Pre-Listing Home Inspections - Good Idea??????

By
Real Estate Agent with Executive Realty Group 471-000119

There was an interesting article that appeared in my "inbox" this morning entitled "Selling Homes Quickly".  Now, working in an environment today where that is a particular challenge, it seemed like a good idea to check it out.  So I did.

The argument presented in the article was that, when selling your home, you should prepare for theHouse under a magnifying glass process by having a professional Home Inspection done BEFORE you list your property for sale.  The rationale for this, according to the article, is that you can address any issues immediately (particularly significant ones) thereby avoiding having them come up at a buyer's inspection, alarming the buyer and perhaps derailing the contract.  And if they don't derail the contract, the writer argues, the buyer will magnify the financial impact, asking much more in compensation than the remedies would likely require.  Now, in the interest of full disclosure, the article was authored by a Home Inspector, so it could be argued that his perspective might certainly be biased.

The fact remains, however, that the topic IS worth considering.  When I run the pros and cons of the "pre-listing home inspection" through my mind, there are a number of things that come to mind on both sides of the question.

Advantages of the Pre-Listing Home Inspection:

  • Takes much of the "guesswork" out of what will likely come up AFTER you've negotiated a contract on your home, when you think you know how much you'll be getting from your sale. 
  • Gives you the opportunity to correct items that might deter buyers from offering on your home, or might cause them to reduce their offers in the first place
  • Enables you to discover safety issues of which you may not have been aware (faulty wiring, low level gas leaks, leaky roof that may not have yet gotten bad enough to be noticible from the interior of the house
  • Reassure potential buyers that you are "not hiding anything".  People tend to be most anxious about "the unknown"

Disadvantages of the Pre-Listing Home Inspection:

  • In most states, sellers are required to disclose what they know to be defects with the property.  However, they are protected from having to investigate to find defects about which they had been aware.  Once the "discover" an issue, they must disclose it
  • Buyers will generally still insist on having their own home inspection, and their inspector will be trying to uncover additional issues
  • Buyers often place little or no value on the "seller's" home inspection because they feel the inspector would be trying to discover "as little as possible" on behalf of the seller
  • If your pre-listing inspection reveals issues that you DO wish to remedy, will that remedy be the "proper" one, or the "cheapest" one?  Sellers often look for the "cheap fix" which can often backfire.

Over the years I've discovered that some agents insist on the pre-listing home inspection.  They believe these inspections minimize the surprises that often occur after all of the work of marketing a home, securing that buyer, negotiating that contract have occurred.  I certainly can't argue that view - it certainly has value.  I suspect it may have more value in some areas than in others.  For example, some types of properties might be better "candidates" for the pre-listing home inspection than others.  If I were looking at an 80 year old home versus a 5 year old home, I might view the importance of that inspection somewhat differently.

Several considerations have thus far prevented me from requiring home inspections on my listings as a matter of policy (though there have been individual circumstances where I've recommended them).   Each recommendation I make to a home owner has a cost/benefit component.   In the case of the pre-listing home inspection, there are a few items to consider:

  • The actual cost of the inspection itself
  • The seller's required "Property Disclosure" (an inherent liablity) will likely be impacted
  • Having had one inspection generally does not mean the buyer won't have their own

As to the premise of the article, that a pre-listing home inspection helps homes sell more quickly?  Can't say I believe that (if I did, I'd require them!)  Generally the inspection will reveal things that the "casual observer" (ie, all of the prospective buyers and their agents who walk through the home) would not notice.  And the items that they WOULD notice don't require a professional inspection to uncover.  It's the things about the house that they do notice that impact how quickly a home sells and how much a buyer is willing to pay for the property.  That's a whole other discussion (about staging a home, preparing it such that when it's exposed to the marketplace it "shows" its best). 

What do you think?  If you're an agent, do you recommend the pre-list home inspections?  What have been your experiences?  If you're a consumer, weigh in with your thoughts!  I'd love to hear from you on this subject as well!

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Rainer
268,456
South Austin Real Estate Blog
Sky Realty South Austin - Austin, TX

HI Judy, this is a very thoughtful post, something to consider, I had buyers who did chose a home that had a pre-inspection done, they poured over the report and then asked me to validate the findings, I could not, because Im not an inspector, I told the buyers the inspection was done by a certified board inspector who put his name and license on it.. .they opted to have their own inspection done and it did not find any new issues.  Did they waste $350 on an additional inspection? No, they do not feel it was wasted, they felt it was cheap insurance sorta.

Dec 01, 2008 11:51 PM #1
Rainer
45,309
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Gail,

Not that I've run into very many homes with indications that there'd been a home inspection, but on the few occasions where I have, my buyer would always say 'but that was done for the seller - I'd want my own".   I suspect it's more for peace of mind than anything else.  Human nature.

Thanks for your comment!

Dec 02, 2008 12:15 AM #2
Rainmaker
1,080,029
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Judi, welcome to Active Rain! I had not seen you here but have followed you on RealTalk for years. This is a great idea to have a pre-inspection. However, when I have a buyer we always do our own inspection in case the other one missed something. Honestly our sellers have never wanted to do one either for the money or because they thought their home was in good condition.

Dec 03, 2008 01:16 AM #3
Rainer
45,309
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Hi, Sharon!

Thanks for your comment....and I think your sellers' reaction is pretty typical.  I also think they really don't want to know if there's something wrong with the house - maybe a little "denial" in there, too.  For the most part, since buyer paid home inspections are so much a part of "standard operating procedure" here, sellers generally don't see the point of paying for another one.  I think over the long term it will be interesting to see whether this concept gains traction or not.

Gotta laugh, too, about your RealTalk comment.  ActiveRain is a new phenomenon for me.  I joined, believe it or not, over two years ago but never really participated.  Frankly, I think that was a BIG mistake...I'm trying to rectify that....[[[ giggle ]]] 

Dec 03, 2008 01:51 AM #4
Rainer
120,567
Brenda Carus
Century 21 Zwygart Real Estate - Monroe, WI

I am on the fence about pre-listing inspections.  They are not really done around here, and sometimes I think about recommending them to sellers.  The disadvantages you mention are what keeps me from doing so. 

Dec 03, 2008 03:08 AM #5
Rainer
225,598
Diane Bell, Hilton Head Real Estate, Bluffton
Charter 1 Real Estate, Hilton Head, Bluffton, SC - Hilton Head Island, SC

Judy,

I don't think the pre listing inspection causes a home to sell faster but rather more easily.  If a seller can remove possible objections, things should move along more quickly. 

Dec 03, 2008 03:14 AM #6
Rainer
45,309
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Diane,

I'd be curious as to what you mean by sellling more easily.  I think I may be stuck on the logic "if a buyer or their agent can "observe" an item that might cause the buyer concern, it's no doubt something I observed when I took the listing and was addressed.  On the other hand, if it was not observable in the first place, the buyer would simply make their offer, unaware of the item, and then, when it was discovered at home inspection, it would then be addressed...but the seller would be making the decision as to how to address it based on market conditions and the price the buyer had negotiated on the property. 

I guess one other concern I have is something that I had mentioned earlier.  If a seller inspection uncovers something, for example...a cracked heat exchanger in the furnace, the seller would have two options...either disclose the issue in the seller's disclosure, or replace the furnce.  If the seller opted to replace the furnace, are they likely to get a good quality furnace, or are they likely to get a cheaper, but "acceptable" furnace....perhaps one the buyer would not have opted for had they had a choice.

Truly, I'd love to hear alternative points of view on this.

Dec 03, 2008 03:50 AM #7
Rainmaker
1,080,029
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Judi, you're going to LOVE it here. Unbelievable information exchange and a positive environment where you're not afraid to express yourself. Frankly, I was a lurker always because people came down pretty hard on other people's comments. Have a great day :)

Dec 03, 2008 04:31 AM #8
Rainmaker
544,684
Shirley Parks
Sands Realty 210-414-0966 - San Antonio, TX
Broker, 210-414-0966, San Antonio TX Real Estate

Hi Judi,  I think a pre-listing inspection is a very good idea but I also think the buyer should have an inspection done as well.

Dec 03, 2008 02:33 PM #9
Ambassador
1,200,126
Ellie McIntire
Ellicott City Clarksville Howard County Maryland Real Estate - Ellicott City, MD
Luxury service in Howard County & Catonsville

Hi Judi- I think inspections are just opinions for the most part. One inspector may find a whole host of different issues from another. I think I will stay away from that!

Dec 04, 2008 10:14 AM #10
Rainmaker
124,355
AMBER NOBLE GARLAND - Top Real Estate Expert, Property Tax Appeal Specialist & Author
Strategic Marketing Expert & Relocation Specialist Serving New Jersey and nationwide! - Marlboro, NJ
- The Agent You Can Trust To Deliver REAL Results!

You make an excellent argument for pre-listing inspections. Definitely gives me something to think about, especially for one of my new listings coming up in a week or two.

Btw, thank you for the comment you left on my blog. :)

Dec 06, 2008 01:37 PM #11
Rainer
45,309
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Sharon - I am already loving it here on AR!  I'm finding the "temperament' of this community much more possitive, sharing, supportive than the other.  I love that!  There is absolutely no reason to be otherwise, so I'm delighted at that discovery!

Shirley, I absolutely agree that the buyer should have their own inspection..regardless of whether the seller has had one or not.  One of the greatest benefits (other than peace of mind) for the buyer is that the inspector is not just looking for issues...he's also educating the buyer with maintenance suggestions and some "how to" guidance (like how to restart the furnace, or replace the humidfier filter and how often to do it, etc) ... which is also very important.

Ellie - absolutely true!!!  Different inspectors will always come up with different information.  One will totally miss something another will catch and vice versa.

Amber - Thanks for your comments and good luck with your new listing!  Oh, and you're very welcome.  Thank you as well!!!!

Dec 06, 2008 09:22 PM #12
Rainer
321,367
Russel Ray, San Diego Business & Marketing Consultant & Photographer
Russel Ray - San Diego State University, CA

The National Association of Realtors regularly reports that homes that had pre-listing inspections sell for more money, sell faster, and have a smoother escrow. Why, they, would any Realtor not have a pre-listing inspection on a property that was being listed.

Here in California, the Courts seem to be saying that Realtors need to know what they are selling, and I agree. Let's presume, as the Courts have done, that a Realtor lists a home for $500,000 at 6%, 3%CBB. Three percent commission on that $500,000 is $15,000. Courts believe that the Realtor and/or the seller should be spending $400 for a pre-listing inspection in order to know better what they are trying to sell.

Note that history indicates that what starts on the West Coast eventually moves eastward.

Jan 01, 2009 06:47 PM #13
Rainer
45,309
Judi Bryan
Executive Realty Group - Bloomingdale, IL
Your Chicagoland Connection

Russel - First, I'd have to question the validity and reliability of an NAR "report" that gives such an indication.  Since they have no way of knowing exactly which homes had pre-list inspections, let alone the relative conditions of those properties, how they were priced for their markets as compared to others they competed with, etc., any info they might have would be limiited and likely skewed.  There are so many factors that could swag those results, not the least of which might be that owners of higher priced homes in great condition and in nicer areas might be more likely to have a pre-list inspection in the first place, who's to say they wouldn't have sold "faster and for more money" even if there had been no pre-list inspection at all.

I too am a believer that often, though not always, what happens in California eventually happens elsewhere as well.  However, when I've approached attorney's locally here about the necessity, let alone advisability, of a pre-list home inspection, they've consistently advised against it ... and for many of the reasons I cited in the original post above.  There are certainly exceptions to that.  For example, if I were about to list a home and saw any "red flags", things I would have every reason to suspect could be a major issue, I would certainly recommend that it be looked at...most likely not by a "home inspector" however, but rather by a specialist in that specific field.

Jan 02, 2009 12:14 AM #14
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