Script to Explain the Benefits of Pre-Listing Inspections.
In response to Bob Stewart's request for scripts and dialogues we use, the following is submitted.
Many sellers do not want to pay for pre-listing inspections because they don’t understand the benefits. This is the script I use to explain to a prospective seller, usually during the listing presentation, why it's in their best interest to pay for pre-listing inspections. This usually comes after the discussion of the Competitive Market Analysis. Bracketed [ ] comments are to the reader, not to the homeowner.
"Mr. and Mrs. Seller you have a choice to make. That choice is to either get inspections before your home goes into the MLS, or to let the buyer get them after their offer is ratified. Please, let me explain"
"One way or another, as part of the sale, your home will be inspected by professional inspectors. There will be a termite inspection, a general property inspection, and sometimes a roof inspection. [If there's a pool or spa] And probably a pool/spa inspection."
"The question is really WHEN, not IF, the buyer to gets the information contained in the inspections. Will they get the information before they tender an offer, or after? I believe it's in your best interest to get the inspections completed before your home goes into the MLS; and to include those inspections in the online marketing package I prepare for the prospective buyers to read before they tender their offer."
"There are several benefits to you, Mr. and Mrs. Seller."
"First, we can negotiate everything upfront at the beginning of the transaction including the purchase price AND who pays for repairs--if any. That's when your negotiating leverage is the strongest, before you accept an offer. Your home is still listed as Active and For Sale so we'll probably have showing activity from other prospective buyers. Once you accept an offer, I change the MLS status to 'Pending' and we lose showings and marketing momentum and your negotiating leverage declines."
"Another reason to get the inspection completed before the home goes into the MLS is that sometimes the inspectors find problems you'd like to correct irrespective of selling the home. That's not uncommon. When was the last time you crawled under your home, Mr. Seller? [Nearly all homes in my marketplace have crawl spaces, not basements.] There may be evidence of termites or plumbing leaks, or some other problem you're not aware of, but which you'd like to get corrected so it doesn't create additional damage that's even more expensive to repair in the future. Does that make sense?"
"Is it okay if I order the inspections? The general property inspection will cost about $450 for a home with this square footage; the termite inspection will cost $225; and the roof inspection will cost $125. Do you know how old the roof is, Mr. and Mrs. Seller? [Write down the answer for future reference.] Those are the costs of the inspection if you pay at the time of the inspection. I typically order the inspections and you're welcome to be present, or not. I'll be present whether or not you are. I order the inspections from well-respected inspectors whom the buyer's agent may already know and trust."
"You need to know that even if we get inspections, the buyer may still get their own, but the chance of any big surprises is greatly reduced. The buyer pays for any inspections they want, of course."
[If the seller agrees, that's the end of the script. I include the cost the inspections in a Net Sheet. I ask the seller to pay for the inspections at the time of the inspection, not to bill the escrow. I want the inspectors to be paid promptly and I want the seller to save on the cost of inspections. If the seller needs further explanation, I continue.]
"If we don't get the inspections completed before your house goes into the MLS, the buyer will get them after we've negotiated the purchase contract, and there may be surprises; surprises that may kill our transaction. I say, 'Surprises are wonderful on birthdays and Christmas, but not when you're selling your house.' It's best to avoid surprises, if possible."
"Even if we sell your home in "As Is" condition, the buyer's offer will be SUBJECT TO their approval of their inspection results. That's a boilerplate contingency pre-printed into the standard purchase contract. Let me show you. [I show the seller that clause, which I've highlighted, in the purchase agreement.] If the buyer doesn't like the results of the inspection, they may withdraw their offer without forfeiting their deposit, or they may ask you to pay for the repairs or give them a credit."
"Depending on the terms of the purchase agreement--if it's As Is or not As Is--you may not be contractually obligated to pay or get the repairs done, but the buyer is not obligated to continue the purchase, either."
"If the buyer asks you to pay for the repairs, or to give them a credit, we've lost negotiating leverage and marketing momentum so you're more likely to agree, but maybe, begrudgingly and under the threat of cancellation. As I mentioned, our negotiating leverage is the strongest before you accept an offer because we're still getting showing activity and we still have momentum from our marketing."
"Some offers may also ask you to pay for the eradication any termites that are discovered by the termite inspector, and to repair any damage they've done; and also damage done to wood by water, such a wood rot. Those repairs are for what's called a Section 1 Termite Certification. But we won't know what those costs are without a termite inspection."
"If you agree to make those repairs, you're agreeing carte blanche to pay for something without knowing its cost. That's not a good idea. The first home I sold was a $27,000 home in east San Jose with more than $10,000 of hidden water damage that was discovered AFTER the seller agreed to pay for all Section 1 damage. Yikes. [That's a true story.] You can limit the amount you'll pay for repairs by specifying a cap in a counter offer--'repairs not to exceed $X'-- but then we just get bogged down over an issue that may not even be an issue. And we can easily prevent that potential problem by getting a pre-listing termite inspection."
"Doesn't it make sense to learn those things BEFORE the home goes onto the market? My experience is that you'll be happier with the job I've done if we get inspections completed before your home goes onto the market."
"Having the inspections completed demonstrates that you're serious about selling. That you've done your homework just like we expect the buyer to do their homework by getting pre-approved for financing."
"If you were buying a home, wouldn't you want to have inspections to read before you tendered your offer?" [end of script.]
How can anyone remember such a long script? It's easy: (1) Practice and repetition; (2) make it flow logically for you; (3) have a printed outline of bullet points and clip art as a memory aide in your listing presentation.
A quick MLS search for this post showed that 65% of the 243 homes sold in my city, Saratoga, CA, since 1/1/2013 had pre-listing termite inspections, 64% had pre-listing general property inspections, and 43% had both. Forty-four percent had pre-listing roof inspections.
Certified Realty Services
19200 Shubert Dr.
Saratoga, CA 95070
Certified Residential Specialist (CRS); Graduate Realtor's Institute (GRI)