By Eric Berman, REALTOR® | The Eric Berman Team at Compass
 

TL;DR:

A home inspection has no pass/fail standard — no score, no certification, no authority issuing a result. It's a condition report, and sellers who believe they've failed something tend to concede more than the situation requires. What genuinely can stop a financed sale is different: an FHA or VA appraisal flagging condition items, a municipal inspection that doesn't sign off, or a septic or well test where one applies. And whatever the report finds, the seller now knows it — which changes what they must disclose if this deal ends and the home goes back on the market.

There Is No Failing an Inspection

Start here, because the framing shapes how sellers respond and the framing is wrong.

A home inspection produces a report, not a result. There is no passing score, no minimum standard, no certification issued or withheld. An inspector walks the property, observes, and writes down what they see — prioritized by their judgment, in a document that typically runs dozens of pages and flags everything from a failing boiler to a loose outlet cover.

Every report finds problems. A brand-new home inspects with a list. A well-maintained sixty-year-old Port Washington colonial inspects with a longer one.

Why this matters practically: a seller who believes they've failed something reacts to a verdict that doesn't exist. They over-concede, agree to items they didn't need to address, or panic about a transaction that was never in danger.

What actually determines the outcome isn't the report. It's the contract's inspection contingency — what it permits the buyer to request, in what window, and what happens if the parties don't agree. That's the governing document, and the full treatment of how inspection negotiations work covers the mechanics and the three-category triage.

What Genuinely Has a Pass/Fail Standard

Four things can actually stop a sale, and none of them is a home inspector's opinion.

FHA and VA appraisals. These apply property condition requirements alongside valuation. An appraiser may flag peeling paint on a pre-1978 home, missing handrails, exposed wiring, an inoperable heating system, or roof condition — and funding can be conditioned on correction. That's a real requirement with a real standard, and a seller who accepted an FHA or VA offer accepted a different appraisal than a conventional buyer would bring.

A conventional appraisal returned subject to repairs. Less common but possible where a condition affects safety, soundness, or habitability. The lender won't fund until the items are corrected and re-inspected.

Municipal inspections. A final sign-off on an open permit genuinely passes or fails. That's separate from the buyer's home inspection and runs on its own track — the buyer's attorney orders municipal searches after contracts are signed, and whatever the governing village or town has on file comes back regardless. The full picture of how permit issues resolve covers what each type costs.

Septic and well tests, where a property isn't on municipal systems. These have standards and can fail.

The distinction is worth holding onto. A home inspector saying a roof is near the end of its life is information. An FHA appraiser conditioning funding on roof repair is a requirement. Sellers respond to both as though they're the same and they aren't.

What a Seller Now Knows

This is the most consequential thing about a difficult inspection and it appears in almost no content on the subject.

The seller now knows what the report found. Before the inspection they may genuinely have been unaware of a condition. Afterward they aren't.

New York's Property Condition Disclosure Statement asks what the seller knows. If this transaction ends and the home returns to market, the seller's knowledge has changed — and the form they complete for the next buyer should reflect that.

Three things follow.

Don't discard the report. It's documentation of what was observed and when, and the attorney will want it.

Raise it with counsel before relisting. How a known condition gets disclosed, and in what terms, is a legal question rather than a marketing one. The full treatment of what the disclosure form asks covers the standard — including that the form has been mandatory since the March 20, 2024 amendment, with the prior option of giving a buyer a five hundred dollar credit eliminated.

Consider addressing it. Where a condition is now known and will be disclosed, repairing it before relisting is frequently better than disclosing it and negotiating around it with every subsequent buyer.

And a caution. A seller who now knows of a material condition and conceals it from a later buyer has moved from an unfortunate inspection into potential liability that survives the closing. That's the reason to route this through the attorney rather than deciding it alone.

The Seller's Options

Four, and each fits different circumstances.

Repair before closing. Appropriate for safety and habitability items, anything a lender will require, and anything cheap enough that negotiating it costs more than fixing it. Use licensed contractors and keep receipts — the buyer will want proof and the work becomes part of the file.

Offer a credit at closing. The buyer takes money and handles the work themselves. Frequently cleaner than repairs under deadline, and it avoids disputes about workmanship. Note that lender contribution limits cap what a seller can credit, which the full treatment of concessions covers.

Reduce the price. Sometimes preferable to a credit, and the arithmetic differs — a credit comes off proceeds at closing, while a reduction changes the sale price and therefore the appraisal basis.

Decline. A legitimate position, particularly for items that are cosmetic, that reflect the home's age and were priced in, or that a reasonable buyer should have expected. Declining sometimes ends a deal. Sometimes it doesn't — buyers who have invested weeks in a property frequently proceed.

What shouldn't drive the choice is the feeling of having failed something. Decide on the merits of each item, not on the length of the report.

Two Port Washington Specifics

Oil tanks. Older homes on the peninsula may have buried or abandoned tanks, and an inspection or a tank sweep can surface one. This is an environmental question rather than a maintenance one — remediation costs vary substantially, and the disclosure and liability implications belong with an attorney. Where a tank is suspected, addressing it before listing rather than during a transaction is considerably better.

Permits are a separate track. A seller can address every item on an inspection report and still face a permit problem, because the municipal record surfaces independently. The peninsula spans several incorporated villages — Baxter Estates, Manorhaven, Flower Hill, Sands Point, and Port Washington North among them — plus unincorporated Town of North Hempstead area, each with its own building department. The breakdown of which rules apply where sorts them out.

A Worked Example

Consider a composite case — a Port Washington seller whose buyer's inspection produced a thirty-page report with nineteen flagged items.

Her first reaction was that the house had failed. It hadn't — nineteen items on a 1958 colonial is an ordinary report.

Her agent and attorney sorted them. Three were safety items an FHA appraiser would likely have required anyway; she repaired those. Eight were age-appropriate observations that had been reflected in the price; she declined. The rest were cosmetic.

One item was different: evidence suggesting a buried oil tank. That went to her attorney immediately rather than into the negotiation, and a sweep confirmed it.

The buyer ultimately walked over the tank. She addressed it before relisting, and — on her attorney's advice — disclosed both the tank and its remediation to the next buyer, with documentation.

The second sale closed without incident. The report hadn't failed her. It had told her something she then had to handle correctly.

Where to Start

Read the report as a list rather than a verdict. Sort the items — safety and habitability, things a lender may require, age-appropriate observations already reflected in the price, and cosmetic requests. Decide each on its merits.

Keep the report. If the deal ends, raise it with your attorney before relisting, because what you now know changes what you disclose. Where something significant surfaced, consider addressing it rather than negotiating around it repeatedly. And handle the permit question separately, since it runs on its own track.

Sellers wanting a read on where the property sits can start with a quiet look at current value.

The Honest Bottom Line

There's no such thing as failing a home inspection, and believing otherwise costs sellers money — they concede items they didn't need to and panic about deals that were never in danger.

What can genuinely stop a sale is narrower: an FHA or VA appraisal condition, a lender requiring repairs, a municipal sign-off that doesn't happen, or a septic or well test that fails. Those have standards. A home inspector's report doesn't.

And the part nobody mentions: whatever the report found, you now know it. If the deal ends, that knowledge goes on the disclosure form for the next buyer — which is a conversation to have with an attorney before relisting rather than after.

For anyone working through a specific report, with no pressure attached, that conversation is available whenever the timing suits.

This is general information, not legal advice. Disclosure obligations, contingency terms, and liability for known conditions turn on the specific contract and facts. Consult a licensed New York real estate attorney before relisting a property where an inspection revealed a material condition.

FAQs

Can a home fail an inspection?

No — there's no pass/fail standard. A home inspection produces a report, not a result: no score, no minimum threshold, no certification issued or withheld. Every report finds problems, and a well-maintained sixty-year-old home inspects with a long list. The framing matters practically, because sellers who believe they've failed something tend to over-concede or panic about a transaction that was never in danger. What governs the outcome is the contract's inspection contingency, not the report.

What actually can stop a sale after an inspection?

Four things, and none is a home inspector's opinion. FHA and VA appraisals apply property condition requirements, and funding can be conditioned on correction — peeling paint on a pre-1978 home, missing handrails, exposed wiring, an inoperable heating system. A conventional appraisal can come back subject to repairs where safety, soundness, or habitability is affected. Municipal inspections genuinely pass or fail, including a final sign-off on an open permit. And septic or well tests, where a property isn't on municipal systems.

Do I have to disclose what the inspection found if the deal falls through?

This is the part most sellers miss, and it belongs with an attorney. New York's Property Condition Disclosure Statement asks what the seller knows — and after an inspection, the seller knows more than before. If the transaction ends and the home returns to market, the form completed for the next buyer should reflect that changed knowledge. Keep the report, raise it with counsel before relisting, and note that concealing a now-known material condition creates liability that survives closing.

Should I repair items or offer a credit?

Depends on the item. Repair safety and habitability items, anything a lender will require, and anything cheap enough that negotiating costs more than fixing — using licensed contractors and keeping receipts. Offer a credit where the work is substantial, deadlines are tight, or you'd rather not manage contractors, noting that lender contribution limits cap what a seller can credit. A price reduction is a third option with different arithmetic. And declining is legitimate for cosmetic or age-appropriate items already reflected in the price.

What should Port Washington sellers watch for specifically?

Two things. Buried or abandoned oil tanks in older homes — an environmental question rather than a maintenance one, with remediation costs varying substantially and disclosure implications that belong with an attorney. Where a tank is suspected, addressing it before listing is far better than during a transaction. And permits, which run on an entirely separate track: the buyer's attorney orders municipal searches after contracts are signed, and whichever village or town governs the address produces its record regardless of what any inspection found.

By Eric Berman, REALTOR® | The Eric Berman Team at Compass

Eric Berman | Long Island & Queens Associate Broker | Compass
1468 Northern Blvd, Manhasset, NY 11030
(917) 225-8596 | eric@ericbermanre.com | theericbermanteam.com