He asked "why should I order a pre-sale home inspection when I am the seller!!!!!"

By
Real Estate Agent with Chris Alston (Keller Williams Realty, Cupertino California) 01338415

ContractsHe asked me why he should order a home inspection when he was the seller.  It seems that in the past it was always up to the buyer to discover whether he wanted the home, and a home inspection was one of the best ways to find out if the house was what you thought it was and if you actually wanted to buy it.

So let's consider a few things, before we directly dive into this answer.

A seller should disclose anything that could affect the value and/or desirability in the eyes of the buyer in their decision to use it in its present and/or future use.  Now I know that the seller is only responsible to disclose things that are known or discovered by the seller during the escrow period.  (At least in California).   So getting a home inspection prior to selling could make sellers weary as it would disclose the imperfections of the home to potential buyers and my turn them off or even encourage them to write an offer that is lower then what you would have received without the home warranty.

So some could argue against doing a home inspection prior to listing it using this point.  So let's think of it another way.

Transactions fall apart for a number of reasons...  Couldn't get a loan, lost a job, had to move, death, etc...  They also fall apart due to something the buyer discovered after they got into contract.  Maybe that discovery was from a home inspection.  Buyers may just cancel the contract or even try to renegotiate the price after the home inspection, since now they have discovered that house has some fixes that are needed and the buyer my feel the home is no longer valued at what they got into contract to begin with. 

When a seller gets into contract with a buyer there is an emotional aspect to that sale.  They are starting the mental process of moving.  Getting ready to set up movers, pack up boxes, letting people know you are about to move...  The seller starts counting the days down till the buyer removes their contingencies so that the contract will be binding and the seller can make the final plans and move...  And these 10-17 days can be stressful to say the least...  And when the buyer cancels on the last day, that means you have to start over... OR if the buyer comes back to ask for some money to cover repairs it sometimes can lead to hurt feelings or even anger.

So this emotional fact alone is one of the strongest reasons to get the inspection prior to selling the home.  First off, if all potential buyers know what is wrong the property prior to writing a contract, then they are less likely to cancel after the contingency time frame since they already know what is wrong with it.  So a potential buyer that doesn't like what the report says up front won't make an offer anyways, so you don't have to deal with the ones that walk away later...

The buyers are also less likely to renegotiate the price, since they are aware of the deficiencies in the property.  So these buyers have less of a position to stand in when asking for repairs and/or money since the buyer was already aware of the repairs that were needed.   So the price that they offer up front will most likely stand through the contingency process and hopefully close at the amount.

A home inspection can range from $250-$500or more depending on the type of house, slab or foundation, rooms, attics, etc...  I recommend all sellers to get pre-inspections.

Do you do pre-sale home inspections?  And what are your thoughts on this?  All points of views!!!

Posted by

 

Chris Alston

 

Home sales and purchasing specialist

Keller Williams Realty, Cupertino

19400 Stevens Creek Blvd, Suite #200

Cupertino, CA 95014

408-850-6955

408-850-6956 fax

calston@kw.com

www.LivePlaySiliconValley.com

 

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Cindy Marchant
Keller Williams Indy NE 317-290-7775 www.marchantteam.com - Carmel, IN
"Cindy in Indy" , Realtor, Fishers Real Estate

I think knowing what is potentially wrong with a home gives you the upper hand to fix things with your contractors.  Consider this...you price the home at $250,000 and you are a beaten down seller (aren't they all) and you accept $235,000.  Now you find out you have an issue with the home and the three bids are $3,000, $5,500 and $10,000 (because they can vary that much) and your buyer wants the average as a concession.   You see where this is going...had you fixed it first, you would be much further ahead. 

My point, if you give during the selling process....you may be asked to give again.  If you already know what needs to be fixed...you are in the drivers seat.

Cindy in Indy

Jan 11, 2011 08:05 AM #11
Rainer
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Joseph Michalski
Sherlock Homes Inspections - Souderton, PA
PA Home Inspector

As an inspector, I find that few sellers are interested in this type of inspection for the reasons you mentioned.  I have a hard time understanding it because it is such a huge marketing advantage and, as Cindy points out, it let's you have more control over the pricing and negotiations.

I don't discount them even a little, though because these usually require more work than a buyers inspection, including follow-up inspections (on repaired items), modifying reports (to reflect corrected items), advice on repairs and ways to improve the home for selling, etc.  In some cases, I have been back to a home 4 times and re-issued the report 6 times (updating photos, items, etc).

My lucky wife gets to add free sellers inspections to her listing presentations (always nice to know someone in the business), which helps her and her clients.

Jan 11, 2011 08:47 AM #12
Rainer
370,054
Tish Lloyd
BlueCoast Realty Corporation - Wilmington, NC
Broker - Wilmington NC and Surrounding Beaches

Chris ~  Had to lean on this one -- As of Jan 1st we have a new "Contract" which has a Due Diligence time frame.  When the offer is written, the Buyer is expected to write two (2) checks:  One for the EMD as always; the second is written TO THE SELLER for an amount designed to reimburse the Seller for time off the market while any contingencies are met.  In other words, the Home Inspection, the Termite Inspection, etc.

So, without getting too far into this -- you've got to compute how long it will take to get the Home Inspection done and then try to anticipate a time period within which to get any repairs accomplished.

These monies paid to the Seller will be credited to the Buyer at the time of settlement -- No settlement, NO money back!

We also have a new revised Listing Agreement which has a paragraph devoted to the Seller paying for and having the Home Inspection completed, together with the timeframe within which this will occur.

Time to get those Home Inspectors lined up on your alphabatized list along with their anticipated response times and fees!

 

Jan 11, 2011 09:25 AM #13
Rainer
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Shannon Coe
Allison James Estates and Homes - Loomis, CA
916-741-1664, Lincoln, Rocklin, Loomis, Roseville

good points, I have had several traditional sales in the last couple of months and I do not like holding my breath during inspection time.

Jan 11, 2011 09:31 AM #14
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Thanks Roger!!!

Jan 11, 2011 11:10 AM #15
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Laura - Well, that is an incentive!

Jan 11, 2011 11:10 AM #16
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Cindy - Well put!  I overlooked the aspect of fixing what was wrong before you sell as well.  :)

Jan 11, 2011 11:12 AM #17
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Joseph - Interesting...  About 10 years ago, no sellers wanted them.  Now in Silicon Valley, most sellers will do thim in non distressed cases.  It is spreading across N.Cal as the years go by...

Jan 11, 2011 11:18 AM #18
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Tish - Wow, that is the first time I have heard of a contract like that!  I bet it took some time to get used to, and I can see how it would be effective!

Jan 11, 2011 11:23 AM #19
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Shannon - I know!  It is tuff to tell the seller they want to cancel based on what they found!

Jan 11, 2011 11:24 AM #20
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Joshua Zargari
MJ Decorators Workshop LI staging and home decorating - Lynbrook, NY
MJ Decorators Workshop

A great point Chris!

Have a nice day!

Jan 11, 2011 11:57 AM #21
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Stacey Smith
Michael Plummer Group - Aliso Viejo, CA
Your Orange County Beach Cities Realtor

That is a great point Chris.. Sometimes the buyer won't take the "Seller didn't know" as a legitimate excuse and won't stop them from taking them to court after the close of escrow and sueing them for damages.. The best thing is to allow your seller to know EVERYTHING affecting the home and the best way to do that is for them to get a home inspection before hand.

Jan 11, 2011 12:06 PM #22
Rainmaker
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Erika Rogers
Re/Max First Realty - Saint George, UT
St George Utah Real Estate & local info.

This is a great post to show to sellers.  Have a super day!

Jan 11, 2011 01:08 PM #23
Rainmaker
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Nick T Pappas
Assoc. Broker/Broker ABR, SFR, e-Pro, @Homes Realty Group, Huntsville AL - Huntsville, AL
Madison & Huntsville Alabama Real Estate Resource

Chris, I agree with getting a pre-inspection to find out if there are problems and address them...less for the buyer to pick apart or ask for later.  Here in Alabama the buyer can not use the home inspection report to back out of a contract for anything that is not, a structural, safety or health hazard.  Also, the buyer can not use the home inspection to re-negotiate the contract/offer.  The buyer can request items be fixed, but the seller doesn't have to agree.  Great post on a topic that I think is often over looked.

Jan 11, 2011 01:27 PM #24
Rainmaker
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Jack Mossman - The Nines Team in Lodi
The Nines Team at Keller Williams - Lodi, CA
The Nines Team in Lodi

Chris - I would make this suggestion if the focus of our marketing plan was directed to a buyer that would benefit from the inspection.  It is a position I have taken with challenged properties with my REO clients.  IF the imaginary costs can be reduced to reality, then financing arranged with rehab components, then the buyer market is greatly expanded.

For an equity seller ... again, considering condition, I may not be as willing to expose the "disclosure" issue ... the results will always be material.  On short sales, I always recommend that the seller pay for one ... which we include with the contract we submit to the bank; we also ask the buyer to reimburse the expense as part of a closing cost credit.

Jan 11, 2011 02:31 PM #25
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Thanks Joshua!

Jan 11, 2011 09:43 PM #26
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

 

Great point Stacey, and well stated!!!!

Jan 11, 2011 09:50 PM #27
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Thanks Erika!!!

Jan 11, 2011 09:50 PM #28
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Nick - That is an interesting point you make, and if you ever get a chance, I would love to see a copy of that contract.  Feel free to email me a sample!!! calston@kw.com  :)

Jan 11, 2011 09:51 PM #29
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Chris Alston
Chris Alston (Keller Williams Realty, Cupertino California) - Cupertino, CA
Silicon Valley, California

Wow Jack, that is a great comment!  I do appreciate all three ideas, and how you handle them!  Thanks, and YOU ROCK!

Jan 11, 2011 09:53 PM #30
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