Should pre-listing inspections be “required?”

By
Home Inspector with Charles Buell Inspections Inc.
http://actvra.in/FCy

 

I have made the case for doing pre-listing inspections before and I thought I would take another stab at it.  They are still VERY rare in my market.

Home InspectionsAs a home inspector I have to overcome the obvious fact that it is in my best interest to have pre-listing inspections done.  After all, if all homes had pre-listing inspections, it would double the amount of inspections and result in doubling the amount of money to be made doing home inspections.

Since there is no way to get around this issue, I will simply ignore it and move on to my opinion that all homes should have an inspection done prior to listing.

I am aware that many listing agents seem to take an ostrich approach to listing houses---figuring it is better to not know what evil lurks in the crawl space and leave the burden of discovery to the buyer.  The fact that a very live buyer can quickly turn into a dead sale still does not convince very many agents to encourage their sellers to have these inspections done.

The other day I did a post about a house with a serious Anobiid Beetle infestation that ended up going south---for this and other reasons. 

My buyer wondered how such a house could have ever made it to the sale market in the first place and felt that the listing agent should have had a better idea of the goods they were placing on the market.

Their comments rang all too true, and the issue could have easily been addressed by a pre-listing inspection.  Sure the inspection might have resulted in a whole different strategy for sale of the property---including selling it for purely the land value (awesome location)---but is that a bad thing? 

Regardless, it would not have resulted in an unsuspecting buyer throwing perfectly good money at a futile enterprise.

Sooner or later the piper will be paid so why not know ahead of time?

Do we really want to treat someone's future home like a used car?  Even they get "detailed" prior to sale.  Perhaps that is what staging is all about.  I prefer not to think like that.

Of course there is the principle of “there is a sucker born every day,” that could be at work.  To me that approach is of questionable integrity.

Now while I don’t think pre-listing inspections should be required, I really hope that they become recognized as the “right thing to do”---without any regulatory requirement for them.

 

Charles Buell, Real Estate Inspections in Seattle

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Re-Blogged 3 times:

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  1. Evelyn Kennedy 07/30/2012 09:07 AM
  2. The Marcus Rice Team 07/30/2012 08:12 PM
  3. Tricia Jumonville 07/30/2012 08:52 PM
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Rainmaker
340,749
Lloyd Binen
Certified Realty Services - Saratoga, CA
Silicon Valley R since 1976;408-565-8177

In Silicon Valley pre-listing inspections (termite, property & sometimes roof) are standard, or close to standard, not to support our wonderful inspectors, but to avoid surprises that damage transactions.  I mentioned about 6 advantages to pre-listing inspections in my old post.

Jul 31, 2012 08:27 AM #46
Anonymous
Anonymous
jill lubinski

I'm a Realtor in Toronto...Canada.  I'm a BIG believer in pre-list inspections (and particularly for the 60++year old Toronto homes) because I HATE surprises (if they're not GOOD surprises!)  If the inspection is good, I make it available to the public, with the caveat that this inspection was done by the seller for information purposes only, (indicating that the co-operating agent is still on the hook to do her own due diligence on behalf of her client).  If the inspect shows some significant defects and my client will address them before going to market...the inspection is still available for the public but with all invoices showing remedies attached.  Finally, if the seller does not want to address defects, I do not avail the inspection, I do disclose anything that goes to health and safety, and the onus is then on the BUYER to do the requisite home inspection himself so that he becomes aware of all the details of the house and can proceed accordingly, treating the listing as if there were no pre-list inspection.  The seller is not obligated to share the info on a pre-list....I really do it because I feel my client and I SHOULD know everything possible about our house.

Jul 31, 2012 08:41 AM #47
Rainer
68,795
Michael Ford
EncinitasHomes.com - Encinitas, CA
California+Oregon

absolutely not.   the assessment of the property (following a full and truthful disclosure of the KNOWN facts by the seller) is the obligation of the buyer.

i do require that  the seller deliver all their disclosures prior to the inspection so  that if there are any items that need consideration by  the agent and the inspector they can be dealt with during the inspectors visit.  i am very thorough with the sellers when we compile the disclosures so there are typically addendums to  the disclosures.

one exception  to  this rule is the heater.  in california we can have the local utility come out for a free heater inspection.   with so many heaters being unused for most of the year we have many  that get turned off, gas included, it's a good idea to have the pilot lit (if applicable) and the flue gas vents assessed for tightness and code.  the inspectors will not turn them on. 

in related matters, i do not use the several "supplemental" disclosures that are popping up in california.  my attorney reviewed them and called them "the lawyers wetdream and full employment act " loaded with nebulous 'gotchas".

 

Jul 31, 2012 09:30 AM #48
Rainmaker
583,288
Susan Neal
RE/MAX Gold, Fair Oaks - Fair Oaks, CA
Fair Oaks CA & Sacramento Area Real Estate Broker
Hi Charles - Inspections are incredibly important, and I always strongly urge my buyers to have one by an inspector I know and trust. If they refuse, I have them sign a document that says they have been so advised and that they are refusing despite my advice. Putting that in front of them often gives them second thoughts. Sometimes we come across a seller who wants us to check out their pre-listing inspection instead, but if I don't know that inspector or feel that he isn't as thorough as you or my guy, Randy West, I still want my buyers to get their own or sign that waiver.
Jul 31, 2012 09:36 AM #49
Rainmaker
641,570
Stephanie/Bob The Ruiz/Miller Team
Keller Williams Cornerstone Realty - Ocala, FL
The Ocala Dream Team

Sorry Charles, we disagree.  We are not spending the money for a listing that might not sell or finding issues we would have to disclose.

Jul 31, 2012 09:37 AM #50
Rainer
210,175
Nan Jester
Exit Real Estate Gallery Jacksonville Beach, FL - Jacksonville Beach, FL
Realtor, Exit Real Estate Gallery

These days it is so hard to get sellers to cough up any money for anything. I do think this is a great idea, though.  Thanks for the article.

Jul 31, 2012 10:47 AM #51
Rainmaker
393,007
Tni LeBlanc
Mint Properties, Tni LeBlanc (805) 878-9879 - Santa Maria, CA
JD, MA, REALTOR, CalBRE # 01871795

I think that doing a termite inspection and roof inspection prior to listing have value. 

Doing an entire property inspection is valuable if you have a seller who wants to correct or is willing to correct the items detected.  Otherwise, it would be hard to justify them.  The buyer will have their own inspection and IT WILL be diffierent.  Then you have a seller who will be married to their own report and/or ask you why you advised them to blow $400 on a report that everyone is ignoring.

Personally, I woud probably do a pre-listing inspection on my own property but that is because I would like to head off any major repair issues.  If I didn't intend to do that -- I would probably skip the prelisting inspection.

Jul 31, 2012 11:03 AM #52
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Jim, exactly---thanks

Justin, I think we are all pretty much in agreement about them being "required" but most people commenting here seem to thing Pre-listing inspections are a good idea.

Justin again, in NO WAY should the pre-listing inspection EVER seen as a substitute for the buyer having their own inspection done.

Lloyd your area seems to be ahead of the curve a bit.

Jill, yup---exactly what I am saying

Encinitas, now if "a full and truthful disclosure of the known facts by the seller" ever actually happened I might agree with you---but I still thing pre-listing inspections would be a good idea.  Again the idea is not to see any one bit of information (inspection) as the end of the discussion but as the beginning---the more inspections the better as to getting the best picture of what the house is all about.

Susan all good policies in my opinion.

Bob, assuming they are going to sell at some point what is the point of hiding heads in the sand?  Sooner or later it is all going to come out anyway---sooner or later it is going to have to be dealt with.

Nan, I hear you---especially on the short sales etc.

Tni, whatever is discovered could be used to price the house properly so that if nothing else the cost of the inspection could be recouped.  Again are we in the business of gaining information about the house or entirely focused on the sale only?  Sooner or later these ignored details have the potential of biting someone on the rear.

Jul 31, 2012 12:39 PM #53
Rainmaker
355,744
Karen Feltman
Cedar Rapids/Iowa City, IA Skogman Realty - Cedar Rapids, IA
Relocation Specialist
I think that homes that are more than 10 years old, especially ones that appear to have had little to no maintenance, should have a pre-listing inspection done to identify things that can be done to market the property at the right price. Cost vs value: a seller paid inspection need not be as thorough or as costly as one for the buyer. Maybe a discounted price for such an inspection? I have used a pre listing inspection to my advantage by allowing sellers to choose which items that are willing to repair prior to listing and which ones they wish to negotiate with the buyer to complete. Smart way of getting the seller prepared for requests from the buyers during the inspection period and it gives your seller an edge in negotiating as well. I require sellers to repair anything that is major mechanical or safety related, a roof can be negotiated. Great post.
Jul 31, 2012 12:59 PM #54
Rainer
35,803
Don Bass
V.I.P. Real Estate - Grandville, MI

We have a couple of home inspectors that do free pre-listing inspections. They only inspect four major areas of the house, but its an excellent marketing tool to Realtors and it helps the sellers identify potential deal killers or at the very least potential places where a buyer may ask for more concessions and gives them an opportunity to correct the issues.

I just bought a new/used car. 2010 Chevy Traverse from dealer in town. They are worlds ahead of other dealers in the area in respect to marketing.  They have certified used cars, they must be under 75k miles but they go through a rigorous inspection, comes with a 12,000 mile/2 year warranty bumper to bumper. You get free oil changes and tire rotation for 2 years/30,000 miles. Unlimited car detailing for as long as you own the car, etc, etc. Most of these items are available at other GM dealers because I think its a GM thing but there are plenty of add ons that only this dealer does.  This is marketing at its finest and exactly what the real estate industry should be studying. There a few agents in the country that do this type of marketing and they are doing great. I am working on mastering mine now.

It doesn't need to be required but is highly recommended.

Jul 31, 2012 02:02 PM #55
Rainer
17,949
Jordy Brisbin
Sutton Centre Realty - Vancouver, BC

I am not sure why anyone would think it should be mandatory. It may be helpful for a seller to know what their home needs, so they are both not surpised when a buyer does an inspection and have an opportunity to fix things they know needs fixing. However, a buyer would be a fool to rely on a seller's inspection. If the seller did have an inspection, the seller would be the owner of it, and the buyer would not have an legal right to rely on it, and I think that a seller would also be the fool for sharing it. Just begging for problems...

Agent are not expected to be all-knowing, and we cannot be aware of material latent defects that the seller does not disclose to even us. We would hope the seller was honest and offers full disclosure, and the buyer should do their own due diligence.

Jul 31, 2012 04:12 PM #56
Rainmaker
330,458
Jon Quist
LONG REALTY - Tucson, AZ
Tucson's BUYERS ONLY Realtor since 1996

I am not sure required is the appropriate word, but in a lot of cases, it sure would be a good idea.

Jul 31, 2012 04:33 PM #57
Ambassador
903,284
Andrea Swiedler
Berkshire Hathaway HomeServices New England Properties - New Milford, CT
Realtor, Southern Litchfield County CT

I had a wonderful, clever and witty comment all typed, hit something and poof, it vanished....

So here is the deal. There are some listings where it should be a requirement, just so that I can say "I told you so". But that is not very professional of me, is it. I do have the luxury of being able to recommend a very good home inspector if my sellers are interested in doing on. I think you know him...

Here is what I have found. The sellers who have wanted to do one are very anxious to remove as many obstacles and objections as possible. And if they can't repair it, we can address it in price.

I am thoroughly impressed at the amount of sh... cr.... flak you took here, LOL.

And I am seriously disappointed that my very witty first response vanished into thin air.

Jul 31, 2012 07:50 PM #58
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Karen, I am not in favor of short-handing the inspection---too much liability in the interpretation of what one person might consider significant and another might not.  I don't do them if they can't be the real deal.

Don, interesting about the car dealers.  One would think it might translate to homes.

Jordy, I don't think anyone really thinks they should be mandatory---my stating it in the title was intended to be provocative to get everyone thinking---given this post and Alan May's post I would say I succeeded :)

Jon, definitely a good idea in many many cases.

Andrea, I can't imagine how you could have left a better comment than the one you did :)  Actually except for the folks that think I was serious about "requiring" them I thought most of the comments agreed with me.  Even Alan and I are not that far away from agreement I think.  There are certainly a few cases when they might not be warranted but in the vast majority I think they could be of benefit to all parties.  If you remember your better comment please bring it on! :)

Jul 31, 2012 08:33 PM #59
Rainmaker
146,152
Marshall Brown
Mid America Inspection Services, LLC - Fargo, ND
BSEE, CHI

I have done a few pre-sale inspections but frankly not enough to have a feel for their value in terms of faster sales with fewer demands.

Intuitively it would seem entirely logical that a seller who knows of things that might be called out in a buyer's report would have time to fix them at a lower cost than last minute fix ups. I'd like to think they would serve a real valuable purpose in reducing lost and delayed sales but there just isn't the data to support it.

I do agree with you that it shouldn't be a requirement but can't help but believe Realtors who can sell a $300,000 house could sell a $300 pre-sale inspection fairly easily.

 

Jul 31, 2012 08:47 PM #60
Rainmaker
637,461
James Quarello
JRV Home Inspection Services, LLC - Wallingford, CT
Connecticut Home Inspector

I think they are a good idea, but as you say, with the disparties in inspectors, it can be a good thing or maybe not so good. 

Aug 01, 2012 06:00 AM #61
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

Marshall, likewise I really have no sense of what happens after the inspection---whether it was a pre-listing inspection or an after offer inspection.  I love this part of your comment:  "....can't help but believe Realtors who can sell a $300,000 house could sell a $300 pre-sale inspection fairly easily."

Jim we need to work on that :)

Aug 01, 2012 06:59 AM #62
Rainer
88,343
George Lawson - (951) 324-5053
Moreno Valley, CA
Moreno Valley

While I agree that pre-listing inspections should not be required ... I also emphasize to my clients of the value that they bring to the listing. As mentioned, they do help the sellers know what they could be facing while in escrow. But they also assure prospective buyers that there are no lingering issues to be concerned about ... thereby helping the listing sell even faster.

Aug 01, 2012 12:46 PM #63
Rainmaker
1,274,419
Gene Riemenschneider
Home Point Real Estate - Brentwood, CA
Turning Houses into Homes

They should not be required, but you would be crazy to buy a home without one.  Good post Charles.

Aug 01, 2012 09:09 PM #64
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Charles Buell
Charles Buell Inspections Inc. - Seattle, WA
Seattle Home Inspector

George, they are still pretty rare in my market

Gene, thanks

Aug 02, 2012 08:16 AM #65
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