Should A Seller Have Their Home Pre-Inspected?
ARDELL on 06 2, 2007
Getting a property ready for market is often a monstrumental undertaking for homeowners. The agent’s job is to always remember that they represent the person taking on this often overwhelming task, and not the house itself.
Sometimes people just don’t know where to start, and so I start with them.
Sometimes people have just “HAD IT” halfway through, and need more support and external services at that point.
Sometimes people are fully capable of getting it “done”, and then you just have to tweak it to convert from “home” to “product” by moving things around to better reflect “space and lifestyle”, which is what is really being sold.
More often then not, when people expend more effort than they ever thought possible by the time the house is “ready”, they want to raise the price to include a cost for “all the work” they’ve done. Forgetting that the work was needed to get the house UP TO the asking price in the first place.
Now that the house is “in showing condition”, it’s time to “position the house to sell”. Now that you can truly SEE the product in its best light, it’s time to price it properly and work on presentation. These days, the number one “presentation” factor is the Internet in its broadest sense.
Having a great virtual tour that only shows on one or two sites, does not compensate for a poor presentation on ALL sites via the MLS feed. After entering the property in the MLS, you look at the property on Windermere’s site, Redfin’s site, John L. Scott’s site and Coldwell Banker’s site. It won’t help you to have the best presentation on ONLY Realtor.com or ONLY your own site with a special link. When you pull up ALL properties in the price range in the area, you have to be positive that the property will make the “SHOWING” cut. If there are 23 homes in the price range, is this presentation going to get you into the Top 5?
After you check the direct consumer view, now check the Agent Search features. Instead of representing “the seller”, put your other hat on and pretend that you are looking for property to show for a buyer client. Go to the MLS and put in the parameters you REALLY would use. Search by the Standard Feature. Oops…property doesn’t show! Go back and check your area code or number of bedrooms or whatever caused the property to “disappear”. Now do a Map Search…oops, property doesn’t show! Go back and figure out why the mapping feature didn’t pick you up.
OK. Now how do we (we being the agent and the owners) feel about getting the house inspected before putting it on market? Before I give you (and Nell) my take on this, here’s a survey I took with opinions from agents around the Country and even a Home Inspector or two.
How will it help the seller to show every possible minor defect to the buyer? HOW WILL IT HELP THE SELLER is the ONLY question you ask and answer here, as the Agent for the Seller.
Why attach a list of minor repair issues? Does that help the seller? The seller is DONE, the place looks GREAT, you may get THREE OFFERS and not have to fix, or credit for, a laundry list of pidly stuff the buyer turns up in a Home Inspection. In fact, the buyer may not have an inspection contingency at all if you have several offers.
It is the buyer’s right to do their own due diligence. If you hand them a Home Inspection, might you be leaning them in the direction of not having a home inspection themselves? Could this be leading them to the conclusion of “why bother?” The buyer SHOULD ALWAYS due their due diligence. The buyer should ALWAYS have the home inspected thoroughly, whether or not there is an Inspection Contingency.
The seller should do THEIR part, and should not in any way influence the buyer to NOT do THEIR part. There’s a very good reason why the Home Inspection is generally part of the Buyer’s Due Diligence DURING the escrow phase. Sure Home Inspectors would like to double their volume by convincing all sellers AND all buyers to do them on every house.
A pre-Inspection often helps no one. It could scare buyers away, and that is NOT part of the Seller Agent’s job description. It could create the feeling that the buyer’s inspection would be redundant, and a waste of money, and that is not good for the buyer or the seller.
Ask yourself this: How many times might a buyer elect to NOT do a Home Inspection, if the seller just did one? The answer is…one too many.
About the Author: Ardell DellaLoggia
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33 Responses to “Should A Seller Have Their Home Pre-Inspected?”
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Here’s a side thought … if the seller does perform a pre-inspection, they suddenly may find themselves in possession of information that must be disclosed.
If they legitimately didn’t know about the uncovered issues, then they wouldn’t have had to disclose them – they couldn’t have because they never knew.
Someone with a 35-year-old ask once asked me about a getting a pre-inspection. I told them they’re likely better off not knowing what they don’t know rather than being told everything they don’t know.
Let the buyer find out what the seller doesn’t know during their inspection as part of their due diligence.
I think another problem with a sellers having the inspection done is the quality of the inspector. Without any regulation in this state of inspectors, there are all kinds of inspectors out there. As a seller I would not want a buyer coming back to me saying that “my” inspector missed something and blaming it on me for picking a lame inspector. The buyer needs to take responsibility for picking the inspector they want protect their interests. It is foolish to not be willing to spend the money and take the time to have a home inspected during the purchase process.
I think you made your point really well in the last part of your post.
Very helpful!
As an aside; I’m a little confused by this statement
“Having a great virtual tour that only shows on one or two sites, does not compensate for a poor presentation on ALL sites via the MLS feed”
I mean yes the NWMLS doesn’t include the VT in its IDX feed but how does that equate to poor presentation on all sites? Forgive me, I guess just don’t understand what you mean. Are you speaking in reference to the photos and their need to be excellent and of the best features of the house?
Yes Maria,
I have seen some who have great videos have poor still photos. It would be great if people would only look where you want them to, but not very realistic. Better to spend the time making sure ALL sites have the best photos, then to have poor photos and a great video.
Also, too many are putting the photos and video in the sequence of outside, many shots, in the front door, down the hallway, etc. By the time they get to the home’s BEST feature, the buyer may have lost interest. Best photos first, regardless of room placement.
Good point Allen. When the buyer does their inspection, if something new comes up, it might look like the sellers were trying to hide something. So this effort to try to disclose all, could backfire.
Gotcha! Good point. I look at photos of houses every darn day and let me tell you I see some really weird stuff.
Ardell,
When you have “” marks around words with punctuation following, the punctuation mark is to be within the “” such as “ready to sell.” not “ready to sell”.
Tsk tsk… Mensa would’ve caught that for sure.
Just buzzing through and thought it was funny that the punctuation police were here.
While that is technically correct, I’ve thought for years that it doesn’t make any sense in some situations and in those situations I actively break that rule. You know where to find me to give me my ticket!
I wonder IF I am in the minority here…..but I believe a “pre-inspection” IS very helpful. Due Diligence on my part is important going forward in any transaction. Why would I NOT want to disclose anything prior to sale? Makes me wonder. Also, the satisfaction from the “seller” knowing the property is in tip top shape & HAS been inspected releaves some stress during the “buyers” inspection period…..JMHO!
Actually, punctuation police is incorrect. When the entire sentence is a quote, then the puctuation goes inside the quotation mark. When the quote is only part of the sentence, the puctuation goes outside of the quotation mark. Not saying I did it right, as I can’t even find it in there. But that’s the rule.
Knowing it has nothing to do with “mensa” levels. It’s has to do with Mother Mary Elizabeth and her big metal edged ruler. SHE was the Puctuation Police for me.
I use so many unnecessary quotation marks, that it becomes somewhat irrelevant. My error of choice, is to have used the quotation marks in the first place
Jim,
In my experience, the timing of disclosure affects the seller’s net.
If you look in the agent comments in the link I provided, you will see that a property ended up selling for $50,000 less when the disclosures were all made up front. The seller often gets charged for the defects twice, when you disclose everything before the offer is written. The house sells for less, AND the buyer still does an inspection and requests repairs on top of the reduced sale price.
You can stand on your head until you turn blue trying to explain that the price already took into consideration the known defects. Won’t do you any good. The seller will pay twice for the same defects, unless they are repaired.
So if a seller is able to repair every defect, then yes, an up front inspection might be worthwhile. But if the seller is not prepared to correct them all prior to putting the house on market, then they will likely pay twice for each named defect.
In my experience it is always better to prepare a house for sale rather than leave things to chance. A pre inspection, if thorough, is the best way to prepare the home. A second pair of eyes is good no matter who you are or what you think you know.
It also shows more care on the seller’s part that they went to that extra effort. Even if the items are not repaired by the seller a fair compensation can be offered at closing.
This is one issue that I feel is not black & white. I think this is something that needs to be case by case depending on the house, the clients, what agents in your area think about pre-inspections and the current market conditions.
There are pros and cons to pre-inspections that all sellers must take into account before making a decision such as once material facts are known they cannot be unknown so you need to be willing to fix them or accept that you will have to include them in your form 17 disclosure. The pro is there are no surprises for the seller (or you hope not!) and if there is anything major they can fix them before they are in a situation where they are needing to ask for extra time in closing to get it fixed, crediting money, etc. I think this is especially important if they are trying to close on their current property without much wiggle room to purchase a new one. If they have buyers walking at inspection time then they will be struggling to get the problems fixed and find another buyer before too much time elapses. The con is if the property is older, the sellers didn’t have a home inspection when they purchased the property, they have lived there a long time or if the sellers simply don’t want to do any work to the property then the list could be overwhelming and I would say no pre-inspection because you would have a laundry list of items to disclose and buyers will have their own inspections done anyway (and we want them to), so why deter buyers before they even see the property when they are less likely to walk away once they fall in love with the property and are somewhat committed to the home purchase.
I had clients a few months back ask me if they should get a pre-inspection done. In this particular case I am good friends with these clients and I know for a fact they take impeccable care of their property, it is only 6 years old, and they are the original owners who had an inspection and fix-ups done before their 1 year new home warranty expired. I also made sure they understood that buyers would still have their own inspection done; I would certainly have my clients do their own inspection on the property so to take that into account. They elected to have it done after walking at inspection on a property they were going to buy. They have already completed all inspection items so when they find the property they are going to buy (and pass inspection) we can go on the market and in agent remarks include the sellers had a pre-listing inspection performed for their own peace of mind and all items were repaired.
On a side note, I don’t get paid for my grammar so I really don’t care how bad it is
LOL We’re going to have to rename this the Pre-inspection/punctuation thread.
There is of course no right and wrong answer about the inspection itself. It is what one does after the inspection that creates the issue.
Agents seem to have three positions on this. One is to hand the whole inspection out to all people, the other is to fix everything and not itemize, the other is to fix the big stuff and burn the rest of the inspection
I can tell you first hand that I have seen inspectors miss a $10,000 item more than once, particularly in Seattle vs. Eastside. So thinking you’ve got it all covered and there will be no surprises if it is pre-inspected, is not always the case. Not because of a bad inspector, but because of the limited scope of a generalist inspector vs. “2nd inspections”.
Buyers often go to “2nd inspection” phase, while pre-inspections do not always go there.
ARDELL, I only suggest a prelisting inspection if I feel there may be major issues that the seller is not aware. Usually these are vacant rental properties were the seller has seen it in a few years. Other than that I list it and let the buyer do their due diligence. I would rather negotiate a higher price up front and then renegotiate downward if necessary, after the inspection, than have the buyer beat my seller up on price initially. Once the deal is signed buyers are more motivated to move forward. Plus I want the buyer to have the property inspected by his inspector.
BB,
I usually look at it this way.
Five year old house: Very few expensive things have a life expectancy of 5 years or less. Shouldn’t be any big problems the seller doesn’t know about already.
18 year old house: If it doesn’t have a new roof, it likely needs one if it has a 20 year shingle. You can usually tell by looking at the roof if it is a 20 year shingle. Could go either way at inspection. Inspector could say it has 5 years left on it, or inspector could say it has 1-2 years left on it. Seller should be prepared for possible roof issues. No I don’t recommend the seller go buy a whole new roof, or get it inspected, if he’s not prepared to replace the roof before putting it on market.
I don’t need an inspector to tell me that an 18 year old house with an original roof may need a new roof. I don’t need an inspector to tell me that a 16 year old hot water tank should be replaced. I don’t need an inspector to tell me that the rotted wood on the eave should be fixed.
We have always been expected to give a seller an idea of their net proceeds, before the house goes on market. The number we deduct for anticipated repair requests, depends on the age of the property, and the age of the major components.
Every agent should be able to do that without having the home inspected.
I just wonder to whose benefit the inspection is? The agent or the seller? Does it make the agent’s life easier and the seller’s price lower to do it in advance?
When relo does a pre-inspection, they do it to protect themselves before agreeing to a buy-out number, not to protect the owner.
That said, I think it makes perfect sense for a buyer to do a pre-inspection in some situations. Our new inspection contingencies now have a place for “pre-inspected” by BUYER. Now that’s a concept I really like, if and when it makes sense, and time permits. That’s a much better way, if the buyer wants to know everything before making an offer.
Each local market is different and right now in my market, I’m asking my selling clients to consider a home inspection.
I honestly believe that it gives the seller some leverage in the negotiation with a buyer because the sellers would have better disclosure knowledge, and it could also help them price the property to the market. A clean inspection could also be advertised to create more interest from buyers.
In my market sellers hold very few cards so some creativity is not going to hurt.
Todd,
In my experience, a home that could actually get a CLEAN inspection is not one buyers worry about. Well, actually, I don’t think I’ve EVER seen a house with a CLEAN inspection
Have you had any sellers do pre-inspections and provide them to buyers so far? If you have, can you tell us how the buyers reacted? Did they do their own inspection in addition, or accept the seller’s inspection?
Only recently have I started this campaign with my sellers. One of them is set to do this right now and I’m taking the fee for the inspection off my commission at closing so the seller has nothing to lose. So I don’t have any hard evidence that this is a sound practice as of yet.
On your other comment, I’ve yet to see a truly clean inspection either. However, sellers are always seemingly shell shocked when I show them the buyers inspection report document. I still get those deals done in most cases (normally the requested repairs are minimal). Doing this inspection ahead of time would allow me to update the net sheet to the seller to include any repairs to give a clearer picture of the actual cost to sell the property.
To me this is better disclosure for the seller if they choose to have the inspection before a buyer makes an offer.
I would still recommend that a buyer does their own inspection even if the seller offered the inspection report to the buyer for review.
Todd,
I still think plugging in a number up front, as a set aside for repairs, works best. Rarely do I have inspection issues come near to or exceed $10,000. So a $10,000 set aside for repairs from the initial seller net, should give the seller a little room. If the only reason negotiations are difficult, is because the seller anticipated zero repairs, then the net is done wrong in the first place with no repair allowance.
If the issue is seller being shell shocked, we can show them the inspection reports for the last 5-10 houses, so they get the idea that none come through with no issues at all. That’s free. Doesn’t get you into an argument about not wanting to disclose everything in the report up front, like maintenance items.
Sounds like it’s just a communication problem.
That said, there are times when I do inspections up front. I just don’t like always doing everything one way, without first considering the impact on the seller. I had one house that was built in the 1800s and the seller owned it for 45 years and never lived in it. We wanted to know eveything the seller couldn’t possibly know on that one. Another had repairs needed in ceilings, and I don’t like to repair a water stain or other problem without investigating the cause of the problem, as that would be concealing the defect.
Our biggest problem is explaining why the seller can’t sell it “as-is” most times. Their frame of reference being no one fixed things for them when they bought it. Usually it’s a mindset, and getting an inspection up front doesn’t necessarily change that mindset.
One of the best systems I saw was in the City of Philadelphia, where they had a roofer inspect and certify the roof, the heater inspected and tagged and the electrical inspected. Individual certifications on major components rather than a generalist inspection up front.
If we do see a movement toward pre-inspections by sellers, then it will have to be a different type of inspection, similar to the way it is done for corporate relos. About half the cost and only major components.
Great post Ardell, such great content I can’t believe it could get hijacked into a punctuation discussion. The advice on managing the sellers expectations on the net with a repair fund is great advice. Leave the inspection due diligence to the buyers.
Keith,
Just the way I was trained 17 years ago. Always worked. Most times the seller had enough left over to buy something for their new house, after deducting actual repair requests for the up front set aside.
Just realized I just passed my 17 year anniversary as an agent on June 1. It always falls right before my birthday, so it’s easy to keep track of.
Ardell:
I doubt I’d even be offering this to my sellers if it wasn’t for the current state of the market. Sellers around my parts still feel ‘entitled’ to sell their property for more than what their neighbor may have sold for last year. Simply not going to happen.
The communication problem is between sellers and buyers. Getting a pre-inspection allows the seller to offer better information about their home… even if they have to address some things on the report. I believe it would give them an edge in our current buyers market.
But I understand your position here and won’t argue against it.
Me… I’m letting the ideas of free enterprise work a bit before I decide to continue with this program or not.
Todd,
I very much appreciate your response. I’ve been wondering why pre-inspections are starting to be recommended by agents to sellers.
I’ve had two situations this year where the seller had reports saying the houses were solid as a rock…and the foundations were slipping. Both needed whole new foundations poured to remedy the problems. My clients did not buy either of them. Someone bought one of them. The other was taken off market, as I don’t think the agent for the seller knows what to do next.
On the first one, the agent for the seller said a whole new foundation had been poured around the original. We inspected it, and only one corner had been poured. Response, “Oh, yeah…well.” I really had trouble with the fact that the agent wasn’t surprised by our findings. Was he just hoping that someone was going to take their word for it and overlook it? When asked for the paperwork regarding the foundation improvements, agent response was “The seller’s attorney advised them to not release the report.”
The second one actually had NO foundation for half the house. Seller’s response was, “Oh, we just put windows in”, not NEW windows, but windows. I said, what was there before you put windows in? Appararenly half the house used to be a porch. There were many bandaid fixes to the foundations on both.
I agree that buyers would like to know everything before making an offer. But any common practice that suggests that a buyer doesn’t need to do their own due diligence, is dangerous for both the seller and the buyer.
As to shifting from a seller’s market to a buyer’s market, I don’t see pre-inspections being the answer. Most times when a buyer perceives that a house needs a lot of work, they are talking more about aesthetics. Kitchens, bathrooms, flooring, etc…and not latent defects.
That said, I do think that one in ten times, a pre-inspection could be of benefit…its the other 9 I’m concerned about.
Hijacked into a punctuation discussion? There haven’t been NEARLY enough posts for that to happen. I just stopped back to see if there had been any defense from the punctuation police, and there hasn’t been. Though I laughed for several minutes after reading the line about renaming the thread. And with that I’ll leave you to your pre-inspection discussion.
LOL Robert,
I didn’t know that you were the “punctuation rule breaker”! Glad you had a laugh. Just for kicks, I’m going to send a questionnaire around with sentences done both ways on Mensa Games Night and see if they spend the night arguing with each other over where the period goes.
I’ve always believed that pre-inspections are a waste of my seller’s money.
There are many reasons, but the main one is that the buyer is unlikely to trust the results and willwant their own inspection anyway.
And, at least in Idaho, home inspectors aren’t licensed and inspections produce inconsistent results.
One inspector will call one thing and the next inspector will either miss it or call something the first one missed.
I wish the concept worked, because it would be an excellent marketing tool to be able to demonstrate that the home was in good condition.
Should a Realtor that encourages the seller not to get a pre-inspection be liable for what the buyers inspector missed and sues the seller??
Interesting question. I’d say clearly not. I would like to see a section in the Form 17 for the agent to complete with items they have observed, the way CA does. I think there can be many improvements to WA Form 17, like info on issues affecting value “nearby” vs. AT the property. Noise issues, smell issues, etc.
Pre-inspection required or extended liability for not having a preinspection is way down on my list of what WA needs to improve. But given your affiliation, I can clearly see your self interest in every property hiring two inspectors instead of just one.
With regard to inspections I would like to see BOTH the agent for the seller AND the agent for the buyer present at ALL inspections. Clearly the agents for both parties should be well informed with regard to property defects beyond the written report. We all know inspectors say a whole lot more than they write, and the inspection addendum should be clear that the agent for the seller has a right to be present.
I’d rather see both agents present at the one inspection, than the cost of an additional inspection added. There are already enough costs associated with buying and selling homes. We don’t need to add to the consumer’s cost burden.
There are court cases where the inspector is not held liable and the Realtor is, due to the fact the agent commented on the property condition. The court saw with the Reator acting knowledgeable about the condition he/she was responsible for commenting that the property was in good condition when it was not. Reator lost the case and had to pay for all items missed by inspector. I will dig the article up and place it on my site under Realtors section.
God forbid the Realtor should act knowledgeable about anything :0
The worst thing that has happened in real estate in the last ten years is risk reduction preachings. “Don’t do anything except open the door. You might get sued.” I’d rather go with the thousands of times all parties were well informed by being at an inspection, than the one or two times there was a lawsuit about it.
[...] Ardell Dellaloggia, the principal writer for the informative and successful blog, Rain City Guide (www.raincityguide.com), wrote a post entitled: “Should a seller have their home pre-inspected?” There were [...]