The report I underwrote off was addressed to the seller, not me

Small mixed-use building, two retail bays and four apartments over. Seller had a pre-listing inspection done six weeks before I got there, 38 pages, photos, a roof section that read like someone who'd actually been up there. I read it twice, priced my repair reserve off it at $61,000, and went hard on the earnest money at the end of a short diligence window because I thought the condition question was answered.

My own lawyer asked the question I hadn't. Who is the client on that report. The answer was the seller. The agreement had the standard clause limiting use to the named client, and the inspector's E&O sits behind that. So I asked for a reliance letter naming me. The inspector said no, which he's entitled to do, and offered to re-inspect for full fee.

That cost me $1,850 for a second inspection plus a $650 sewer scope I could have ordered on day one, and about twelve days of a 21 day window. I lost the negotiating runway. I asked for $34,000 against a new report that mostly matched the old one, and took $11,000 because I was out of clock.

What I'd do differently. Treat any report I didn't commission as a checklist of what to look at, never as a condition finding I can price off. And order the specialist scopes on day one rather than after the general report tells me to, because the general inspection was never going to cover the lateral anyway.

3 replies

1dpatel_reCS4A

We don't put a seller report in the model at all. It goes in a folder called "read for questions" and the reserve line stays at whatever our own scope says, even if that means the number sits blank for ten days. Twice now the seller report and ours disagreed on roof remaining life by five years, which on a 60,000 square foot roof is the whole deal.

The twelve days is the actual loss here. $1,850 is a rounding error against an $11,000 settlement on a $34,000 ask.

1jessreyes12AU1APRO8

Dumb question I'd have swallowed in a room. What does a reliance letter actually do? Is it the inspector saying he stands behind the report for me too, and does that mean he can be sued by me if he missed something?

1gregpowell66AG4BPRO8

compass, roughly, it names you as someone entitled to depend on the report, which brings you inside whatever obligation and whatever liability cap the agreement created. Caps in those agreements are usually small. Ask an attorney what it's worth in your state before you pay extra for one.

warrant, I'll push on your cause. The reliance thing is a paperwork problem you found late, fine. But you signed a 21 day window on a mixed-use building with a sewer lateral, retail HVAC, and four kitchens, and you didn't order any specialist scopes until a generalist told you to. I've been on the trade side of that building. Twelve days wasn't taken from you by the inspector saying no. It was already spent the moment you sequenced the general inspection first and the specialists second. On anything with commercial bays I book the electrician and the sewer camera the same day I book the inspector, before I've read a word.

The report I underwrote off was addressed to the seller, not me

3 replies