Dear Monty: I had my home inspected before putting it on the market. The home inspector tagged the furnace and said I should have a heating technician check it out. The furnace company inspected it and said there was no defect. He also offered to replace it for $8,000. I am in a quandary because when an interested party sees the report, it may cause a problem. At the same time, I struggle to justify spending $8,000 when the heating company says it’s OK. Do you have a suggestion?
Monty’s Answer: The home inspector’s job is to find defects. Defects may be defined differently state by state. A “defect” is defined as “a condition of any component of an improvement that would significantly impair the health or safety of future occupants of a property or that, if not repaired, removed or replaced, would significantly shorten or adversely affect the expected normal life of the component.” Defects most often occur in the major components or systems.
Choices to Consider
There are several choices from which you can choose a direction. There may be other options not listed here to consider as well. Regardless of which option you select, the effectiveness of any option, short of replacing the furnace, can depend on your resolve and your customer’s opinion. Your customer may have yet another option.Option No. 1: Do not replace the furnace. The positives for you are: a) You keep $8,000 in your pocket. b) You keep the buyer’s trust as you have disclosed the report and invested in having the inspection done upfront. c) You have shifted the responsibility of the decision to the buyer. The negatives for you are: a) The buyer may see this situation as an added cost. b) The furnace may turn into a negotiation.
Option No. 2: Replace the furnace. The positives for you are: a) You have increased the buyer’s trust. b) You have eliminated a negotiation. b) The negative for you is that you have put $8,000 at risk.
Be happy you have not yet set the price. Can you recover the cost when setting the price?
Option No. 3: Offer the buyer an $8,000 credit at closing. a) You keep the buyer’s trust. b) You shift responsibility to the buyer. c) You may still save $8,000. The negatives for you are: a) The buyer may resist doing the work. b) You may not save $8,000.
Other options are in the buyer’s hands, which you have no control over. While they could order an inspection of their own, the likelihood of a second inspector discovering some new defect unreported by the first inspector are slim. The buyer may ask the seller to replace the furnace. The buyer may walk away.
Homebuyers that allow home sellers to handle repairs or replacements will often be disappointed with the results. Examples of common complaints are selected cheap products or replacement parts, poor workmanship, the problem not having been eradicated or work not completed. While many very competent homeowners are capable, there appear to be just as many that are not.
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