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Inspect in Advance to Get Better Offers & Save Grief for Everyone

Eliminate surprises and hurdles during escrow by ordering Home Seller Reports when first listing your property on the market. Listed below are the advantages of ordering each type of report in advance.

1. Appraisal

· Price your property correctly at the very beginning, when most qualified buyers are viewing it.

· Help buyers see the value of your property.

· Demonstrate a better value in the market.

· Increase showings of your property.

· Give you and your agent confidence.

· Other agents are eager to show your property.

· More likely to get full price offer.

· Reduce surprises and pricing problems in escrow.

· Guarantee a faster, smoother closing.

· Make seller feel secure during escrow.

· Stimulate buyer confidence.

Once in escrow, if the appraisal comes in low, the buyer will probably cancel the sale.

2. Pest Control Inspection

· Buyers know exactly the condition of the property.

· Help seller disclose material defects in writing, limiting liability.

· Seller knows the cost of repairs in advance.

· Repairs can be completed early, reduce surprises (work needed) during escrow.

· Guarantee a faster, smoother closing.

· Make seller feel secure during escrow.

3. Home Building Inspection

· Buyers know exactly the condition of the property.

· Help seller disclose material defects in writing, limiting liability.

· Seller knows the cost of repairs in advance.

· Repair can be completed early, reduces surprises (work needed) during escrow.

· Guarantee a faster, smoother closing.

· Make seller feel secure during escrow.

These reports are well worth their cost, saving both money and stress!

Oh, how I wish it was MANDATORY for sellers to complete HOME BUILDING INSPECTIONS before listing their house for sale here in California! Then buyers could make more informed offers. It would save a lot of "later" negotiations in which sellers lose control of their transaction and the whole thing quickly unravels. If sellers completed an inspection in advance, and handed it to each prospective buyer, it would save everyone a lot of grief.

Join my new AR group and post your blog at http://activerain.com/groups/virtualoffice

Regina P. Brown
Broker, Realtor®, e-Pro
Author of eBook "Stop Foreclosure Fast: Solutions to Save your House"

Posted by Regina P. Brown, e-Pro Realtor® on 02/17/2009 05:37 AM

Comments (55)

Seller Inspections Needed in the Home Selling Channel

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55 Comments on Inspect in Advance to Get Better Offers & Save Grief for Everyone

FEB

I sure wish you lived in my area. I have been trying to market this for years with very little success. Please see my blogs.

www.MoveInCertified.com

I think it would be a great idea. I hate knowing that the negotiations are not over when the contract is signed. Today was a perfect example. My buyer had picked 3 things on a list of over 20 that were found on the home inspection and they were not the most expensive fixes. The seller feels they have done enough already. It just prolongs the process.

FEB

Regina - I am all for any type of inspections, great post!

Regina, We have been working on a pre-market/listing inspection program in our area for awhile. Good post.

Your building consultant in the Spring Hill, TN area - Michael

I always recommend to agents that they advise pre-listing inspections. Seems to me that if a seller isn't interested in pre-listing inspections, they'll be less likely to make repairs to serious defects if found by the buyer's home inspection.

Good advice. Not likely to happen, but good advice.

Reginia, Pre inspections make too much sense to for this idea to work. What next? Pre-listing appraisals?

Regina, serendipit for me on this issue with a transaction right now. Lenn is right, if they aren't willing to know what they might be dealing with during this phase, they are still in the denial phase of the whole process. It can be a very, very painful lesson.

Regina, I feel the same way. Get a home inspection before you put the property on the market. Never ask a question unless you know the answer. Minimal surprises are always a way to go.

Great for Sellers who don't have a Professional real estate agent on their side.. Great if sellers have the extra money to pay for all of these themselves in the current market... but a Professional Real Estate Agent with years of Education and Experience should be able to help spot out the obvious...

And... I do know how all of the reports ordered up by a seller can be manipulated...

Hmmm.. Sorry but I do advise a buyer getting their own independent reports and not relying on reports ordered up and performed by the Sellers Agents/friends.

I have been preaching the advantages of getting pre-listing. pre-sale inspections for a long time. Problem is... how do you convince sellers that it in their best interest to do it? All they seem to be able to look at is... it's going to cost me some money, isn't it? The answer to that is.. initially, yes, but it should be looked at as part of the investment in your home, and it's sales potential. Making your listing stand out from the rest of the market is important these days. Having a Certified Pre-Sale Home Inspection is a good way to do just that.

Hi Regina:

That is a good idea and has been done very successfully. Great post!

ToulaRosebrock.com - Lacey Township Real Estate

Regina, Around here, even if a seller is willing, the buyers seem to be a bit wary of an inspection done by an inspector chosen by the seller. There is always a little nagging doubt as to the objectivity. I know that if you have a qualified inspector, objectivity should not be an issue, but I think buyers are concerned about that.

Regina, as always, another wonderful, informative post. You already know how I feel about pre-listiing inspections, but here in my neck of the woods they seem to be a tough sale. Keep spreading the word... eventually the sellers will hear you.

I am beginning to think the best thing to do with short-sales is to get a home inspection. Then when buyers right tell them you have a home inspection and are looking for an offer without the inspection contingency.

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Great advice Regina. I've recommended this to sellers, and to date, no one has agreed. It's even more important in this strong buyer's market that once you get a buyer in a transaction, you sure don't want them to walk away.

Good Morning Regina,

I love it when the seller will go ahead and get a termite and property inspection and take whatever steps are necessary to correct any problems at the time of listing. It certainly makes for a smoother transaction. The appraisal is another matter. Properties here are staying on the market for a year or longer and an appraisal bought by the seller is worthless by the time of contract.

In NC I am asking my clients to have an appraisal done prior to listing ,as appraisals are coming in all over the place. Also inspection completed, my inspectors will wait to get paid until closing , that helps, or with an agreement they will get paid within a certain time frame. We pay for part of the appraisal as it gets the house measured for me and I get a cad drawing of the property, and the home is measured by an expert, saving me time!

Like everything else in real estate, this is determined by your market. I agree completely that this is good information for sellers to provide buyers, but strapped home sellers are in no position to pay for these reports that will only be repeated by (and at the expense of) buyers. In fact, buyers sometimes have a tendancy to mistrust information provided by the sellers. Just to carry on my "devil's advocate" position a little further, these inspections could uncover defects the sellers are unable to correct, but they now have to disclose.

Again - pros and cons to every good idea in real estate.

I think it's a wonderful idea, but is it horribly difficult to get the seller to spend money up front? I have a few more questions :)

Where you are, do the sellers typically pay all of these expenses? Here, they only pay for the termite inspection, I think it would be difficult to get the seller to absorb the extra expenses.

Do the buyers still get all of their own inspections? I'm sure that some buyers would only trust the inspectors they pick out themselves.

I would love to find a way to get my sellers to agree to inspections first, to have the chance to address any issues that come up before they even have an offer would be great.

I just worked with a customer on a house now under contract where the seller had done an inspection and it created a lot of credibility for the house. Then the decision for the buyer is do you go with that one or get your own done. There are advantages to both.

Morning Regina,

We advocate pre-listing inspections, however most property owners opt out. They "know" their property and elect to wait for buyer inspections. We continue to suggest pre inspections in our listing presentation.

I always tell my sellers to have inspections done prior to listing their house for sale. Some have done so. while others refuse to see it as anything other than a waste of money. Congrats on the feature.

Regina--excellent advice! We recommend pre-listing inspections to our sellers, and our last three listings have taken our advice with no regrets! Having the inspector's findings available to buyers offers transparency regarding the property condition, eliminates many of the post-buyer-inspection renegotiations (the buyer has been made aware of issues prior to making their offer) and affords the sellers the opportunity to address the issues in the manner they see fit before going on the market. In addition, much of the stress that comes along with a buyer's inspection period is alleviated--there have been very few surprises for our sellers. It's a good investment for sellers, and viewed positively by buyers.

Forewarned is forearmed! Congrats on this great post and the well-deserved gold star!

Excellent advice, Regina. We try and do pre-inspections and appraisals on our listings. Not all sellers will agree to that but it does help!

Gold is up $23.78 an ounce and the Dow is down 270 points for the day... Yes... we need a home inspection.. LOL!!

I don't think home inspections should be mandatory for a regular sale, but I do think they should be mandatory for REO sales. Here in California, the banks don't have to disclose anything, based on the fact that they never see the property and don't know anything about it. If they were required to do a mandatory home inspection by a certified inspector, the entire sale would go much better. In addition to making the inspection mandatory, the banks should be required to post the inspection report on the Internet, where it can be viewed by potential buyers in advance of making an offer. Buyers would be able to determine if they want to make an offer or not. They would have a much better idea of what needs to be repaired, and whether they can fit the repairs into their budget. It would be a huge time saver for the listing agent, selling agent, the bank, lenders and the buyer.

Great idea!

If pre-sale inspections reveal any defects, it gives the seller time to get estimates and not be under the gun to pay premium prices when a contractor knows a sale is imminent.

I see the word "Inspect" in a post title and I instantly need to comment. However, everyone has pretty much summed up what I wanted to add. However, I can add that we offer a seller inspection with the benefit of pay-at-closing, so no upfront expense which usually scares sellers away.

ActiveRain: THANK YOU for the feature! I really and truly appreciate you taking note of this blog. I feel it's an important topic and hope the industry changes to address these types of issues.

Kim Brown: I agree that TRANSPARENCY is critical. As a buyer, who are you more likely to trust: A seller who presents you with a pre-listing inspection (perceived as honest) OR a seller who says "I know my house and everything's fine" but then only after YOU pay for an inspection, discover that the house has TONS of issues and suffers from neglect (perceived as DIShonest).

Paul Francis & Barb Szabo: I am NOT saying that the Buyer not do their own inspection. I do think that Buyers should ALSO get their own inspection done and not rely 100% on the seller's inspection. As you pointed out, it can be manipulated, the inspector could really be the seller's wife's uncle who needed a few bucks so became an "inspector" for a day. So when representing the Buyer, I advise them to get their own inspection, even if the Seller has already done a pre-listing inspection.

Kelly Young: Yes there is a lot of credibility when a seller can present a pre-listing inspection to the buyer and the buyer can make a more informed offer. The seller is perceived as more TRUSTWORTHY and the transaction has a better chance of sticking!

Chelsea: In our area, no inspections or reports are expected up front, although I hope this will change. In the offer, it is standard that the SELLER perform a pest control inspection (cost = $75) and fix any Section 1 items at their expense. Then they have to get a re-inspection and Certificate of Clearance from the pest control company at their expense. The Buyer's lender will not lend money until this is done. Section 2 items (things that don't have to be fixed right away) can be completed later at the Buyer's expense, if he so chooses.

In California, our standard CAR contract states that the Buyer has 17 days to perform their inspections. Within that time frame, the buyer has to perform the home building inspection, review the report, and remove the contingency (or request either repairs or a monetary credit from the seller). That is where the buyer can now re-negotiate the contract, based on their inspection findings. And if the home inspector finds severe problems and recommends other inspectors (roofing, foundation, electrical, plumbing, HVAC, etc), then it will take another 1-2 weeks for the buyer to go through this process again with these specialist inspectors.

However, if the Seller gets a home inspection (less than $400) in advance, he can not only disclose these problems, he ALSO has time to contact specialists and get a written estimate of how much it will cost to fix these issues. When the Buyer is presented with this disclosure up front, he can't later try to re-negotiate the price. Because that is where a lot of escrows fall apart due to the time involved and the mis-trust created by then.

BTW, if a Buyer does a home inspection, then he sends a copy of the home inspection to the Seller, then the Buyer decides NOT to buy the property, the Seller is now obligated to provide the home inspection results to future Buyers. Because now that the Seller is in possession of these material facts, he must now disclose it. For better or for worse, depending on your point of view.

Bob Willis: I agree that REOs and even short sales are a problem. REOs represent a big problem for our industry. The lender-sellers don't think they have to abide by any rules or contracts or laws. They think they are above the law and can make their own rules. This will continue until they are sued or fined enough times, or until their industry starts to be monitored, whichever comes first.

In one instance, a Buyer submitted a contract to buy an REO on a CAR contract, which gives the Buyer 17 days for their inspection period. After waiting weeks for a response, the lender-seller sent back their own homemade contract, which cut down the Buyer's inspection period to only 5 days (which is nearly impossible to do an inspection & review it in that timeframe), and also sent the Buyers an Inspection Waiver form to sign, saying that they waive their right to an inspection. The Buyer managed to get an inspection in the short 5-day window and found major problems with the foundation. The lender-seller wouldn't give them any more time to do further inspections. They wouldn't negotiate at all. They wouldn't even answer the phone! Apparently they don't care about Buyers, or even if they have Buyers. This Buyer withdrew. The good news is that now the lender-seller and their agent have a copy of the inspection which they MUST now present to other prospective Buyers. But from what I've heard, they aren't disclosing this major foundation problem at all. They don't think they have to follow the law. As for this Buyer, he no longer trusted the lender-seller, he felt that they knew about the problems and just wanted to get rid of the house. He ended up buying an owner-occupied non-REO, non-Short Sale property. Just for his own sanity and peace of mind.

I have many examples of lender-seller reprehensible behavior, but will save it for another post. I'm sure that many other AR members can provide ready examples also.

In my humble opinion, REO properties are much more subject to problems than Owner Occupied and should be inspected MORE, not less! Why? Think about it. Once again, that's a whole new post!

Regina,

Great idea! However, if I'm a Buyer's agent, I would still recommend that they have there own inspection done!

Kathy Opatka, Re/Max OCEAN CITY, MARYLAND

I love the idea of getting all the inspections done immediately right off the bat. That way there's no surprises. You know exactly what's going on with the house inside and out. It also allows the sellers to evaluate what problems they are willing to take care of immediately versus possibly losing a deal over them to nervous home buyers.

Regina - this idea is catching on in my area. I've seen a few listings with riders that read "pre-inspected by....". I love it - it automatically creates trust with the buyers.

Reginia, I agree...it should be MANDATORY for sellers to complete HOME BUILDING INSPECTIONS before listing their house for sale in every state.

Regina, really great information. I whole heartedly agree that having that information in your pocket can prevent major headaches during the transaction process.

I think that if we as real estate agents will promote the idea of pre-listing inspections to our sellers, it will eventually become the standard.

It's a good idea for the seller to pre-inspect, but I would not allow my buyer clients to soley rely on what the sellers have obtained, or take their home inspection as part of our own due diligence.

If the sellers have a pre-lising inspection, then they won't be surprised because the corroded/leaking pipe in the crawlspace (that they didn't know existed) will be (should be) taken care of prior listing the home. The buyer's inspector won't find the plumbing to be an issue. WHEW!! The more items that can be taken care of, the better the property will look. No questions about that!!

But I would never suggest to my buyer clients to accept the sellers own inspection as theirs. There would be too much liability on my part if I made this suggestion.

Carla, I agree 100%. See my response to Paul Francis & Barb Szabo above.

FEB

We use inspection on each home and get them certified by the inspector which means that the needed repairs have been made. The inspector puts his sign on property showing it is a certified inspected home and I put his label on our flyer.

FEB

Regina,

Thank you for your thoughtful responses here. Very good post.

I wonder if we could start a movement to get CAR to push legislation in California that would require REOs to pay for an independent inspection that they have to use as part of their disclosures. I would support such a piece of legislation whole-heartedly.

Tim: great job! I hope more of us can follow your lead. Please share with us how you get the sellers to agree to this!

Bob: good idea but I sincerely doubt that the banks will ever listen to anything our organization has to say. Remember, they're trying to push us out of business so they can get their foot in the door of selling real estate!

FEB

Their is one company in this area of Virginia that give their sellers an inspection at time they list. It makes it easy when showing these homes to buyers to be able to flip thru the inspection left on kitchen counter for review.

Dee Dee, yes that is wonderful that they pay for the inspection at the time of listing! It would provide a good incentive for sellers to list with them.

MAR

I agree with the pre-inspection and a pre-market appraisal. The appraisal goes over much easier than the inspection, however.

Latonia, thanks for stopping to comment! I agree that sometimes it's difficult to get sellers to pay for reports and inspections.

MAR

Thats a really smart way of doing this! Good idea i was doing a pre listing home inspection to use as a perk of not hiding anything from the buyer. But i think is going to a big present not only to the seller and the buyer and a sale at the end of it.

Jeff, I think it's a wonderful gift to pay for the pre-listing inspection for the seller, but it costs a lot of capital AND it doesn't always ensure that you'll have a motivated seller if they don't have to put forth any investment on their part.

MAR

Wouldn't it be GREAT if every seller did the inspections first! Maybe in a perfect world...sure would make things easier for everyone.

MAR

I highly agree. It makes for such a cleaner offer. No surprises. Just write the contract once and be done with it.

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