Home Sellers - do you read Buyer inspection reports?

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snackdog
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Home Sellers - do you read Buyer inspection reports?

Post by snackdog » Thu Jun 14, 2018 8:11 am

My understanding is that reading a prospective buyers inspection report on a property one is selling may oblige one to disclose the findings to other prospective buyers in the event the initial buyers do not complete the sale. This is problematic as 1) the inspector may have written her report in such as way as to portray real or potential issues in an unrealistically negative light and 2) once such issues, real or imagined, or known to the seller they must be disclosed to other parties (in many jurisdictions). Some sellers and listing agents recommend refusing to receive inspection reports or any information in them from purchasing parties and instead focus the transaction on monetary adjustments to the contract, if any.

Buyers, on the other hand, would do well to receive inspection reports regarding properties which have fallen out of escrow before they tender an offer. Any strategies for getting these if the seller is not disclosing them?

What is your experience as seller (or buyer)? Any suggestions?

(Not looking for legal advice, just best practices and personal experiences.)

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Re: Home Sellers - do you read Buyer inspection reports?

Post by Jack FFR1846 » Thu Jun 14, 2018 8:15 am

I've sold 2 houses. I've never been offered the opportunity to read the buyer's inspection report.

As a buyer, not only did I read the report, I followed the inspector who gave me a narrative as he went through the house. "See the mark on the foundation...there's been water in here." "That bathroom vent should go outside. Just hook a flexible hose to that thing and string it over there and put a dryer vent through there". "The roof looks good". All these while in the basement, in the attic, on the roof. This way, if the inspector doesn't want to put a comment in the report (like the bathroom vent fix will cost all of $12), I understand the implications and don't raise a stink over something that's $12 and maybe 45 minutes of my time.
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desiderium
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Re: Home Sellers - do you read Buyer inspection reports?

Post by desiderium » Thu Jun 14, 2018 8:20 am

I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by jfn111 » Thu Jun 14, 2018 8:35 am

I tell my sellers that neither one of us wants to see the report. That said, the buyer will want to negotiate repairs on any serious items and then we are still obligated to disclose, even if the deal falls apart.
One of the most common ones is Radon. The Buyer will have the house tested and if the readings are high will want a mitigation system installed. If the seller doesn't want to install one they still have to report to any future buyer that a test was done and what the results were.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by daheld » Thu Jun 14, 2018 8:43 am

I get the concern here, but we recently bought a home, and then sold our old home. We received the buyer of our old home's inspection report, and I had no issue with it. For one, I wanted to know, in detail, what the inspector found, and why the buyer was asking for certain concessions/repairs.

I totally understand not wanting to know every single thing the inspector found, on the chance that the deal falls through and you're then obligated to disclose minor issues that you otherwise would not have disclosed.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by stan1 » Thu Jun 14, 2018 8:53 am

If you are the unfortunate owner of a property with a major defect such as a failed foundation, fire, or repeated flooding that is either very expensive to fix or unfixable in full I'd be handling the sale very differently than if you are worried about a few windows that don't latch tightly. I would not feel the need to disclose a minor issue such as a window not latching. No one is going to lawyer up over that.

As a buyer my strategy is to turn around the inspection report back to the seller and their realtor in full and then negotiate a discount. That pretty much defeats a strategy of not being provided the inspection report.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by GAAP » Thu Jun 14, 2018 9:17 am

Certainly I read them -- the buyer will be using the report to negotiate the price. It's hard to respond effectively if you don't know what they think they see.
snackdog wrote:
Thu Jun 14, 2018 8:11 am
reading a prospective buyers inspection report on a property one is selling may oblige one to disclose the findings to other prospective buyers
If you have been provided with the report, you are now assumed to be knowledgeable about the contents. If your first buyer exits due to the report, and you don't disclose a problem, then the eventual buyer has a cause of action against you.

In any case, I would be shocked if your real estate agent didn't require it -- failing to disclose can cost them their license.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by michaeljc70 » Thu Jun 14, 2018 9:48 am

I guess I don’t entirely get what people are saying. What typically happens is the buyer says you have to fix or I want money off due to X,Y and Z. There is no possible way to avoid knowing X,Y and Z. X,Y and Z are typically the biggest problem found (though they may throw in the small stuff too). As a practical matter, at least in my state, the disclosure form has a limited number of items. You don’t need to disclose a window latch or many other things. Further, though you may be legally required to disclose such things to a future buyer if the sale falls through, it is extremely unlikely the future buyer would ever know about the prior inspection report. I am not advocating not disclosing something legally required, but I am talking about a situation where the inspector may have been incorrect (sometimes they say X needs further review by an engineer or whatever).

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Re: Home Sellers - do you read Buyer inspection reports?

Post by brandy » Thu Jun 14, 2018 10:24 am

I sold two homes, both FSBO. I not only had inspections done prior to the sales, I had them available on the kitchen counters for agents and potential buyers to read. Of course, they could get their own report, too.
For the first house, the buyers relied on my report, which was clean, no problems or repairs suggested.

The second,a few years later, the inspector found a few problems: 12 damaged roof tiles, a drainage problem, indication of termites. The house had been a rental, and the termite problem taken care of then. After I moved in, I had a new roof put on (the year prior, so it was still under warranty, and got repaired, with papers to verify) and I repaired the drainage problem, also had work papers to verify. The book and receipts were left on the kitchen counter.
The buyers had their own inspection done, by the same company. They wanted to use that report to reduce the price or to get out of their purchase agreement, and the agent did not want to give me a copy, or to tell me what the problems were. She said she read the contract, that giving it to me was not part of the contract. I told her I read the contract too, that she needed to talk to her broker. She discovered she was wrong, and brought me a copy the next day. The problem she used to get out of the purchase was the drainage problem, but as I could verify that not only had it been appropriately addressed, I had gone beyond what was actually needed, in order to improve the appearance. They did buy the house. AFAIK, they are still there.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by Jags4186 » Thu Jun 14, 2018 10:45 am

michaeljc70 wrote:
Thu Jun 14, 2018 9:48 am
I guess I don’t entirely get what people are saying. What typically happens is the buyer says you have to fix or I want money off due to X,Y and Z. There is no possible way to avoid knowing X,Y and Z. X,Y and Z are typically the biggest problem found (though they may throw in the small stuff too). As a practical matter, at least in my state, the disclosure form has a limited number of items. You don’t need to disclose a window latch or many other things. Further, though you may be legally required to disclose such things to a future buyer if the sale falls through, it is extremely unlikely the future buyer would ever know about the prior inspection report. I am not advocating not disclosing something legally required, but I am talking about a situation where the inspector may have been incorrect (sometimes they say X needs further review by an engineer or whatever).
Do the sellers in your state have to fill out a seller's disclosure form? I would hazard you need to disclose anything that is on the form. So "windows not shutting tightly" is not something that needs to be disclosed unless it is a question on the form.

I'll give you an example--I entered into a contract on a house where the sellers filled out a seller's disclosure form. On the form they claimed that there was no evidence of knob and tube wiring and no evidence of an underground oil tank. My inspector, among other things, found knob and tube wiring and piping coming into the basement from an abandoned oil tank. We provided them with the report and those along with numerous other issues caused us to back out of the deal. I see the house is pending for sale again now. I'd be curious to see if they updated the seller's disclosure form.

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snackdog
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Re: Home Sellers - do you read Buyer inspection reports?

Post by snackdog » Thu Jun 14, 2018 10:51 am

In Texas, at least, the standard disclosure form includes a section on Inspections and asked you to provide copies of any you have from the last four years. Thus, the importance of viewing them or not. I see no advantage to viewing them as a seller. I prefer to simply ask the buyer to close the deal under the terms agreed or propose a different sales price and we negotiate only the price. As an owner I have a pretty good idea of what issues his inspection may have unearthed. If it found other issues I may doubt the inspector or otherwise not want to know!
Last edited by snackdog on Thu Jun 14, 2018 10:53 am, edited 1 time in total.

GAAP
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Re: Home Sellers - do you read Buyer inspection reports?

Post by GAAP » Thu Jun 14, 2018 10:53 am

michaeljc70 wrote:
Thu Jun 14, 2018 9:48 am
Further, though you may be legally required to disclose such things to a future buyer if the sale falls through, it is extremely unlikely the future buyer would ever know about the prior inspection report. I am not advocating not disclosing something legally required, but I am talking about a situation where the inspector may have been incorrect (sometimes they say X needs further review by an engineer or whatever).
Around here, "failing inspection" is an easy way to get out of a contract -- but that fact is also public knowledge. We did much more thorough inspections than most -- the overall house, a separate septic inspection, separate well inspection, detailed water tests. We also tended to look much more closely at houses that had several inspection failures in their history. We didn't know what was in those reports, but became more careful also.

Inspection quality is highly variable -- and when we sold, we made it quite clear how unacceptable some of the items on the buyer's report were. We couldn't do that without reading it...

What people consider "important" is surprisingly variable. The people that bought our house wanted to replace a concrete sidewalk instead of sealing a crack -- several thousand dollars vs. less than a hundred dollars. We chose different flooring types throughout the house to distinguish the rooms, they wanted consistency everywhere, etc.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by e5116 » Thu Jun 14, 2018 10:56 am

I've had two experiences as a buyer related to the inspection report. The first the report was terrible and full of items noted. It was so bad that we backed out of the deal, but it was in a multi-bid situation, so the seller didn't really care. The inspector told me to NOT send it to them because they wouldn't want to see it. And that was accurate. My attorney simply informed them that we were backing out, and that was that. They didn't disclose anything to anybody and sold it quickly for full ask to the next person in line.

My second experience as a buyer also noted major issues, but we still wanted the house but wanted financial concessions to repair some of the items. So, the seller and their realtor in that case certainly wanted the report so they could see what was noted and have a reasonable response. Otherwise, they'd be just totally guessing, which makes little sense since we were asking for a fairly significant concession. That may set them up for a "risk" that they'd have to disclose it if the deal fell through, but it didn't. In my experience, as well, the VAST VAST majority of sellers do not disclose any issues even if they are aware of them (and I live in an area where they are legally supposed to). Not saying that's "right," but sellers simply aren't incentivized to disclose things.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by michaeljc70 » Thu Jun 14, 2018 11:24 am

Jags4186 wrote:
Thu Jun 14, 2018 10:45 am
michaeljc70 wrote:
Thu Jun 14, 2018 9:48 am
I guess I don’t entirely get what people are saying. What typically happens is the buyer says you have to fix or I want money off due to X,Y and Z. There is no possible way to avoid knowing X,Y and Z. X,Y and Z are typically the biggest problem found (though they may throw in the small stuff too). As a practical matter, at least in my state, the disclosure form has a limited number of items. You don’t need to disclose a window latch or many other things. Further, though you may be legally required to disclose such things to a future buyer if the sale falls through, it is extremely unlikely the future buyer would ever know about the prior inspection report. I am not advocating not disclosing something legally required, but I am talking about a situation where the inspector may have been incorrect (sometimes they say X needs further review by an engineer or whatever).
Do the sellers in your state have to fill out a seller's disclosure form? I would hazard you need to disclose anything that is on the form. So "windows not shutting tightly" is not something that needs to be disclosed unless it is a question on the form.

I'll give you an example--I entered into a contract on a house where the sellers filled out a seller's disclosure form. On the form they claimed that there was no evidence of knob and tube wiring and no evidence of an underground oil tank. My inspector, among other things, found knob and tube wiring and piping coming into the basement from an abandoned oil tank. We provided them with the report and those along with numerous other issues caused us to back out of the deal. I see the house is pending for sale again now. I'd be curious to see if they updated the seller's disclosure form.
Yes. There are 23 items on the form in IL. Most say "material defects" in X. X can be electrical system, plumbing system, etc. High concentrations of radon, lead paint, flood plain and asbestos is on there too. My point is these are major things that I'd be surprised a homeowner wouldn't know. Presumably they had an inspection when they bought. I wouldn't worry about seeing the report. If one of these major things was found and the buyer backs out, do you think the next buyer won't find them?

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Re: Home Sellers - do you read Buyer inspection reports?

Post by GAAP » Thu Jun 14, 2018 11:29 am

michaeljc70 wrote:
Thu Jun 14, 2018 11:24 am
Presumably they had an inspection when they bought.
Both of our selling and buying Real Estate agents said "You would be surprised"... One said that few buyers actually pay for an inspection of a newer tract home -- they seem to think it costs too much. To me, that's cheap insurance.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by michaeljc70 » Thu Jun 14, 2018 12:05 pm

GAAP wrote:
Thu Jun 14, 2018 11:29 am
michaeljc70 wrote:
Thu Jun 14, 2018 11:24 am
Presumably they had an inspection when they bought.
Both of our selling and buying Real Estate agents said "You would be surprised"... One said that few buyers actually pay for an inspection of a newer tract home -- they seem to think it costs too much. To me, that's cheap insurance.
Those usually have warranties, so that is probably why.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by audioaxes » Thu Jun 14, 2018 12:18 pm

I recently sold a rental condo in Texas where the seller asked for major repairs done based on the inspection report. Our agent said if we fall out of escrow we would be required to disclose their inspection on our listing.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by c1over8 » Thu Jun 14, 2018 12:53 pm

In my state sellers are required to disclose very little (for example, they disclose if it was built before a certain date that it may contain lead based paint, if the owner has ACTUAL knowledge of the existence of defective drywall, ACTUAL knowledge of a PENDING building or zoning violation). So there is much downside, if any, to looking at the inspection report and you certainly wouldn't be required to turn it over to future buyers.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by snackdog » Thu Jun 14, 2018 5:51 pm

GAAP wrote:
Thu Jun 14, 2018 11:29 am

Both of our selling and buying Real Estate agents said "You would be surprised"... One said that few buyers actually pay for an inspection of a newer tract home -- they seem to think it costs too much. To me, that's cheap insurance.
Brand new homes are among the most risky to purchase, in my experience, home warranties notwithstanding. The majority of builders today in the US are doing a terrible job of construction and problems are built-in to many homes. Inspections will turn up the most egregious issues but others only surface after the place is occupied for a year or two - roof leaks, plumbing leaks, stucco issues, etc. Remediation during escrow is easy as the builder is responsible and has a crew at his disposal to fix it. Getting builders to do warranty work can be nearly impossible.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by adamthesmythe » Thu Jun 14, 2018 9:47 pm

The seller can only read the inspection report if he is given it. The buyer owns the report and is under no obligation to show any of it.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by Carefreeap » Fri Jun 15, 2018 5:23 pm

desiderium wrote:
Thu Jun 14, 2018 8:20 am
I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.
+1 This is what I've done.

In my state (CA) a seller must provide the buyer a copy of any and all home inspection reports.

The CA realtor's purchase agreement requires that the buyer provide copies of their report to the seller and his/her agent.

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Re: Home Sellers - do you read Buyer inspection reports?

Post by michaeljc70 » Fri Jun 15, 2018 5:39 pm

Carefreeap wrote:
Fri Jun 15, 2018 5:23 pm
desiderium wrote:
Thu Jun 14, 2018 8:20 am
I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.
+1 This is what I've done.

In my state (CA) a seller must provide the buyer a copy of any and all home inspection reports.

The CA realtor's purchase agreement requires that the buyer provide copies of their report to the seller and his/her agent.
One thing I didn't see mentioned was if you do this, you have the option to do things yourself if you are handy. Typically, at least where I live, the buyer (more likely their attorney) will demand that plumbing issues be fixed by a licensed plumber, electrical work be fixed by a licensed electrician, roof repairs done by a licensed contractor, etc. and want receipts proving it.

2015
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Re: Home Sellers - do you read Buyer inspection reports?

Post by 2015 » Sat Jun 16, 2018 11:31 am

Carefreeap wrote:
Fri Jun 15, 2018 5:23 pm
desiderium wrote:
Thu Jun 14, 2018 8:20 am
I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.
+1 This is what I've done.

In my state (CA) a seller must provide the buyer a copy of any and all home inspection reports.

The CA realtor's purchase agreement requires that the buyer provide copies of their report to the seller and his/her agent.
I'm surprised you would do this as I see you live in the Bay Area. The RE market is as much on fire there as it is in my SoCal location. Regardless of any inspection report, I will only entertain "best and final offers", to exclude negotiations of any type. Why? Supply and demand.

Homebuying today: Fewer homes, higher prices, and faster deals
LA housing prices break another record
The cost of buying has been at an all-time high for three months
One-third of LA homes sell above asking price
It’s a competitive market out there
Buying in LA has never been pricier

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Re: Home Sellers - do you read Buyer inspection reports?

Post by Carefreeap » Wed Jun 20, 2018 12:12 pm

2015 wrote:
Sat Jun 16, 2018 11:31 am
Carefreeap wrote:
Fri Jun 15, 2018 5:23 pm
desiderium wrote:
Thu Jun 14, 2018 8:20 am
I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.
+1 This is what I've done.

In my state (CA) a seller must provide the buyer a copy of any and all home inspection reports.

The CA realtor's purchase agreement requires that the buyer provide copies of their report to the seller and his/her agent.
I'm surprised you would do this as I see you live in the Bay Area. The RE market is as much on fire there as it is in my SoCal location. Regardless of any inspection report, I will only entertain "best and final offers", to exclude negotiations of any type. Why? Supply and demand.

Homebuying today: Fewer homes, higher prices, and faster deals
LA housing prices break another record
The cost of buying has been at an all-time high for three months
One-third of LA homes sell above asking price
It’s a competitive market out there
Buying in LA has never been pricier
the
Because by law you must disclose all defects. I have a real estate background (although I'm not licensed). A judge will treat me much harsher than the average seller when it comes to the "should have known". Statute of limitations on a sale in CA is 4 years. So just because the sale closes it doesn't mean you're off the hook.

And believe me if the market corrects and the price drops far enough a buyer will come after a seller for a significant undisclosed defect.

2015
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Re: Home Sellers - do you read Buyer inspection reports?

Post by 2015 » Wed Jun 20, 2018 2:10 pm

Carefreeap wrote:
Wed Jun 20, 2018 12:12 pm
2015 wrote:
Sat Jun 16, 2018 11:31 am
Carefreeap wrote:
Fri Jun 15, 2018 5:23 pm
desiderium wrote:
Thu Jun 14, 2018 8:20 am
I have gotten my own inspection reports prior to selling, using a highly respected local person. Then I fix most of the issues on the report and disclose it to prospective buyers. They of course are free to get their own inspection, but I feel my downside risk is known. By disclosing this before offers are made, later adjustments to the agreed price are avoided.
+1 This is what I've done.

In my state (CA) a seller must provide the buyer a copy of any and all home inspection reports.

The CA realtor's purchase agreement requires that the buyer provide copies of their report to the seller and his/her agent.
I'm surprised you would do this as I see you live in the Bay Area. The RE market is as much on fire there as it is in my SoCal location. Regardless of any inspection report, I will only entertain "best and final offers", to exclude negotiations of any type. Why? Supply and demand.
...
the
Because by law you must disclose all defects. I have a real estate background (although I'm not licensed). A judge will treat me much harsher than the average seller when it comes to the "should have known". Statute of limitations on a sale in CA is 4 years. So just because the sale closes it doesn't mean you're off the hook.

And believe me if the market corrects and the price drops far enough a buyer will come after a seller for a significant undisclosed defect.
I see your point but a home inspection or any other form of discovery is the responsibility of the buyer during their time of due diligence. The seller is required to complete a California Transfer Disclosure Statement to the best of their knowledge regarding any known defects related to the property. I agree its imperative to be completely forthright in completing this disclosure. In my case, I did have an inspection for, executed remediation of, and obtained a clearance inspection for mold earlier this year, all of which I will provide to the seller. In this highly sought after neighborhood buyers don't care about defects because they're either going to come in and gut the place or in the case of houses tear them down to build something several times its size and much more "upscale".

Regarding the CA Transfer Disclosure Statement:
https://www.thebalance.com/what-is-a-ca ... nt-1798653

criticalmass
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Re: Home Sellers - do you read Buyer inspection reports?

Post by criticalmass » Wed Jun 20, 2018 2:33 pm

When I looked at a Buyer's inspection report, I was surprised at how much attention was given to very minor issues, while much larger issues (in my opinion) in the Seller's house were completely ignored or missed.

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