Many sellers and seller's agents are starting to see this popping up in the real estate market.
One of the many stressful times of selling a house is the home inspection. There's always worry that the inspector will find defects and the negotiations after the inspection will be tense. In my experience the inspection time period can make or break a deal and the re-negotiating that occurs after the inspection is stressful for both parties. It's better to know the issues now than to lose the buyer later.
In this buyer's market, I have found that once the inspections are being done, both parties are feeling a little beat up. The sellers are feeling like they took less for their house than it was worth, and the buyers are left wondering if they got a good enough deal.
This is one of the reasons why inspection time can be tense, since emotions are running high already.
A seller can be more prepared on any issues regarding their home and can stand out in a saturated market by having their home pre-inspected. Then they can use this as a benefit to the buyer by advertising that the home has been pre-inspected and also offering a copy of this inspection to all potential buyers.
Here are a handful of benefits to this approach:
- If there's something that needs immediate attention you can get to work on addressing any defects before a buyer's inspector finds it - after you've already negotiated the price.
This is especially true for big ticket items like a septic system or a roof.
One of my sellers last year knew that his roof was only 17 years old so he wasn't at all concerned about the roof and mentioned the age of the roof in the disclosures. What he didn't know was that the shingles were defective and were past the end of their useful life. When the buyer's inspector made note that the roof needed to be replaced before winter (just a few months away), the seller didn't believe it. The seller had a neighbor (who is a licensed contractor and works for a roofing company) climb on the roof and check it out himself. Sure enough he told my seller the only thing keeping the roof from leaking was the paper underneath the shingles. So now he believed it and dealt with it. But it would have been good for him to know ahead of time so he could disclose it or replace it, and maybe have time to take advantage of the rebate that the shingle company was offering for their defective product. Once you know what you're dealing with up front, you can address it with time on your side.
- You can hire your own contractors to do the work that needs to be done, or if you're capable of performing the job you can do it yourself.
- Buyers are also stressed through this part of the transaction and may be nervous about the inspector's findings and sometimes will ask for money in lieu of repairs once issues are brought up. In this case they will almost always err on the side of caution and will ask for much more money than is needed for repairs.
One of my first real estate deals entailed very stressful negotiations after the home inspection. The buyers came forward with a list of about 30 items that they think needed to be done to the house, many of them routine maintenance that should really be the responsibility of the buyer once they move in. Things like trim bushes from side of the house, clean out gutters and install gutter guards, etc. The buyers then said ‘in lieu of the above 30 items being completed prior to closing we are requesting $4500 back at closing'. Honestly, this was about $1000 worth of work. My seller did everything on that list himself that didn't require a contractor and then hired a contractor to do the remaining $500 worth of work. Problem solved. But the buyers were not happy. ‘They really wanted the $4500' their agent told me. Well, who wouldn't? I had to wonder.
- Inspection issues can delay a closing. Most contracts have time limits as to when these issues are to be resolved to keep the deal going at a normal pace. Imagine you have septic issues so you need the septic guy to come back out and give an estimate, a roofer needs to be called (and oftentimes the buyer will want more than one opinion/estimate), the well needs to be decontaminated and then tested again. It all takes time. Not to mention that trying to get contractors out for estimates can be challenging (Most contractors are thinking with a real estate deal they won't get the job after the estimate has been given). And all of this is not to mention that it could take weeks to get the proper contractors out there to perform the necessary work. So even if buyers and sellers agree on the remedy and who will pay for it, this could delay closing. In these cases sometimes the sellers can give money back to the buyers at closing for repairs, but then you have a new set of problems and that is if the buyer's lender will allow this.
- Issues that can come up during a home inspection will give the buyers another reason to re-negotiate the price. And remember at this time the seller has most likely made plans for moving, has an offer or contract on another house, has started to call moving companies, etc. Having an inspection ahead of time and knowing what you are dealing with will help avoid this. And avoiding another round of stressful negotiations will help give you peace of mind that the deal is going smoothly.
An inspection will cost approximately $700 - $1000 depending on what you want done, and I would recommend it all. Structural/Mechanical, Septic, Termite, Radon and Water to name a few. Also keep in mind that the buyers will most likely hold their own inspections, and may find some issues that your inspector didn't note. But having some of the large ticket items fixed prior to contract or disclosed to the buyer and made part of the negotiations prior to contract can be a big benefit and take some of the emotional roller coaster out of selling a home.