The Inspection Trap: Why Deals Fall Apart After Everyone Says Yes

One missing step can turn a “sold” sign into two weeks of stress, renegotiation, and a buyer who wants to walk. We’ve been living that reality on the buyer side lately, and it’s made one thing painfully clear: skipping a pre-listing inspection is one of the easiest ways to create surprise, fear, and price cuts.

Rowena Patton, Deanna Allen, and Kelly Denney break down what really happens after a contract goes under agreement, when due diligence begins and the home inspection report drops 40 to 60 items on the table. We talk through the inspection problems that consistently derail deals, from galvanized pipes and outdated wiring to deck safety issues, septic root intrusion, and the big red-flag photos buyers hate most: crawl space moisture and “fungal growth.” Even when the fix is straightforward, the uncertainty can push buyers toward environmental testing, bigger credits, or walking away entirely.

We also connect the inspection chaos to today’s housing market reality: prices softening, interest rates rising, and buyers already nervous about overpaying. That’s why we keep coming back to the certified pre-owned home method, a proactive approach that puts the seller inspection up front, builds trust through transparency, and reduces the odds of a contract falling apart. We close with why home warranties don’t replace inspections, and what sellers can do right now to protect their net proceeds and their peace of mind.

Subscribe for more real-world real estate strategy, share this with a seller who’s on the fence, and leave a review with your biggest home inspection surprise so we can talk about it on a future show.

Transcript

SPEAKER_00 0:00

Good morning. This is Rowena Patton on the Real Estate News Radio Show with Deanna Allen and Kelly Demi. And we're talking about challenges we've had in real estate in the last couple of weeks. So I'll kick it off if that's okay,

Welcome And Today’s Challenge

SPEAKER_00 0:17

guys. You want to say hi to everyone? Hi, everybody. Great to have you on the call today. Hey everyone. Here's my interesting take on it, or it's been very interesting and I've learned a lot from it. So it's interesting in my world, I guess, that I've been working with a few buyers recently. Um, I have a uh a number of listings and I focus on the listing side. I've been working with a few buyers, and it has been, I'm not gonna say intolerable,

Why Buyers Struggle Without Pre-Inspections

SPEAKER_00 0:47

but very, very difficult being on the buyer's side. Why? Because most listing agents don't take the time to certify pre-own the homes. All it means, guys, is get an inspection up front. So if you've got your house listed or you're thinking about listing it, get the pre-inspection. I love it when I went out to a listing this week and the lady said, I've been listening to you for years, and here's my pre-inspection, because she's been listening for so long, right? So I can tell you from the buyer's perspective, here we are, we're two weeks into buyer negotiations. This is the bit that you don't realise happens when you buy a house or sell a house. Most states have some form of what is called due diligence now. Due diligence, period, everybody has. That's a time in which you get to check out the house, look at the area. Um, sometimes people say there's sex offenders next door. As the buyers, you can check all of that out when you're going there, right? So that's your due diligence, period. And then you have your inspections. Please don't not have your inspections. You may be in construction or something like that. Just have an inspector look at it. So here's the difference. When you're going to a certified pre-owned listing, it's already had an inspection, and the listing agent's going to say to me, This listing is certified pre-owned. Let me share the inspection with you before we go into contract. Right? Because a third of contracts drop out on average when they don't use the CPO process, it drops to 7%. And here's why. So I'm representing the buyers, they haven't had the pre-inspection. We have been two weeks back in renegotiation. My buyers a few days ago said, I'm walking. Like, you know, they asked for $15,000, and most of it was very, very reasonable in what they were asking for. Roots into the septic tank, a dead tree that was in close proximity to the house, all that good stuff. What are the things do you see on inspections, guys, when you look at inspections?

SPEAKER_01 2:49

You know, things like uh those old galvanized pipes that a lot of older homes have, or uh knob and tube wiring that nobody wants anymore.

SPEAKER_00 2:57

Oh, yeah. And it could be things

Deal Killers Found In Inspections

SPEAKER_00 3:01

the the most uh annoying things for sellers are the uh the balustrades on a deck, what do you call those pickets on a deck, when they're half an inch too far apart, and a baby, if they push the head really hard, could get the head through it. Right? So the I've had sellers get very annoyed by that. Um but yeah, there's all kinds of things that come up. So I've had one, there's you know, minor root intrusion into the septic tank, a tree coming down, but the worst thing was some mold in the crawl space area. Now, the the people who own the house, it's not my clients, um, haven't been in the house for a year, and it had closed up vents, and it turns out they took the dehumidifier with them. So, about 50% of the time here you'll find people, if it's encapsulated, you need to do that in in the crawl space area. So you'll find people put dehumidifiers in and they close off the vents. Well, that's fine when the dehumidifier's there, but the minute you take it out, you're gonna have some mold growing. And when the inspector goes in, most inspectors in most states aren't allowed to say um mold, but they say fungal growth, right? That's pretty scary to a buyer. Have you guys ever seen that? In the crawl space. Have you ever seen fungal growth or moisture in the basement? I've done whole radio shows about moisture in the basement. We used to make always.

unknown 4:27

Yeah.

SPEAKER_02 4:28

Right. I would I would say always when they're at the crawl space. Yeah. Because who the who no one no nobody puts that even the wife doesn't even put that on the husband's to-do list. I need crawl into the crawlspace, make sure there's no single crawl space.

SPEAKER_00 4:42

That doesn't ever happen. That's not one of the things to do. And it's very it's very common. And it's because you've closed it up, right? The vents aren't open. And usually when you close the vents, you're gonna put a dehumidifier. They took the dehumidifier with them, and it's been sitting for a year, of course, there's some growth. But of course, that scared my buyers to the point where they said, Do we need to get an environmental uh survey on it? You know, do we need to get the environmental inspectors in to do a fully fledged survey? So we looked a bit more closely at the pictures and didn't look like there were any damage. It just looked like some, you know, surface fungus on there. So agents, if you're listening, or buyers if you're listening, of course you can go ahead and have that full inspection if you want to. Just in this case, we didn't think it was that necessary. So we finally got through it, but it took two weeks of negotiation. We had buyers that had been looking for months that now were going to pull out. We had sellers that had been listed for eight months and hadn't been in the house and they're divorcing for eight months, now facing the buyers pulling out. We had an agent who was looking to disclose all the items we came up with. This is the real life mess. Real life mess. This is what destroys deals. It almost destroyed this one. Now, put it on the other foot. Had this house been certified pre-owned, it's not magic, right? But we'd have done the inspection first. We'd have found all the wood and stuff and things. I mean, you don't expect an agent to crawl in the crawl space and check that out either, right? I mean, you're right, Kelly, that's what husbands are for. So who's crawling in the crawl space really? Apparently they'd like left lots of wood under there, like building materials. Perfectly normal when you've got a dehumidifier, right? It's a good place to store them. But not now. We've got fungal growth. It just creates this really scary picture. And that's what comes out of the inspection often. So that's why pre-inspect, pre-inspect, pre-inspect. I'm gonna hand it over to Deanna and she can say her real estate chat challenges in the last few weeks, and then we'll hand it off to Kelly.

SPEAKER_01 6:47

Okay, thank you, Ro. Yeah, so I mean, obviously there are a lot out there, and we're speaking specifically today to the inspection and the importance of it.

Seller Psychology And Price Deductions

SPEAKER_01 6:55

Um, you know, the negotiations that come back and forth after a home buyer does their inspection is, like you said, really what stalls things. And the home seller often thinks, hey, the buyer's gonna do their inspection anyway. Why on earth would it make sense for me to do it now? Well, this is exactly why, because these surprises come up. And what happens with a buyer's viewpoint is they see a price on a house. Let's say they're looking at a house and it's 500,000 is the asking price. Well, the second they get that inspection back and see all of the things that are on the report that need to be repaired, according to the inspector, what happens in their mind? They deduct, deduct, deduct. Things that need to be fixed and dated homes are automatic deductions in a buyer's eyes. And that's just what happens, yes. Can I build onto that, Deanna?

SPEAKER_00 7:45

Of course. So in all of our markets, and you're across the other side of the country, in all of our markets, we're in a declining market right now. Mine is anywhere between four and 10% forecast decline in the next year, and it declined that in the last year. You you're actually on the other side of the country, and your figures are very, very similar. And Kelly, your figures are very, very similar too. So the interesting thing there is a lot of sellers are, a lot of buyers in their mind are thinking, oh my gosh, these prices have gone up so crazy. Right? They already f that and they know the market's declining, so they're nervous. You've got a lot of nervous sellers out there, nervous buyers out there that are sitting, or nervous sellers too, but nervous buyers that are sitting on the fence going, is it the time? Are interest rates going to drop? You know, we're having some of the lowest sales in the last 10 years right now. So you've already got this small pocket of buyers. So when you do get this beautiful goose egg, is it goose egg a bad thing? Beautiful eagle's egg that's golden, that that's in your nest, which is your wonderful buyer, hatch it out. Because guess what? That buyer's already nervous, they're worried they're paying too much. So, in your point, Deanna, when they get the inspection report back, when it's not a certified pre-owned home, you're gonna have 40 to 60 items on that inspection report. When they get that back, aren't they using those as a big negotiating ploy? Hey, I've got 40 items on here. Let's just get 20 grand off because we're paying too much anyway. Exactly.

SPEAKER_01 9:20

Yeah, that's always what happens. And so, you know, using using the certified pre-owned method for people to sell their home, for home sellers to sell, really, you know, decreases their chances of the contract falling out by, you know, from a third to about 7%, is what we've seen across the board. And so what does that do for the home seller? That puts more money in their pocket and everyone goes in eyes wide open. Yeah. The buyer feels more confident and everyone's happy at the end, and we make it to the closing table.

SPEAKER_00 9:51

And we don't have those awful negotiations where it's all so stressful. I mean, I, you know, over the last few weeks, I've seen text coming back going, well, from the buyers, and and you know, the it because we're agents, we sit, we're sort of peeling back the curtain here. So from the buyers, they'll say things like, I almost want to read you one, we should do that one day. Say things like, Um, I can't believe these home sellers think they're an inspector and know better than the inspector. This is absolutely necessary to be done. I know you've both seen those. You know, everybody gets very agitated. Um, they curse, they get very angry, they often blame it on the agent, uh, whichever agent side, you know, that they're blaming it on. It gets it can get very, very ugly. I've actually seen back in the day when sellers and buyers sit around the closing table, I've seen fists, fisticuffs pulled. I've seen like punches pulled across the table. Like it can get and it's not unusual though for it to get very uh tense, right? I mean, in in our both of our markets, our average price, average price point is about 500,000. So you're buying something that's half a million dollars, of course it and selling something that's half a million dollars, of course it gets tense. Of course, you know, people get the the gets their IRE up and all that good stuff. What do you think, Kelly? What have you seen?

SPEAKER_02 11:14

Well, yeah, I agree with you. I haven't seen fisted cuffs, but as we're sitting here discussing this, the things that pop into my head is we are with the interest rates going up and house prices coming down, which is great, but interest rates make them unaffordable. I've been sitting here thinking

From Reactive To Proactive Selling

SPEAKER_02 11:31

we need this is a paradigm shift. We need to happen. We are historically, I mean forever, it has been a reactive market. And the home buyer brings in the inspector and they see the list. What do we say on average? 45, 50 items, 46. And their eyes pop out of their head, and they're like, Oh, I didn't think this home would be that bad. And they send it to the homeowner, and the homeowners think their house is fantastic, but they don't know everything about it because they just they just know about the things they use day to day or they deal with commonly. And it's like, so they get blindsided, so they're both they're both reactive.

SPEAKER_01 12:13

Yeah.

SPEAKER_02 12:13

So using the CPO method, it becomes proactive. And I had the thought that's like it's like if you're thinking of going to the gym, this strengthens the homeowner's muscles. So one day you think, hey, I'm going to the gym, and you go to the gym and you do everything, and what do you do? You pull a muscle, you hurt your back, and you don't go back out for 30 days. Well, doing this will help you strengthen your home seller muscle, so to speak, and it gives you the information you know. So when this buyer comes back with their inspection, you can marry them together. But we've talked about this before is the level of trust and transparency it creates from the seller to give their own inspection to the homeowners, the home buyer's agent, and then they can see what's coming on. And it means and the seller is not going to be blindsided. That happens, it's got to be high 90%. Nobody does the certified pre-owned with the inspection up front, and they have to. It's just it just strengthens their house, and we're always aiming to make their house stand out on the market, and this is the way to do it versus just going, I'm gonna put my house on the market, and I sure hope it sells. But you literally have no idea if it's gonna sell in this current market because unless it's just the diamond and all the cliches you can come up with, it's not gonna sell if you haven't done your homework first.

SPEAKER_00 13:33

So, Kelly, riddle me this Batman. So, can I call you Batman? Is that alright? You'll can't see the screen behind Kelly, so now he's Batman. Um, let me be Robin for a minute. So why don't honestly, I've been tearing my hair out about this because I've been, you know, on the buyer's side for the last two or three. Um actually, people we've helped through the cash offer in different states who have moved here, that's why I ended up on the buyer's side, helping the buyers. So it's infuriating to me when we're going through this mess when I know a simple inspection could have cured all of this. Right? We've nearly had two drop out now. A simple inspection, and I can hear the homeowners saying, Yeah, but the buyers do that. And why would I spend 550 bucks? Because it's a massive insurance policy, that's why. And you end up losing way more money. $4,000, $6,000, $10,000 because the buyers will ask for it. I can hear the sellers saying, well, I won't pay that. I can tell you from over 3,500 transactions, when you're in the midst of it and you're in a declining market and you finally got that buyer after a year, you probably will. And I I know that feels rough and I know it feels tough. Do the inspection up front. Why are more agents not? I mean, how would home sellers move, you know, know about it? That they probably haven't sold a house in 10 years. They're not in the business. Any successful agent is selling one, two, three homes a month. They know what happens. They know we're not just telling a story here, guys. Honestly, every single deal. People don't go, oh, the inspection's great, wonderful, okay, move on. Oh, happy closing day. I don't remember the last one that went like that. Everybody gets a little nervous. The market's declining, interest rates are going up. What's gonna happen with the war? You know, all these things are going on, politics are going on, everyone's nervous. It just doesn't happen like that. There is there's either there's anything from a little tenseness where people are nervous to really all out, all out freaking out about something that's going on in the house. Would you say that's fair, guys? I'm not exaggerating, am I?

SPEAKER_02 15:44

Not at all. I I can honestly tell you in my entire history of the number of sales I've done, there has literally never been a seller inspection done. Never. And it's like, unless your agent is a general contractor, well, I happen to be one, but I'm not gonna go inspect their home. I mean I could, but agents in general do not inspect a home. They have they should know what's going on with the house, and the more they know, the better. But I've literally never had a pre-inspection.

SPEAKER_00 16:22

What why so why are a so you are a contractor is a little bit different, and you know, you were recently exposed to this, but why do you think agents aren't you know isn't it a blinding sellers and agents when they learn about this say that is a blinding glimpse of the obvious. It's a no-brainer. Like, why aren't we all doing this? Right? In California, it's widespread. So, so why is it, do you think, that agents aren't explaining this stuff? We can't expect home sellers to know. We do lots of these shows, been doing this for 14 years, talking about certified pre-owned, best-selling book on it. You know, we do lots of marketing on it, all the good stuff and things. But you can't expect homeowners to to to know about it because they sell a home once every 10 years, maybe once every seven years. Agents know this goes on. So have they just not got to that blindingness of the obvious piece? Is it because it is more work, we have to explain to the home seller why it's such a good idea. Like, why are more agents not doing this?

SPEAKER_02 17:22

They're running around, they're running along with tradition. This is tradition. You get a listing agreement, you put a sign in the yard, you throw it on the MLS. Unfortunately, today it goes to every website in the country in the world. But it's just not

Why Agents Skip Certified Pre-Owned

SPEAKER_02 17:39

part of their training and it's just commonality and and it's not taught. It is not taught through the brokerages to their agents. It's not. They don't know it. And the other thing, when you mentioned dropping, you know, putting out five hundred dollars, oh I don't want to do that. I will you we've talked about it many times, and you bring it up all the time, bro. Is you you're gonna have to make adjustments, and that first adjustment they're gonna have to make is gonna be ten times the price uh of a five hundred dollar inspection.

SPEAKER_00 18:09

Yeah, easy.

SPEAKER_02 18:10

Absolutely. Without without question.

SPEAKER_00 18:13

In fact, on our cash offers, what we do is we put in an amount. Uh, so we do, you know, we do five ways to sell your house. Sale by owner, we give you the net, a grandma's listing, we give you the net, a conventional CPO where you do the inspection, we give you the net. Um, certified pre-owned, where we give you the majority of your cash out up front, and then we list it CPO when you get another check. And now we have the new one and done offer. And all the net, in other words, the money you put in your pocket is on one sheet. So we put all of that in place. Um, on that, when we do the cash offer, we always put so it says, you know, what what's the mortgage amount outstanding? By the way, guys, if you're listening out there and you have you're thinking about selling your house, go and put it in at cash CPO. That's for certified pre-owned. CashCpo.com. Go put it in. It'll take you five minutes, see what home just for a home value, see what home value comes back.

Cash Offers Repairs And Next Steps

SPEAKER_00 19:08

You'll actually get an offer, which is a real home value, right? That's a real home value. On those cash offers, we always just estimate $5,000 for repairs, right? On the inspection report, because the inspection report comes back, it's going to be at least $5,000. So we try and not put too much in, but we know that's going to come back, just like a normal transaction. So you're right, Kelly. Five you said 10 times. It's at least 10 times the cost of uh of an inspection. But even more than that, it's not just money. Spend the money, it's an insurance policy. It's the fact, should your listing drop out a third of the time, which what happens with grandma's listings, which is what you it may all you've ever heard of are grandma's listings, not certified pre-owned listings. If it's that, it's gonna drop out a third of the time. Here's the problem with that. You've got a stigmatized listing. Everybody in their dog calls and says, What's wrong with it? That drives your price down. Isn't that worth the 500? Plus all the stress and agony and angst. If you could just have a viewpoint, we need a reality show. You know, oh, selling Beverly Hills. Yeah, right. Let's look at real life real estate. What happens, right? Where people are almost, they would throw punches, they're just keyboard warriors instead. All the stuff and things that go on, that would be interesting, right? Because it is agony. Take the agony away for $500. Go for it, Kelly. Take us home.

SPEAKER_02 20:34

So the the other thing, too, is some of it may be, oh, we'll offer from the seller's side, we'll offer them a homeowner's warranty for one year. Great. That covers major things, but that doesn't cover everything an inspection's gonna re show. So they're it they're tied into this commonality of like, we'll give them a homeowner's warranty, it'll all be fine. It's like, hey, save yourself. You're likely you're gonna bring your money back by doing a home inspection. You will get your money back on your house better than that.

SPEAKER_00 21:04

I agree because if you've got mold or a tree that's dead or something, the home warranty isn't gonna cover that. And it needs not to ship on the inspection. Any last words, Deanna?

SPEAKER_01 21:15

I would say if if you're selling your home, find find someone who can represent you using the the CPO method. Uh, you'll you'll have a lot better experience in the end, as will your buyers, and everyone will be happy at the end of the day.

SPEAKER_00 21:29

Much happier, right? You'll you'll be on the nine

Final Advice And How To Reach Us

SPEAKER_00 21:32

out of ten instead of the two out of ten, which is normally how it scores. This has been Kelly and Deanna and Roe on the Real Estate News Radio show. Anywhere in the country, if you'd like to find an agent, actually anywhere worldwide these days, um, with the sleep CPO method or that are taking it to the next level for you, give us a call twenty four seven eight two eight three three three forty four eighty three. Eight two eight three three three forty four eighty three You can see all the episodes at realestate newsradio.com. That's realestateradio.com. See you on the radio next week.