Sellers, Buyers & Realtors Benefit From Pre-Sale Inspections

By
Commercial Real Estate Agent with Crye-Leike Real Estate Services AR00075165

The growing trend in today's tightening real estate market is for Homebuyers to have their real estate sales offer contingent on an acceptable home inspection.  A buyer's home inspection can be a nail-biter for all parties involved.  A new home is a major investment and homebuyers want to make sure the home they are considering is structurally sound and that all the major and minor components are not only functioning at the time of the inspection, but are also going to have a reasonable life expectancy that is comparable to the price the sellers are asking.  But what happens when their home inspector finds key deficiencies such as a failing roof or a foundation that shows signs of moisture penetration?  Chances are the homebuyers, especially first time homebuyers, are going to be very concerned, demand additional evaluations or may even want to back out of the deal.  On the surface, this scenario seems unavoidable since most homebuyers hire a home inspector, and more than likely that home inspector will find fault with something, whether it be something major like the foundation or a minor issue such as loose tile.  However, situations like this can be avoided or their impact greatly reduced with a pre-sale inspection.  Just as a homebuyer's inspection is for the buyer's piece of mind, the pre-sale inspection is for the seller's piece of mind.  A pre-sale inspection can provide the seller with a list of key items likely to be revealed by the buyer's home inspection and give them time to find acceptable and affordable remedies to them prior to showing, in short, it gives the seller a glimpse into the future of the sale.

At first thought it almost seems redundant and costly to have two home inspections on the same property.  A seller more than likely is in the same process of purchasing another home and will not want to incur the cost of two home inspections, one for the home they are buying and the one they are trying to sell.  This is acceptable logic, but not reasonable.  Once a seller decides to hire an inspector for the home they are selling, they should also ask the inspection company to negotiate a reduced inspection price if they plan on using the same company for their future home.  The cost of two home inspections aside, the seller must anticipate that some issues are going to arise during the homebuyer's inspection.  Some buyers with try to use these issues as negotiating leverage to lower the sales price or get major work done and more than likely slowing the process or even possibly killing the deal entirely.  The benefit of a pre-sale inspection is that the inspection will mention the deficiencies, if any, and provide a cost analysis.  More importantly, however, the pre-sale inspection will highlight the homes assets / perks and provide the seller with firm reasoning for the asking price and leave little room for the buyers to negotiate a  reduced price after receiving their home inspector's report.  Another benefit to obtaining a pre-sale inspection is avoiding a disclosure lawsuit.  If a home inspector identifies an issue that the seller had no previous knowledge of, they would then be required to disclose this information on the seller's disclosure form.  Why is this to the seller's benefit?  If a problem arises after the closing and the buyer finds a major defect, they may say the seller was aware of the defect and then file suit to obtain damages.  This situation can result into thousands of dollars, mortgage defaults or years of headaches and court battles.  Having a pre-sale inspection demonstrates to the buyer that the seller is serious and wants to have a smooth, non-chaotic transaction; but most importantly that the sellers are honest. 

A pre-sale home inspection should also alert home sellers to a variety of other maintenance improvements that can enhance a home's appearance and marketability, such as:  trimming trees and shrubs which touch or overhang the house; new caulking and weather-stripping around windows and doors; cleaning gutters of debris and leaves; repairing or replacing cracked or broken gutters, downspouts, and extensions to ensure proper drainage; replacing bathroom caulk or grouting where necessary to prevent more seepage and improve appearance.

Fixing even minor items can go a long way toward improving that important first impression of a home, so home sellers should remember to repair leaky faucets, tighten loose doorknobs, replace damaged screens, and replace broken panes of glass.  Safety issues will also be address by the home inspector including; installing smoke detectors on each level; installing Ground Fault Circuit Interrupters (GFCI's) in "wet" areas, such as kitchen counter tops, bathrooms and exterior outlets; keeping flammable products away from heaters, water heaters, and fireplaces.

In a recent survey of its members, the American Society of Home Inspectors (ASHI) found that the most frequent problems listed on an inspection report was improper grading and drainage around the exterior of the house which can cause basement moisture problems and sometimes even soil erosion which can sometimes lead to foundation structural failure.  Another frequent problem area listed was the electrical system, including situations such as insufficient electrical; overload protection, and amateur wiring situations which can be dangerous.  Though these problems are not usually costly to fix, they may significantly influence a buyer's purchasing decision. Roof damage, and mechanical problems with the heating and air conditioning systems were also near the top of the list for frequently reported problems.

There are over 35 parts of a home that come under analysis during a typical home inspection.  To receive a list of the 10 most common problems found during a home inspection, according to an ASHI poll of its members, contact Certified Residential Inspections, Inc at 800/540-1400 or mail@certifiedcorporate.com 

Certified Residential Inspections, Inc is an Illinois State Licensed property inspection firm providing a full line of inspection services to buyers, sellers, investors and lenders since 1987.

Richard G Roberts, Operations Manager

Certified Residential Inspection, Inc

800/540-1400www.WeInspectRealEstate.com

Comments (6)

Lorinda Ward
Keffer Realty - Norfolk, VA
Serving, Hampton Roads Virginia. Norfolk, Chesapeake, Va Beach

These are great tips Robert, welcome to Activerain.

May 11, 2008 04:33 PM
Paula Swayne
Dunnigan, Realtors, Sacramento (916) 425-9715 - Sacramento, CA
Realtor-Land Park, East Sac & Curtis Park -Dunniga

HI Robert!

Here in California, 99% of the time, a home inspection is completed within 17 days of acceptance of an offer.  However, we rarely have a pre-inspection done.  The rational for this is that, as unfortunate as it is, different inspectors find different issues, have different resolutions and range from picky to the point of panicking buyers to so loose, they tell the buyer to have further inspections on every element. Many times inspectors come from previous lives of plumbers, electricians, heat & air servicers, etc. These inspectors always have an emphasis on this portion of the inspection.  So, I don't want my seller to pay for a home inspection, have repairs done as a result of the home inspection, only to find that the buyers inspector stresses a whole new set of issues.  Now, the listing agent looks inept.  I just wanted to point out another viewpoint.

May 11, 2008 04:53 PM
Richard Roberts
Crye-Leike Real Estate Services - Fayetteville, AR

Paula

You statement that every home inspector has a different approach to their role in a real estate transaction is one of the most trouble aspect of home inspections in my view. Though there are national standards of practice and ethics, home inspectors can be very subjective.

This fact is one of the points for having pre-listing inspections. The inspection report is written in a voice for the seller and highlights potential home buyer inspection issues. The seller becomes aware of what might come up with a home buyer's inspection and then can develop a strategy with his/her agent address them and hopefully prevent last minute price negotiations.

For an example, let's say the seller's inspection reveals that the HAVC and the roof may become issues for a buyer's inspector and the seller doesn't want to invest or does not have the funds to remedy the situation.

A seller can say that due to a seller's inspection they had done prior to listing the property that they are aware that there is a possibility that these items will need to be addressed during the first 5 years ownership. They can further state that the price they chose to list the property for reflects these findings. We also find that when the seller gets bids for the work prior to the buyer's inspection that they can easily counter buyer's inflated cost to resolve issues. Saving the seller time and money. We find that three bids from local contractors works best.

In addition, in Illinois we have a seller's disclosure law and this inspection report becomes part of the seller's disclosure statement transferring much of the responsibility to the seller's inspection company.

Finally, the property tends to sell sooner because the seller is seen as forthcoming and many possible delays due to resolving major issues can be eliminated.

Of course, going back to your main point...the seller's inspector would need broad experience, know his/her role in the transaction and be able to communicate in way that puts everything into its proper perspective. 

 

May 12, 2008 01:29 AM
Anonymous
Paula Swayne

Hi Richard!

I appreciate your perspective on this.  In an ideal world I think you are absolutely right. However, we have the same disclosure laws in California and even with the inspection attached to the disclosures, it does not mean the buyer can't ask for the repairs. Also, in this buyers market, the repairs needed being taken into account in the list price doesn't go very far...the buyers are still asking a discounted price. 

I know there are times when your system is absolutely the way to go...but I think there are other times when it duplicates cost and concerns.

 

 

 

May 12, 2008 05:49 AM
#4
Richard Roberts
Crye-Leike Real Estate Services - Fayetteville, AR

Paula

We agree on much............there is no single simple solution that can be applied to all situations and we are definitely not working in the ideal world.

Just think of pre-listing inspections as another tool to put in one's toolbox.

Richard

 

 

May 12, 2008 06:34 AM
Debra Kukulski, Broker Associate
RE/MAX Suburban - Cary, IL
SRES;SFR,CDPE;GRI;ABR;e-PRO Realtor, Northern IL

Hi Richard!  This is very good information.  Welcome to Active Rain and good luck with your new blog:-)

Mar 20, 2009 03:32 AM