Let the SELLER Beware of Appraisals & Inspections

We’ve all heard the phrase “caveat emptor,” which means, let the buyer beware. This phrase became familiar to me when I worked in retail. The idea was that, as a buyer, you have a certain responsibility to watch out for yourself.

Whatever you are buying is being “sold” to you by someone. Built into that process is the fact that you may not have the entire picture. That “picture” could also have more touch-ups than an online dating selfie.

So, for centuries, apparently (Latin has been a dead language since the 6th century AD) people have felt the need to remind buyers to look out for themselves. But what about the sellers? Who is looking out for the sellers? Why don’t they have a fancy Latin phrase to remind them to be careful?

Since I work with a lot of home sellers, I decided to brush off my 10th-grade Latin notes and help them out a little. Mr. John Byker, if you’re reading this, go ahead and pat yourself on the back because you are responsible for this.

Therefore, with enough pomp and circumstance to make Constantine proud, here goes.


I don’t know if this saying will catch on, but I’m so dedicated to this idea that I may temporarily pause my campaign to bring back “Whaaaazuuuuuuup” and “ridonculous” until this takes off. I’m sure this will make my kids very happy.

What is wrong with me? This is one of the most incredible sellers’ markets in a century. Why would I suddenly be looking out for those greedy sellers? I’ll tell you why. Because buyers are getting smarter and smarter every day, and sellers are the ones paying the price.

Here are two examples that I see over and over each week while we negotiate offers and manage those contracts to close.

First, appraisal issues.

Let’s say you’re a buyer, and you know you are in competition with several other buyers for a particular home. Multiple offers are announced, and the seller is calling for “highest and best” by the offer deadline. Sounds like a big celebration is about to happen for those sellers.

Well, before they pop the champagne, let me pop this balloon and see how we feel afterward. The savvy buyer is going to simply blast in an offer that can’t be refused. This buyer has already figured out they can’t compete at the top of their budget, so they wisely start targeting homes that are 5-10% under their top end. When the multiples start, they have the financing letter to push this offer multiple 5-figures over asking and win the bidding war.

Great for the seller? I think not, amigo. While the winning offer may be the “highest,” it may not necessarily be the “best.” Sellers get caught up in the dollars, and all sense goes out the window. But let’s not forget, unless that house appraises for that amount, that offer is coming back to earth with a loud thud.

I have seen more low appraisals in the past few months than I have seen in the last 20 years combined.

When a home doesn’t appraise for the contract price, there are a few things the listing agent and seller can do to fight it, but at the end of the day, the seller is left holding the bag. Appealing the appraisal, if you’re even allowed, is a long shot at best. I won’t get into the playbook for a low appraisal here, but it’s not pretty.

This is when the buyer’s evil plan starts to bear fruit. Win the bidding war and let the appraiser get me a better price. At first, I thought it was a fluke, but then it started happening multiple times in the same week. There’s a conspiracy here, my selling friends. If not, it’s the biggest cluster of coincidences I’ve seen since Roswell.

The fast answer to this is to make sure any time you are considering an offer above your list price, ask for appraisal gap coverage. Since the buyer is the one pushing the price above asking, get them to commit to covering any amount above asking but short of the appraised price.

For example, you are asking $300,000. A buyer offers $335,000 to win. You ask the buyer for $35,000 in appraisal gap coverage. If the appraisal comes in above $300,000, but under $335,000, the buyer is on the hook to make it up in cash at closing.

Once you establish that the buyer will cover any shortage, make sure they can cover it. Get proof of funds demonstrating the buyer has the cash to cover their down payment plus the appraisal gap amount. Once you have this clause in your purchase agreement, you have my permission to pop that cork.

Second, inspection issues.

Another part of the buyer’s plan for bringing the price down is to take the seller to the cleaners during the inspection process. Inspections have always been a shaky bridge to cross for all contracts. We estimate that, of the deals that fall apart, approximately 70% fall apart due to inspection issues. One of our laws of real estate is this:

The love between buyer and seller peaks at the offer and gets lower and lower all the way to closing.

The inspection process is one of the major contributors to that loss of love, and all the counseling in the world won’t fix it.

If a buyer wakes up with a multiple offer hangover, they are going to want some revenge. That buyer usually starts to feel like a victim because the evil seller forced them to overpay. The hangover cure? Let’s get it back during the inspections.

Where I come from, inspection issues are limited to structural/safety/environmental issues that were not known to the buyer during the offer phase. The thinking is that if the buyer knew about the problem during negotiations, they would have offered less.

During the inspection remedy period, the goal is to make that right. We do this by having the issue repaired or by compensating the buyer with a lower price (or closing credit) to get the problem fixed. Simple enough, right? Not anymore.

When a buyer feels wronged or, in the case of the evil conspirator, decides to purposely overpay, the plan to fix it is to go apeshit on the seller during the post-inspection process. Since there very few hard and fast rules about what can and can’t be requested during inspections, it’s like open season.

In the past, sellers usually felt like they should and could work with the buyers to make it right, so things went OK for all involved. Some deals fell apart, and some were amended.

Now, we are seeing lists that look like full-blown remodel plans. These days, some buyers and their inspectors have sellers feeling like the house should be condemned.

A 20-year-old water stain on a concrete wall is now a $20,000 reduction. A missing shingle is now a new roof. A missing GFI outlet is $5000, or a complete rewiring of the home. All sense of sanity is out the window, which by the way, needs to be replaced because it’s a little stiff when we open it.

Not all deals are like this, but many are, and we are hit with a phrase from the buyers that I have come to loathe.

“Well, we paid a premium for the house, so this should not be a big deal.”

Wow…just typing those words is making me angry. Don’t worry; I’ll meditate a little extra later.

First of all, no one forced the to pay that amount during negotiations. They willingly, albeit possibly emotionally or drunkenly, chose to submit and sign that offer. They were represented by someone whose job is to look out for only them. (I don’t practice dual agency, so all of my buyers are either represented by another broker or represent themselves.)

Coming back later and claiming that the seller owes you a new kitchen because the faucet leaks? That tells me the pendulum has swung too far.

A while back, we had a buyer win in multiples. During the walkthrough and on the seller disclosure, it was noted there was a crack in the concrete of the basement wall. This crack was there when the home was originally built. The builder filled it with some appropriate material, and for 20 years, the home stood with nary an issue. Fast forward to the inspection.

The inexperienced inspector makes a note that the crack is there. Not exactly Sherlock Homes (see what I did there?) No advice other than telling the buyer they need to get it inspected by someone qualified. Wait…then what is Sherlock doing here?

The buyer decides the seller needs to pay a structural engineer to come in and assess the situation. The seller responds that a legitimate structural assessment by a qualified engineer will take many weeks to set up and get results. The seller also states this inspection will cost many many dollars and, frankly, is unnecessary. Hmmmm….

How does the seller know all of this? Because he IS a structural engineer and does this for a living. Naturally, he feels the buyer won’t listen to him since it’s his home, but I submit to you: If a structural engineer moved his family into the house, isn’t there a chance he did a little homework before he bought the place?

The buyer’s response? How about you give us a $10,000 reduction in price since we…wait for it..paid a premium for the home?  I rest my case.

So I ask you, friends and neighbors, can we start a new craze across the nation? I want t-shirts, billboards, Robo-telemarketing calls, YouTube ads, and one of those planes pulling the banner through the sky.


Clearly, I’m a bit biased, but I’m not the first, and it’s about time someone stood up for the sellers. Everyone thinks this market is only stressful for buyers—which it is. It’s one of the most high-tension markets in decades. But that tension is not all one-sided.

If you agree, let me hear it. Tell me your stories and tell me what worked and what didn’t work for you.

If you disagree, punch me in the face with your reasons and logic. Don’t worry—I don’t bite, and as you may have guessed, I love a good argument. Wait…didn’t the Romans invent the debate? We just came full circle. The floor is yours, my friend.

One more thing…Before you actually stick that sign in the yard, make sure you and your property are 100% ready. Our Ultimate Seller Bundle is a free comprehensive packet that covers everything from prep to closing and everything in between. With over 50 pages of forms, checklists, and templates, you won’t miss a thing. Pick up your free set here. 

Hit me up HERE with your thoughts and comments. I read and respond to every email…eventually.

Take care,


Ohio Property Group, LLC
Author: “You Can Sell It”

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