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PRE-LISTING HOME INSPECTIONS Change the Buyer-Seller Dynamic

By Kevin Corsa

Home Inspector with H.I.S. Home Inspections (Summit, Stark Counties)

March 09, 2008 05:59 AM

Having a home inspection is something that has traditionally been performed at the request of the home buyer before finalizing the purchase of a home. Often times, this inspection will result in the buyer asking for certain items listed on the report to be repaired, or compensated in some way, which in turn can lead to another whole round of negotiations, and even sometimes the loss of a sale. Unfortunate, but true.

Which is one of the best reasons I can think of why realtors should be insisting that their listing clients have a "Pre-Listing Home Inspection". It changes the entire dynamic of the transaction, and tends to put more control in the seller and listing agents court. How does it do this? Well - forewarned is fore-armed, and the best surprise is no surprise when you are talking real estate. If the seller knows ahead of time the issues with the home, he can choose to have them fixed, or simply disclose them so that a buyer can not use it as a leverage tool later.

Statistics so far support the fact that most homes that get a Pre-Listing Inspection do not have another one requested by the buyer, so the net effect is that the transaction sails along much smoother.

If you care to comment, feel free. And if you would like to learn more about Pre-Listing and "Certified Pre-Owned Homes" you can contact me at hkcorsa@yahoo.com.

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Mark H. Roe

BeSure Home Inspection Service - Lancaster, OH

BeSure Home Inspection Service

Paul,

Realtors are starting to use Pre-Listing inspections more and more here in my area as a selling edge. Kevin has explained it pretty much on how it works. You,might want to look into it further to provide a possible better service for your clients.

Mar 11, 2008 02:42 PM

Paul Howard

Cherry Hill, NJ

Paul Howard Realty, 856-488-8444

Mark, I would look into it if I listed homes. My office is an exclusive buyer office. We do not represent sellers.

Mar 11, 2008 02:46 PM

Joseph Michalski

Precision Home Inspection - Lansdale, PA

PA Home Inspector

This seems to be a regional hit-or-miss idea. Most of the Realtors I talk with regularly (at least in PA) are very hesitant to recommend pre-listing inspections for 2 reasons:

First, it can't help but increase the seller's liability with respect to disclosure. How can you reasonably claim that you did not know about a defect when you had a complete home inspection? (unless the inspector didn't find it, in which case, of what value was the inspection?)

Second, it is inevitable that a buyer's inspector will identify items not in the original inspectors report. This doesn't mean the first inspector was bad (of course they may be), just that different inspectors have different opinions, methods, and strengths and weaknesses.

For example, the seller's inspector may have been an expert plumber in a previous life, but not as strong on HVAC, while the buyer's inspector comes from an HVAC background and (using his previous professional expertise) finds issues with the heat pump the first inspector could not identify. Even if they are small items, the seller is left to wonder why thay paid money when there were still items that were called out on the buyer's inspection.

The case for Pre-listing inspections in a buyer's market is a fair one, but is seems that many Realtors here are still cool to the idea, and I certainly understand why (from their point of view).

Mar 11, 2008 02:56 PM

Kevin Corsa

H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

I would again like to thank everyone for their blog posts. This is turning into a a pretty good forum for differing opinions, and also bringing out some of the reservations that people may have about Pre-Listing Inspections.

I would like to address Joseph's comments, since he has brought up some issues that may be at the heart of why realtors from different areas of the country are hesitant to suggest P-LI to their customers.

Does it increase the sellers liability with respect to disclosure? Maybe, but it shouldn't! Nobody is suggesting that the seller cover up or hide anything that would be found on the P-LI. If you read my original post, you would know this. The purpose here is to have the seller KNOW, and REPAIR, OR DISCLOSE all the major and minor issues with the home that were found in the inspection, and as long as he does this, there would not be any greater liability on his part.

As a matter of fact, I always suggest that the inspection report be laid out with all the other display literature, and the property disclosure form, so that any prospective buyer can pick it up and read it whenever they want.

Secondly, will the buyers inspector find items that the P-LI inspector did not find? He certainly may; for two reasons- first is that conditions in the home may have changed since the original inspection. Second, is like Joseph mentioned, different inspectors do have different areas of expertise.

But the fact is, that home inspectors are sometimes held up as experts in too many areas, when in fact home inspectors are supposed to be generalists, with some knowledge in all areas concerning a home and it's systems, and to recommend that others with more specific knowledge in a certain area get involved when it is appropriate.

But, if you are a home inspector who is offering a Pre-Listing Inspection, then you had better be doing a pretty thorough job, because you already know that someone else may be following you and checking your work. With that in mind, under normal circumstances, there really should not be any great differences that would become major issues for the buyer or the seller. I'm not saying that EVERY case would turn out this way, only that with DUE DILIGENCE, it should.

So, I guess you can remain cool to the idea of P-LI, or you can embrace it as a new idea, that is hopefully better than the old idea of having the home inspected only by the buyers inspector, which is by far, a very imperfect system itself, since it often produces negative results and negative reactions by the parties involved. In the process of disclosure, communication, and understanding, the P-LI (I believe) is still a very good tool whose time has come. Implementation is the key.

Mar 11, 2008 09:52 PM

Kevin Corsa

H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

Are there any other differing opinions out there? I would love to hear from you. I think this is a very important and relevant question for the current real estate market. Both positive and negative feedback are welcome here.

Mar 12, 2008 11:19 PM

David Holden

DRH Home Inspection Akron, Ohio Summit County Home Inspector - Akron, OH

DRH Home Inspection Akron, Ohio Summit

Hi Kevin, As a newbie, I thought I would chime in on this topic. I have been out hitting open-houses, attempting to market myself a bit. I decided early on that I am willing to offer a complimentary service to the listing agents and sellers, of which NO ONE has taken me up on it yet. I will do a complimentary "Walk-Through" for the seller only to help identify moderate to major defects, NOT a complete inspection. My motivation to do this is to both offer a "tool" for the listing agent to offer the seller. And my hope is that, "Sellers are also Buyers", and this would possibly get me a paying client on the other end. I would also offer the seller a full "Pre-Listing Inspection" at the time of the walk-through. I don't know if this is a good idea or not, as I said, no one has taken me up on this complimentary service.

Some of the other "Heated" topics are on the whole Inspector / Realtor relationship in general. I have read a lot of comments from those that believe "Absolutely NO Referrals" should come from REA's. I haven't chimed in on that one until now, but I see no problem with referrals. I will NEVER pay to be on a list though. Nor will I go soft on an inspection for the sake of referrals. I will serve my client's "best interest" above ALL.

Hope this isn't off topis too much.

Mar 13, 2008 12:13 PM

Kevin Corsa

H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

Thanks for your comments Dave.

Although your comment is a bit off subject, it is another area where I have a lot of concern.

As part of the service of Pre-Listing, I have also been offering to go with a listing agent on their initial appointment to do a walkthrough, and find any glaring issues, and also to offer a Pre-listing Inspection. And you are right, there does seem to be a lot of resistance to this offer, and I would love to hear some opinions from realtors on this particular subject.

As to the other topic about referrals from agents, I guess there couldn't be any more differing opinions on that than there are already. One of the things I find the most disturbing, is that in recent years, especially around here, there has been growing concern about some RE offices charging home inspectors and others to be on "Preferred Lists". Doing a preferred list is one thing, and charging people to be on it is quite another. What do you think?

Mar 13, 2008 09:36 PM

Gina Kay Landis

Home Experts Realty - Dayton, OH

Hmm... if it is a whole-house inspection, the inspectors aren't considered "experts" but as you said, "generalists" - I always recommend my clients get "expert" inspections if they have a particular concern. That should cover most things that could be missed from one inspector to another.

That said, inspections often fall under the category "if the house is running ok now, why delve into it" particularly recently when people have less funds to put forth into inspections. I have now had several clients who waived inspections though they were counselled not to do so. In those cases, a seller pre-inspection would have been helpful for both sides.

Thanks for your post!

Mar 15, 2008 01:43 AM

Tony Fantis

Fantis Group Real Estate - Salt Lake City, UT

Realtor,Principal Broker - Salt Lake City

Agreed, pre-inspections can shift the power back into the seller's court. By the way, I use to live in Richfield...not too far from your stomping grounds! I'm now in Utah, and they're deleting the section of the contract in which the seller guarantees to sell the home in any particular condition, such as a working furnace. Inspections are going to become even more powerful as a negotiation tactic. You're right, forewarned is forearmed!

Mar 16, 2008 05:43 AM

Rick Harrington

Patch Independent Home Inspections, LLC - Columbus, OH

Specialist--Infrared Residential

Many of the high end Realtors have been starting to get this done. I remember an article from an agent in Arizona that averages 750K per house and has the seller sign a document if they DON'T have a prelisting inspection.

It allows the seller to state the selling price is based on all the known conditions. Less negotiation and everyone wins.

Mar 21, 2008 08:57 AM

Kevin Corsa

H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

Wow, I wish the realtors here would catch on to that idea. Sounds super!

Mar 21, 2008 09:01 AM

Rick Harrington

Patch Independent Home Inspections, LLC - Columbus, OH

Specialist--Infrared Residential

Kevin,

I do know a lot of agents in my area. I guess the only way to prove this to them it to PROVE it to them. I may provide some prelisting inspections for no cost to allow them to compare that house and how it sells and how much quicker the offer/inspection/renegotiation process is as compared to the house that did not have a prelisting inspection. This may take up more of my time but in the end well worth it.

I have some other ideas on this.

Pre listing inspections without a written report or pictures? May be less expensive for the seller.

Mar 23, 2008 03:34 AM

Leonard Thomas

RE/MAX Dallas Suburbs - Plano, TX

Kevin. Ugh, sorry to rain on your parade, but from the standpoint of representing the best interests of the SELLER (and I stress this point with three !!! best interests of the SELLER), I think this is a horrible idea for a number of reasons. 1) Though you are correct that post execution of contract inspections lead to a new round of negotiations, they do so (generally) after the buyer has invested time, emotion and money into the home (via credit app, appraisal fee, inspection fee, telling family they're under contract, kids telling friends they're buying a new house on 1234 Main Street). As such, the buyer is often more willing to accept LESS repairs or allowance for repairs having emotional/$/time investment in the property than if there was a pre-execution of contract inspection and negotiations were done PRIOR to other time/$/emotional commitments to the property. If I am representing the SELLER, I want the buyer to be as committed as possible, time/$/emotionally, BEFORE we negotiate repairs as it will invariably save them money - whereas a buyer might walk away from a deal over $500 prior to execution, practically none will do so AFTER execution. I can't stress this point enough. 2) Given point one above, why would I encourage a seller to spend $400-500 to limit their leverage prior to contract when they can execute, have the buyer pay and generally INCREASE their leverage? 3) Are you submitting to us that if a seller gets a preinspection, discovers they have limited life on their AC unit, replaces the AC unit for $4K that they will get a higher sales price? Or that they will have to deduct the $4K from the price anyway? I don't think either statement is true. What if they have a preinspection, discover the AC has limited life and they don't have the funds to invest $4K in a new unit. The inspection becomes disclosure and buyers shy away because of it. Purchase contracts are AS-IS; more information, specifically about the disrepair of the house, increases leverage for the BUYER, not seller.

If your post suggested a buyer having a pre-inspection prior to making an offer, I'd say you were closer to being on track than suggesting the owner do it.

Just my opinion!

Mar 24, 2008 04:31 PM

Kevin Corsa

H.I.S. Home Inspections (Summit, Stark Counties) - Canton, OH

H.I.S. Home Inspections, Stark & Summit County, OH Home Inspector

Leonard,

Thanks for your post. That sure is a lot of rain you are pouring down on PLI, and frankly I have been doing seminars to realtors on this subject for over a year now, and never once have I heard any of the things you mentioned, or expressed in that way at least.

Everyone is entitled to their own opinion.

Regardless of time and emotional commitment, the house is what it is, and large items will either be fixed or negotiated whether before or after. I'm sure that pre-listing inspections will not fit every realtors personal style or needs.

Welcome to AR Leonard

Mar 25, 2008 03:31 AM

Baker Home Inspection and Commercial Properties Inspections

Baker Residential and Commercial Properties Inspections - Springfield, VT