we're already headed the game from where we actually started at. So I think it's just almost reverse engineering it a little bit and preparing the seller that they know that they're going to pay for something. And I also don't want them to spend out of control and just hand them over, you know, a hundred page report or however many pages and read through it and be like, I'm not doing anything, you know, So I try to do some damage control if you will upfront a little extra legwork work with my contractors and you know, obviously timelines and but the request art it doesn't always work that way But at least I'm doing my due diligence before I just say okay, what do you want to deal? So I don't know if that really answered your question with that, but it works Ashley (09:36) Mm-hmm. I think it's important to have those key relationships with contractors, right? Like a lot of times at the, need you to get here in like the next 24 hours. Right? So having to be able to sneak them in. think you make a good point about, you know, earmarking for repairs. Cause a lot of people are looking at the bottom number of their net sheet, right? Versus, you know, pricing. And I always tell people like, it's a great offer, you know, or maybe an offer comes in and it's a little bit less than the seller's like, well, no, that meets my bottom dollar. I always, I'm like, okay, but. Steven L Burch (09:56) Mm-hmm. Ashley (10:10) What if there's $3,000 worth of repairs? Are we still falling into that or is that warranting a counter? So think we have to make sure that we're not leaving that piece out of the negotiation. Steven L Burch (10:20) Yeah. And you know, even same with, you know, your marketing align item as appraisal repairs in there too. So like being very, very clear and transparent right up front. And that's where I think that from my job as an agent is to be able to show my value and my value is yes in the marketing, but really it also is in the negotiation. So if I know that they want their net bottom line to be X, my goal is to get it as close as possible that I can get it there. And then anywhere of my relationships with vendors or negotiation power and everything else in between, that's where I can cut some of the line items out and get them more money to the bottom line. Ashley (11:01) So what about on the other side? So what if you have a buyer that that's gotten their inspection report and I don't know if your state does it, but we have like a defects page. So there's supposed to be like a summary page of defects, but then a lot of times, right, there's maintenance type items, there's caulking, there's cleaning the leaves out of the gutters, those types of thing. How do you kind of work through your buyer, not necessarily Steven L Burch (11:05) Okay. Again, it starts with negotiating with the buyer right up front. It's setting those expectations and that buyer consult to see what's important to you. Like how handy of a person are you? How much time do you want to spend working on the house? It's finding those discovery, asking those discovery questions to be able to see if this house will fit for them or not. But also being able to go through there and tell them that my main concerns that I'm looking at through that inspection is safety, health, or hazard. And so I try to go through and make sure that I mine out, is this a safety health or hazard issue? And then there also is going to be those things that are maintenance, generic, general type of ⁓ requests and repairs. So what I do with my buyers is I give them the report. Obviously they have that. ⁓ And I want them to number one to whatever, I don't care, to 100, give it to me in order of what means the most to you. And then, so I can see where is the line in the sand from where we go to, these are the most important things versus these are the things that are really not top of mind, top of a necessity for me. And what I actually find out when I put it in that position and positioning into them is that there's a top two or three things that are super freaking important to them. So now I know those are their non-negotiables. Everything else is the extra, it's the honey on top, right? So I want to make sure that I know. Ashley (12:56) Mm-hmm. Steven L Burch (13:03) where does that line truly land? And it goes back and forth. Like I always ask them, if the sellers don't come back, is this a breaking point for you? Are you done? It's about having conversations with them. It's educating them upfront. It's not scaring them through. It's making sure that they understand that this is a huge commitment. Even if they say yes, that they'll accept everything as is, do you have the budget to be able to move forward and repair these things? You know, what happens if the water heater goes out? Do you have the thousand bucks to be able to turn around and replace that? Like, how do we need to position this? And I think that's another huge thing to be able to put in and position on here in negotiations. How many of those things could be covered by a home warranty? And so making sure that that could be a part of your offerings as well to give your buyer the peace of mind and maybe even to where the seller doesn't have to come out of pocket necessarily for it. So. Ashley (13:51) Hmm. Yeah. And I don't know how your home warranties work, but we actually have a home warranty. it's the top level. And if you were to ask for it in your offer, it actually like retro covers the seller. I think that that's kind of a selling point. Like if you're asking the seller to pay for a warranty, now they're going to have coverage that they wouldn't have had before. So then that's one good piece of it. But I also think, you know, again, with the expectations that no house is perfect, that not even a brand new house is going to be perfect. I've sold plenty of brand new homes that had plenty of things come up in the inspection. So I think that, you know, ⁓ the other important thing for me is I like to try to be at the home inspection with the buyers and the inspector. That's not always reality. And it's not always reality that a buyer can get off of work either. So I always tell them too that when you get just sent ⁓ an inspection report, it can be overwhelming. And you see all these. Steven L Burch (14:32) Mm-hmm. Ashley (14:56) red line items and you think like, my gosh, this is horrible. Where had you been at the inspection and actually like, saw them in person or you'd hear the inspector say like, I, that's like a $50 fix, but still it's highlighted in red on the inspection report too, right? So think being able to see those specific defects in person, have a conversation with the inspector or even a lot of times I'll be like, oh yeah, like I got a, I got a guy for that. can get you an estimate. So same thing that. They're thinking it might cost $2,000 to replace, that's a $300 repair, right? So I can get you an estimate so you know what you're looking at. Steven L Burch (15:32) It's down to the facts at that point. It's not the opinions, it's not verbiage, right? And that's where you try to have to peel back those emotions out of there. The sellers live there and has an emotional attachment to it, right? The buyers want this to be their perfect home, but we all know that that's not always the reality of it. So it's almost making sure that you give them the realistic picture and the no BS view of everything. then it's easy for, in my opinion, it's easy to be able to see again where that negotiation is and those hard lines are for these people. But also too with that, there's different types of personalities and there's different people that have to process things completely different than the next person. And so I think also it's making sure you understand the personality type that you're working with, making sure that you, let me. Not lie. Like I use chat GBT all the freaking time on a lot of my writing stuff as far as emails that this person is a type a personality or this person has a very engineer like mind and has a background in banking or whatever it's going to be. Like make sure this makes sense to them and give them the time to be able to process and the way that they need to process and comprehend things. not just taking it for face value and taking the reaction as how they want to handle the rest of the transaction. Let them review it together, right? And then give them some time to process it. And then let's regroup. I don't need an answer right this second. Do your research and do your due diligence. So, Ashley (17:10) Yeah, I think the ability for people to sleep on it, you know, really makes a big difference. I had a client yesterday that was not going to make any repairs, blups on it. Now probably we could meet in the middle somewhere. So I think it's important to just say like, I know those are your intentions. don't you just take some time to look over the report overnight, you know, etc. We have this weird, what I feel like I don't know what your guys's are a little bit different, like a due diligence. We have an actual like inspection deadline and it's typically like 17 to 21 days. A lot of agents like to counter that out like 12 days or something. I've never quite understood that, but you know, you have to work with an inspector's schedule and we only have like three or four that we work with. So most of them need like, I don't know, a good seven to 10 days to get there. Cause they already have inspections. you know, scheduled, so you'll see it often. They counter it out to move it up. The inspection gets done the day before the deadline, which leaves zero time for negotiations and then nine times out of 10, they get amended to extend the home inspection deadline. So I think just even as far as agents are concerned, like trying to be mindful of like, yes, you're going to try to get it done as soon as possible, but let's also have reality of inspectors. Most inspectors aren't available overnight. Let's also leave ourselves some time. Like maybe the buyer wants to have somebody look at something again. Like let's make sure that we're giving each party time to swallow all those decisions versus like forcing everyone like, the deadline's tomorrow. You have to make a decision by tomorrow. Like it's just not a good way to do business. Steven L Burch (18:39) Thanks. Great. And I think that pressure right there just, well, if I have to hurry up and give you an answer, like, no, right? Like, I mean, it's almost a defense mechanism of, I don't even want to go through all of that. just, no, I'm not going to do it. So I think it's, ⁓ how you position it and making sure that you have enough foresight and forecast to be able to look into the future. And to me, it's not that hard. It's looking at your calendar, It's, you know, verifying with your, the home inspector. and making sure you're actually going to be in town, make sure the buyers are actually going to be in town and, you know, making sure that everybody's on the same page. You're, you're the one that is, ⁓ you know, coordinating everybody. And so, and that project management, I mean, it's tough. There's a lot of moving aspects to it, but you have to be able to see someone into the future on what you can control and what you can't control. Ashley (19:41) Yeah. And I always think too that you kind of have to be the voice of reason for both sides. And a lot of times I'll talk to agents and they'll be like, well, I'm not going to, I'm not going to say that to my buyer or I am not going to say that to my seller. I'll be like, but that's why they're hiring you is to hear from you. know, so like yesterday I had the discussion of, like you don't want to make these repairs. We're going to have to disclose them. And then if we don't get another offer right away and we sit on the market for three more months. Steven L Burch (19:47) I like that. Ashley (20:10) those holding costs of utilities, taxes, now we're going to start to having to pay for snow removal. What does that cost you versus, we just made the repairs and moved on and sometimes they need a reality check and we have to be the ones that are willing to have those conversations with them. Like I had one yesterday where ⁓ there's two offers always, right? You have a property that sits for months and then they get an offer at the same time. So it's strange. That happened and Steven L Burch (20:36) Always. Ashley (20:39) the secondary agent reached out. The buyer was really upset and I was like, I I understand there were such close offers. were just little points of difference. And I told that other agent, was like, should really just tell her everything happens for a reason. I would never tell her that. And I was like, oh man, that's like my go-to line with everyone. And so yeah, they're not gonna wanna hear it, but. Steven L Burch (21:02) Right. Ashley (21:06) I feel like that's when they need to hear it is when they don't want to hear it. And it's actually really funny that I had a closing this morning and they had put on an offer on a property, I think like six months ago. Same thing. I'd been on the market for months, nothing. Another cash offer comes in so they couldn't beat it. And she was devastated. And I remember just telling her, like, I promise you that everything happens for a reason. You just have to trust the process. Well, they closed on their new home today and life changes. had Steven L Burch (21:08) It's not. and Ashley (21:35) promotions, like they bought a completely different house than what they would have bought, you know, six months ago. And when we were walking out, she just said, I just remember what you said. And it was everything happens for a reason. Just trust the process. She's like, I keep on doing that, like at work when things don't work out. I'm like, nope, Ashley said everything happens for a reason. Just trust the process. So I appreciated that. Right. But I mean, that's what they need someone to guide them and be like, I know it sucks, but I guarantee you there's a reason it happened. Steven L Burch (21:51) Ha ha ha. Mm-hmm. You know, it's funny that people don't want to those discussions as far as, you know, delivering bad news or confrontation or whatever. But I always try to look at it from, this were a different profession, if this, if we were in something totally different, would I want to go to my dentist and have him not tell me straight up what's going on? Right? Like, what if I have horrible breath? Like the dentist is supposed to tell you what's going on. and give you the professional guidance and opinions and everything else. And if I chose to, you know, not follow those directions, that's my fault. But I'm paying the dentist for his professional opinion. So why do we think it from our standpoint as agent standpoints? You know, we can't say the truth and we can't be able to, I don't want to say just tell it how it is. There's a tactful way to be able to do it, but people are hiring you for your professional opinion. Ashley (22:44) Mm-hmm. Steven L Burch (22:58) Be the professional and provide your opinion. That simple. Ashley (23:02) I think even I found that with smells, know, where I've been there like after another agent had been there. And then I'll be like, I mean, so we might need to do something ahead of time with carpet cleaning or you know, whatnot. And they'll be like, you what, I'm like, oh, it smells like cat or it smells like dog. And they'll be like, oh, I had other people in here and they never said a word. And I'll always say like, I'm way more sensitive than most people. So just want to be, you know, you to be aware, but. Same thing, like other people would be like, I did not tell them it smelled like cat. They'd be really upset if I told them that. I'm like, well, no, because if it affects them getting an offer, that's what they're going to be upset about is they didn't get an offer because people's feedback is it smelled like cat. Steven L Burch (23:40) They may be nose blind. need to wake them up and that's okay. Absolutely. Nope. think the takeaways here are be open, honest, and transparent, have conversation, right? Very simple, set high expectations upfront and reinforce those all the way through the transaction. And I really think it's at end of the day, it's not our feels. It's not our ego as agents to Ashley (23:42) Yeah, you're living it every day. Steven L Burch (24:08) be able to interject into a transaction. It's the professionalism and the level that we raise the bar and continue to raise the standard in this industry. So making sure that you have those conversations constantly. I think the more honest and upfront you are, the easier the transactions actually go through. know, the whole timeline of everything is way more easier and less bumpier. At least that's my opinion. Ashley (24:33) I also think that's how you generate repeat business and you generate the referrals, right? Like they'll be like, no, but Ashley was completely forward with us. mean, people will joke that I'm brutally honest. I'm like, but would you want something different when we're talking about, you know, the biggest transaction of your life versus, you know, someone that didn't give them the right guidance and they had a bad experience. So I would rather have that I'm brutally honest and I got you what you wanted and we closed and now you become a client and a friend for life. Steven L Burch (24:47) Right. No, I'm just not going to give you that. Yeah, everything's fine. Everything's hunky-dory. No, that's not. Let's have a combo. So, so great conversation as always. Thank you for tuning into the leading lane podcast and make sure you catch the next one. Ashley (25:05) Thanks for watching.