By Bill Zollicoffer
Information Officer
The term "caveat emptor" is frequently associated with real estate transactions. This adage, "let the buyer beware," expresses the principle that a buyer is purchasing something at his or her own risk, and it encompasses the notion that there is no implied warranty on the part of the seller with respect to the quality of the item which he is selling. Many buyers, wary of this phrase, become concerned about possible defects that they may find in the property after closing. To alleviate these unforeseen problems and consequences, many purchasers propose offers to purchase which are contingent upon a series of property inspections. While an experienced homebuyer may be familiar with the process of home inspections, a first-time buyer is usually not as knowledgeable about the procedure for having inspections performed. For assistance, a novice buyer may understandably turn to the real estate agent who is involved in the transaction. Therefore, it is essential for agents to properly respond to such inquiries. First, a real estate agent should never discourage a buyer from performing or hiring someone to perform a home inspection. Although the agent may believe that bypassing inspections will save the buyer money in the short run, it could become very costly to the buyer in the long run. Buyers will become disgruntled when a major defect, which could have been detected by a pre-closing inspection, is discovered after possession is taken, and this can result in unpleasant confrontations between the buyer and agent, as well as the buyer and the former owner. The buyer might even file a lawsuit against the seller and the agent for nondisclosure of material facts, in which case the costs of the lawsuit may outweigh any money previously saved by foregoing the inspections. Secondly, should a buyer desire an inspection or a series of inspections on a property, the agent should encourage the buyer to have them performed in a prompt fashion. The Commission has received complaints in which buyers stated that they were told by a real estate agent that inspections could not be performed prior to loan approval. This type of misinformation from agents has caused buyers to spend unnecessary time and expense in qualifying for loans on homes that they decide not to purchase when they discover the extent of repairs which must be made. As a result of these situations, some sales contract forms now encourage buyers to have inspections completed prior to incurring expenses for closing. To this end, agents should ensure that all buyers and sellers are fully aware of inspection provisions in contracts, and suggest that inspections be performed promptly.
Although inspections which are performed immediately after contract may not guarantee smooth transactions, the parties will at least be more informed about a property's condition at an earlier stage which, in turn, affords them an opportunity to resolve their differences before they incur unnecessary costs.