Inman: 7 Reasons Pre-Listing Inspections are a Must

Just as a buyer needs to do their due diligence, a seller needs to do theirs so that bad judgment calls don’t derail their deal

After several days (or weeks) of negotiating, an agreement between the buyer and seller is finally reached!

The buyer is excited that they’ve found their new home, the seller is glad they will be able to move on to whatever is next and the agents are glad that their goals for that listing have come to fruition.

Contrary to what might be depicted on television or what many real estate agents think, when a contract is executed is not the time to begin celebrating. It marks the beginning of a long and uncertain process to a potential closing.

If the buyer is getting financing, there are almost always inspections and an appraisal.

With so many hands in the pot, much can go wrong, and the fear of the unknown is real. The best way to increase a seller’s chances of crossing the closing finish line is to have a pre-listing inspection done before ever coming on the market.

Here are seven reasons why:

What you don’t know can hurt you

Knowledge is power, and surprise is never a good thing. It is easy for sellers to have a superficial and inflated view of their homes.

They think, ” What could be wrong?” They’ve lived there for x years, and if something were seriously wrong, they would know it. Or, they bought the home four years ago and had it inspected then—why would they need to do this now?

You see, those very thoughts can come back to bite sellers. When was the last time your sellers went on their roof, looked in their chimney, or crawled around in their attic, basement, or under the foundation?

Do they know how old their water heater and HVAC are? What about the plumbing and electrical systems if they live in an older home?

This is exactly why you should have a pre-listing inspection: to assess the physical health of your home.

You might not have to fix everything.

Having a pre-listing inspection does not mean your sellers have to fix every item that comes up — but they do need to disclose everything.

This is where you—the agent—come in to strategize with your seller on a plan of attack and what makes the most sense given the market, your competition, the time frame for moving, etc.

Some things might need to be fixed to comfort a buyer or to qualify for the kind of financing they might be seeking.

For example, if buyers are obtaining FHA or VA financing on homes in your area, any wood rot or termite damage must be fixed before the buyer can obtain the loan.

There might be major vs. minor items that you and your seller will need to take into account when pricing the home, as they can definitely affect what a buyer is willing to pay.

Homes with older roofs, HVACs, and water heaters, on top of other repairs, coupled with a home that needs cosmetic updates, can be viewed as “a money pit” in the eyes of a buyer.

If you have many expensive items nearing the end of their lives, you might need to consider replacing at least one and be willing to offer a home warranty to provide some coverage to the buyer for the first year of ownership.

The 15-year-old HVAC might be working great now, but that does not mean it won’t fail soon.

Disclosure is not an unpleasant surprise.

Many sellers fear that having an inspection will require them to disclose everything to a buyer, which may cause them to pay less for the house.

The truth is, a buyer is going to find out anyway, but it will be after they’ve already agreed upon a price and terms that they might not want to pay after the outcome of that inspection.

Avoid buyer’s remorse by shifting the knowledge of the home’s condition to the front end of the transaction rather than after the negotiation. Although a buyer will still have the property inspected by their inspector, the information found will not surprise them.

All houses have “things” that are found on an inspection. Even new homes that are under construction or nearly complete have items that need correction by the builder after they are inspected.

Keep the deal together.

Back to the “surprise is never a good thing” concept, problems arise when you leave the discovery of the home’s condition entirely to the buyer.

The seller has already agreed upon a price and terms, and depending on your home and the time of year it is on the market, the actual time to go under contract may have taken longer than you thought.

You will have grown weary from numerous showings, second showings, and “almost offers” that have never materialized. Now, you finally have a buyer and the transaction may be in jeopardy because of the outcome of the inspection.

The buyer wants to renegotiate the purchase price and/or ask for all repairs to be made or a considerable concession to account for what was found.

The sellers don’t feel like giving anymore, especially when they might sell for less than they thought (which is how most sellers often feel). They could be paying closing costs on behalf of the buyer and agreeing to leave certain appliances, such as the refrigerator and/or washer and dryer.

Everyone goes into full-on crisis mode trying to obtain estimates for the repairs. It is a hurry-up-and-wait game trying to get contractors over to look at the findings and then even more waiting to get their written quotes.

Keep in mind that buyers and their agents don’t always have a realistic handle on the actual cost of repairs found from an inspection and might inflate or over-exaggerate the potential costs on purpose to beat down the agreed-upon price or force the seller to make repairs.

Buyers might seek opinions from overpriced vendors trying to upsell, and sellers might interfere with this information to get their own quotes.

This chaos ensues while the clock keeps ticking on the inspection time frame set forth in the purchase contract. Most contract time frames never consider the real world of waiting on repair specialists.

Although most transactions are handled this way, it doesn’t mean they should be. By being proactive, you can help your sellers avoid the stress of the unknown and level the playing field between them and the buyer by recommending a pre-listing inspection.

Wouldn’t it be better to have done your homework, know what you will or won’t fix (or in some cases have already tackled it), and obtained estimates on all else?

What is unknown is usually an excuse for not taking the time to find something out ahead of time rather than after the fact. Sticking your head in the sand like an ostrich and being in denial of any inspection issues will not help sell the home.

Incompetent inspectors

This one is starting to become a serious problem in our industry. Just as the swell of real estate agents has increased as the market has improved over the last few years, so has the number of home inspectors.

What is required to become a home inspector varies from state to state, and just because some states require licensure does not automatically mean that an inspector has sound judgment and the ability to diagnose/interpret a home’s condition legitimately.

A license is never a substitute for competence—ask any seasoned real estate agent who has listed properties the number of times they have had to interfere with an inspector’s report that was full of misdiagnoses.

The prospect of rookie inspectors who have only been functioning as inspectors for a year or two—and who are running their own shop with virtually no support system and no more experienced inspector to mentor them—is cause for concern.

They are crawling through someone’s largest investment, and they don’t know what they don’t know; they know only enough to be dangerous.

Newer inspectors often discount their fees to build their business, and so what looks like a bargain compared to what more experienced inspectors charge is often at the expense of the deal.

Buyers might shop by price alone, or an agent might give them a “coupon” the inspector sent out in an email blast to agents, hoping it would generate some referrals. The agent might be newer, may not have vetted the inspector, and may not realize that all inspectors, like agents, are not the same.

Although buyers have the right to choose whatever inspector they want, having your own inspection done by a vetted, experienced, adequately insured, and credible inspector can be a huge asset in situations like this.

That inspector will be available to consult with you during the home sale process and can assist with running interference should an incompetent inspector cross the home’s path.

The smoother the transaction, the faster closing

All parties want a purchase and sale process that is free of hitches and can close within a reasonable period of time.

Getting a pre-listing inspection eliminates the risk of the unknown, and the parties will enter a negotiation feeling confident and empowered.

If a seller is unable or does not wish to take on repairs, the property can be priced accordingly. At the same time, if a seller has replaced a big-ticket item, like a roof or HVAC, it might help the home sell faster as the buyer might be willing to make an offer and pay a higher price because of it.

A significant portion of time normally eaten up by the inspection period and all of the back-and-forth trying to resolve repairs is reduced since everyone is aware of the issues and has a handle on what will or will not be done.

Insurability

Some repairs might have to be made for the next buyer to get insurance, or they will likely need to be done within the first 30 days of owning the home to get a lower insurance rate.

If a seller has an older home with a knob and tube or aluminum wiring, for example, a buyer might run into a snag getting insurance or the quote might be much higher than anticipated.

The seller might have lived with older electrical or plumbing and not had any issues. However, this can become an issue for the next buyer. It is easy for sellers to become numb to problems that don’t concern them.

Unfortunately, real estate transactions don’t work like that, and these are serious concerns any buyer would have before sealing the deal.

Buyers are often hesitant to take on significant projects, like a whole house rewire or re-plumbing, unless they can get it at the right price or a seller is willing to pay a substantial portion of their closing costs to offset the amount such a project will cost.

Knowledge is power. Just as buyers need to do their due diligence, sellers need to do theirs so that bad judgment calls don’t derail their deals.

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Inman: 7 Reasons Pre-Listing Inspections are a Must

Inman: 7 Reasons Pre-Listing Inspections are a Must

Just as a buyer needs to do their due diligence, a seller needs to do theirs so that bad judgment calls don’t derail their deal

After several days (or weeks) of negotiating, an agreement between the buyer and seller is finally reached!

The buyer is excited that they’ve found their new home, the seller is glad they will be able to move on to whatever is next and the agents are glad that their goals for that listing have come to fruition.

Contrary to what might be depicted on television or what many real estate agents think, when a contract is executed is not the time to begin celebrating. It marks the beginning of a long and uncertain process to a potential closing.

If the buyer is getting financing, there are almost always inspections and an appraisal.

With so many hands in the pot, much can go wrong, and the fear of the unknown is real. The best way to increase a seller’s chances of crossing the closing finish line is to have a pre-listing inspection done before ever coming on the market.

Here are seven reasons why:

What you don’t know can hurt you

Knowledge is power, and surprise is never a good thing. It is easy for sellers to have a superficial and inflated view of their homes.

They think, ” What could be wrong?” They’ve lived there for x years, and if something were seriously wrong, they would know it. Or, they bought the home four years ago and had it inspected then—why would they need to do this now?

You see, those very thoughts can come back to bite sellers. When was the last time your sellers went on their roof, looked in their chimney, or crawled around in their attic, basement, or under the foundation?

Do they know how old their water heater and HVAC are? What about the plumbing and electrical systems if they live in an older home?

This is exactly why you should have a pre-listing inspection: to assess the physical health of your home.

You might not have to fix everything.

Having a pre-listing inspection does not mean your sellers have to fix every item that comes up — but they do need to disclose everything.

This is where you—the agent—come in to strategize with your seller on a plan of attack and what makes the most sense given the market, your competition, the time frame for moving, etc.

Some things might need to be fixed to comfort a buyer or to qualify for the kind of financing they might be seeking.

For example, if buyers are obtaining FHA or VA financing on homes in your area, any wood rot or termite damage must be fixed before the buyer can obtain the loan.

There might be major vs. minor items that you and your seller will need to take into account when pricing the home, as they can definitely affect what a buyer is willing to pay.

Homes with older roofs, HVACs, and water heaters, on top of other repairs, coupled with a home that needs cosmetic updates, can be viewed as “a money pit” in the eyes of a buyer.

If you have many expensive items nearing the end of their lives, you might need to consider replacing at least one and be willing to offer a home warranty to provide some coverage to the buyer for the first year of ownership.

The 15-year-old HVAC might be working great now, but that does not mean it won’t fail soon.

Disclosure is not an unpleasant surprise.

Many sellers fear that having an inspection will require them to disclose everything to a buyer, which may cause them to pay less for the house.

The truth is, a buyer is going to find out anyway, but it will be after they’ve already agreed upon a price and terms that they might not want to pay after the outcome of that inspection.

Avoid buyer’s remorse by shifting the knowledge of the home’s condition to the front end of the transaction rather than after the negotiation. Although a buyer will still have the property inspected by their inspector, the information found will not surprise them.

All houses have “things” that are found on an inspection. Even new homes that are under construction or nearly complete have items that need correction by the builder after they are inspected.

Keep the deal together.

Back to the “surprise is never a good thing” concept, problems arise when you leave the discovery of the home’s condition entirely to the buyer.

The seller has already agreed upon a price and terms, and depending on your home and the time of year it is on the market, the actual time to go under contract may have taken longer than you thought.

You will have grown weary from numerous showings, second showings, and “almost offers” that have never materialized. Now, you finally have a buyer and the transaction may be in jeopardy because of the outcome of the inspection.

The buyer wants to renegotiate the purchase price and/or ask for all repairs to be made or a considerable concession to account for what was found.

The sellers don’t feel like giving anymore, especially when they might sell for less than they thought (which is how most sellers often feel). They could be paying closing costs on behalf of the buyer and agreeing to leave certain appliances, such as the refrigerator and/or washer and dryer.

Everyone goes into full-on crisis mode trying to obtain estimates for the repairs. It is a hurry-up-and-wait game trying to get contractors over to look at the findings and then even more waiting to get their written quotes.

Keep in mind that buyers and their agents don’t always have a realistic handle on the actual cost of repairs found from an inspection and might inflate or over-exaggerate the potential costs on purpose to beat down the agreed-upon price or force the seller to make repairs.

Buyers might seek opinions from overpriced vendors trying to upsell, and sellers might interfere with this information to get their own quotes.

This chaos ensues while the clock keeps ticking on the inspection time frame set forth in the purchase contract. Most contract time frames never consider the real world of waiting on repair specialists.

Although most transactions are handled this way, it doesn’t mean they should be. By being proactive, you can help your sellers avoid the stress of the unknown and level the playing field between them and the buyer by recommending a pre-listing inspection.

Wouldn’t it be better to have done your homework, know what you will or won’t fix (or in some cases have already tackled it), and obtained estimates on all else?

What is unknown is usually an excuse for not taking the time to find something out ahead of time rather than after the fact. Sticking your head in the sand like an ostrich and being in denial of any inspection issues will not help sell the home.

Incompetent inspectors

This one is starting to become a serious problem in our industry. Just as the swell of real estate agents has increased as the market has improved over the last few years, so has the number of home inspectors.

What is required to become a home inspector varies from state to state, and just because some states require licensure does not automatically mean that an inspector has sound judgment and the ability to diagnose/interpret a home’s condition legitimately.

A license is never a substitute for competence—ask any seasoned real estate agent who has listed properties the number of times they have had to interfere with an inspector’s report that was full of misdiagnoses.

The prospect of rookie inspectors who have only been functioning as inspectors for a year or two—and who are running their own shop with virtually no support system and no more experienced inspector to mentor them—is cause for concern.

They are crawling through someone’s largest investment, and they don’t know what they don’t know; they know only enough to be dangerous.

Newer inspectors often discount their fees to build their business, and so what looks like a bargain compared to what more experienced inspectors charge is often at the expense of the deal.

Although buyers have the right to choose whatever inspector they want, having your own inspection done by a vetted, experienced, adequately insured, and credible inspector can be a huge asset in situations like this.

That inspector will be available to consult with you during the home sale process and can assist with running interference should an incompetent inspector cross the home’s path.

The smoother the transaction, the faster closing

All parties want a purchase and sale process that is free of hitches and can close within a reasonable period of time.

Getting a pre-listing inspection eliminates the risk of the unknown, and the parties will enter a negotiation feeling confident and empowered.

A significant portion of time normally eaten up by the inspection period and all of the back-and-forth trying to resolve repairs is reduced since everyone is aware of the issues and has a handle on what will or will not be done.

Insurability

Some repairs might have to be made for the next buyer to get insurance, or they will likely need to be done within the first 30 days of owning the home to get a lower insurance rate.

If a seller has an older home with a knob and tube or aluminum wiring, for example, a buyer might run into a snag getting insurance or the quote might be much higher than anticipated.

The seller might have lived with older electrical or plumbing and not had any issues. However, this can become an issue for the next buyer. It is easy for sellers to become numb to problems that don’t concern them.

Unfortunately, real estate transactions don’t work like that, and these are serious concerns any buyer would have before sealing the deal.

Buyers are often hesitant to take on significant projects, like a whole house rewire or re-plumbing, unless they can get it at the right price or a seller is willing to pay a substantial portion of their closing costs to offset the amount such a project will cost.

Knowledge is power. Just as buyers need to do their due diligence, sellers need to do theirs so that bad judgment calls don’t derail their deals.

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