Understanding the Differences Between the Departure Inspection and the Buyer’s Inspection
A common challenge faced in the relocation industry is to understand, navigate & negotiate findings asserted by the ultimate purchaser of a property from that of the ERC Relocation Property Assessment performed on the same property.
To assist in better understanding why these differences may exist, FICS (fidelity Inspection Consulting Services) would like to offer the following insights to the relocation property assessment process.
The state Purpose of the ERC Relocation Property Assessment is described as:
- This assessment seeks to obtain an opinion based on a visual, non-invasive evaluation by a professional, whether the professional is a licensed engineer, a member of a national or state professional organization, or other qualified contractor.
- The service provider is to evaluate the home based on its “as is” condition, as of the date of the assessment.
Status definitions of the ERC Relocation Property Assessment are limited to:
- Acceptable: The item is performing its intended function as of the date of the assessment.
- Not Present: Does not exist.
- Not Assessed: Not assessed due to inaccessibility or seasonal impediment.
- Defective: Structurally unsound; unsafe or hazardous; inoperative.
Passage of Time
The property assessment does not make any forward looking or anticipatory statements, nor does it account for the period of occupancy between its completion and that of the buyer’s inspection. Commonly, the time period between these inspections may be short…however, the passing of the time has taken place & the environment/date/time/conditions are all different.
A house is an extremely complex structure with millions of interactive parts. These parts are continually in “ing” mode – performing, working, insulating, deflecting, heating, cooling, protecting, expanding, contracting, decomposing, hydrating, dehydrating….and on, and on. Numerous influencers to the physical characteristics of the house are continually at work: Electrical currents, combustion, energy transfer, climate & geological conditions, (Rain, Temperature, Soils) hydrostatic pressure, load / gravitational pressure…and on, and on.
Fundamental Differences Yielding Different Results
The Purpose of a typical buyer’s inspection is not subjected to the same limitations as those placed by the relocation industry as a whole. While some of these limitations are factually comparable, others are more obscure & implied.
Inherently in the relocation process, a desire for Transferee satisfaction with the assessment process and product exists, although the Transferee is not the consumer of the product. Communication during the assessment process is intentionally limited.
For an ultimate purchaser, their inspector is working solely in their interest and often with the intention of increasing negotiating leverage. High level communication is practiced as a rule & discussion on anticipatory are often had on site. Purchasers use the inspection process to plan for their future ownership at the property, and may ask for credits in lieu of repairs. Purchasers have the ability to do so without restriction. This is considered a viable negotiation tactic which is common to a US real estate transaction. Simply put: negotiate price, then negotiate inspection results. The leverage to the purchaser is compounded by the industry practice of disclosing assessment result to the marketplace.
Be Cautious of Scope Modification
Oftentimes, the scope of the ERC Property Assessment is enhanced by policy to include maintenance, cosmetic, minor repair items.
This approach is successful in mitigating some small element of risk, but may elevate transferee dissatisfaction, while a key fundamental exists regardless of assessment scope…
The Relocation Assessment process is preventative in nature and is utilized in risk prevention for contingency ownership, but a Purchaser Inspection is used for anticipated occupancy and living standard.
And the buyer will always want to feel as though they have “won”.
By Mark Gronke