PROPERTY CONDITION DISCLOSURE FORMS: HOW THE REAL ESTATE INDUSTRY EASED THE TRANSITION FROM CAVEAT EMPTOR TO "SELLER TELL ALL"

Turning to the second question, Professor Robert Washburn endorses the idea of forcing sellers to pay for the home inspection. Professor Washburn states that "[i]f the cost is placed on the buyer, there is a problem with multiple inspections by successive buyers, each having to pay for the cost of an inspection."187 Furthermore, the seller could obtain the report and make it available to the buyer before the listing broker begins showing the property to prospective buyers, enabling the buyer to adjust the purchase offers according to the revelations in the report instead of forcing the buyer to re-trade the deal later, as the buyer often does following the buyer's own professional inspections. California real estate attorney John O'Reilly observes that many San Francisco real estate brokers urge sellers to pay for home inspections. Besides providing buyers with useful information, seller-funded inspections preempt buyers from renegotiating the price once in contract and encourage competitive bidding by increasing buyers' comfort levels.188

Although the buyer is not made a party to the seller's agreement with the home inspector, the buyer will probably be able to enforce the seller's contract.189 Even so, relying on the seller's inspection has drawbacks for the buyer. For starters, the buyer will seldom have been present during the inspection. The buyer's presence encourages a more thorough investigation and enables the buyer to ask the inspector's questions on the spot and the comprehend the inspector's observations and conclusions better. The buyer will not have participated in reviewing the terms of the inspection agreement, including provisions limiting the inspector's liability190 and the buyer's time for filing a claim. Buyers will not know what the seller paid for the inspection, how long it took, and how careful the inspector was. Nor will the buyer have participated in selecting the inspector. The seller probably will shop around for an inspector with a reputation for not being too difficult-even though a lenient inspection does not absolve the seller from the legal obligation of disclosing all known material latent defects. Should the inspector present an alarming assessment of the property condition, the seller will be tempted to seek a second opinion. The buyer may not know if the seller had discarded a previous, less favorable inspection report or instructed the inspector to exclude certain matters from the scope of the inspection.191 Buyers are well advised to be present when the inspection takes place.

For all these reasons, buyers overwhelmingly prefer to hire their own inspectors. Professor Weinberger doubts any savings can be achieved by seller inspections, and asserts that "[w]hile the occasional buyer may be willing to accept a seller's disclosure and professional inspection report, most buyers will repeat the process by hiring their own inspectors, who will typically discover additional defects. This duplication of effort maximizes the parties' joint transaction costs. . . ."192 Even when sellers commission extensive presale inspections for the benefit of prospective buyers, as sellers often do in high-end residential markets, brokers urge buyers to obtain their own inspections.