Pre-Listing Inspections as a Marketing Tool

    Selling property in a slow real-estate market

Many home sellers in the current market are bemoaning the fact that they missed the top of the peak in home sales and values. With many more homes listed for buyers to choose from what can be done to help their home be more appealing to potential buyers? Sellers and brokers know about keeping the yard looking nice, planting flowers and keeping the inside of the house neat and clean. These “curb appeal” tactics can be affective to get people inside the door; but what can be done to help assure that the transaction will go smoothly once an interested buyer shows up?

After an offer is made, the buyer looks beyond the flowers in the yard and cleverly staged interior décor. At this point, a concerned, savvy buyer wants to know if the house is structurally sound, major systems are functioning properly and that there are no safety concerns that could be potentially costly or, even harm their family. Anybody who has ever bought or sold property knows that there are pages of disclosures required by sellers of known issues. During or after a real-estate transaction, questions many times arise regarding full, honest disclosure of conditions. When guided by a qualified, honest broker, homeowners usually make their best attempt at honestly disclosing the issues.

The first problem with these legally required disclosures is that they do not address many important issues that can be of great concern to the homebuyer and their families. The second problem is that most homeowners simply don’t know about many defects in and around their homes. Even when being as honest and forthright as they can, many serious issues are unknown to even the most knowledgeable owners. For example, question 5-a on the “Sellers Disclosure Statement” asks: “Has the roof leaked; If yes, has it been repaired?” It doesn’t ask who repaired it. Maybe the homeowner did their best when it would have been best left to a professional, or maybe Bob, the handyman or the kid across the street did it. There is no question asking if it was professionally and correctly done or if it was just a quick, cheap, temporary fix. There is no assurance that it won’t continue to be a problem at a later date. Another question asks “…if the following systems…are…in good working order…electrical systems, wiring, outlets and service.” Very few, if any, homeowners could answer this question. All they would probably know is that when they flip a switch the light comes on and when they plug in the toaster or computer, they work. They would generally not know if the circuits are properly and safely wired or if there are hazardous conditions inside the electrical panel which could have very serious or costly consequences.

So what else can a seller do to help make their property more appealing to buyers and, at the same time, give them selves another layer of liability protection? More and more of the savviest sellers are choosing to have a whole house inspection done prior to listing their homes. Many people confuse this with what is commonly called a pest and dryrot inspection. There is a big difference. A P&D inspection is generally performed by a licensed pest applicator and on the average house may take 15 to 30 minutes on site. These inspections look for rot, insect damage and conditions conducive to pests and rot. If damage or pests are discovered, these companies can then come back and treat or make repairs. A whole house inspection inspects all the major systems of the house, grounds, drainage and most conditions affecting the livability, safety and structural soundness of the building. The home inspector will look at everything from the ground to the top of the roof, including crawl spaces and attics. Depending on size, age and condition, these inspections will often take 3 hours or more on site. An Oregon Certified Inspector is not allowed to financially benefit by doing any repairs on an inspected house for a year. This assures that the inspection is completely unbiased.

This kind of inspection not only allows the owner to fully and honestly disclose any and all conditions, but provides greater assurance and peace of mind for buyers thereby helping the sale to proceed more quickly and smoothly. A seller’s pre listing inspection is even more valuable in a slow market when buyers are more demanding and often have the advantage. Once you have accepted an offer, most buyers are going to get a whole house inspection. After the contract is signed, there is a short time to get these inspections done, usually 10 days. Assuming an inspection can be scheduled in a timely manner, it will often take a few days before the report is in the hands of the parties. There are always some issues that were unknown, even to the owner, that then have to be dealt with very quickly to complete the transaction. Now there are only a few days left to find contractors to further evaluate and estimate defects in order to complete the negotiations. This is often very difficult to do in the time allowed. Due to time constraints, it can also be more costly if repairs are needed to complete the deal. When the owner knows in advance what the issues are, they have time to more effectively and economically make the corrections they choose. If they decide not to do all repairs, that can be disclosed at the beginning of the offer negotiations, thereby making the process much smoother and less stressful.
Many times a deal will fail because buyers and sellers are overwhelmed with the last minute rush to decide what needs to be done and who will do it. When the seller has a pre listing inspection to present to the prospect, some buyers will choose not to have their own inspection done. Even when they do, it is less likely that there will be any big surprises that would substantially affect the process. Many knowledgeable agents will recommend this to their clients as an added value service.

Sometimes, even after the sale has been completed and the new owners have moved in, conditions will be discovered that the buyer thinks the owner and the broker must have known about and did not fully disclose. Depending on the severity, these could come back to haunt the former owner and brokers on both sides of the sale. The seller and agents could find out about this by way of a registered letter from an attorney. When the seller has made the extra effort of obtaining a pre listing inspection in addition to the minimum required real-estate disclosures, it could be a very powerful legal argument in their favor. Any plaintiff would have a much more difficult task convincing a judge or jury that the owner did not make a reasonable effort to fully and honestly disclose the condition of the property. In our litigious society, this could be one of the greatest benefits for having a pre listing inspection. It could have the potential to save thousands of dollars and avoid the grief of being involved in legal proceedings.

When a buyer or seller has decided to have a property inspected how do they find a qualified inspector with the proper credentials and experience? As is the case with almost any professional service, not all are equally qualified and competent. You may be able to rely on the experience of your broker, attorney or a friend for names of inspectors they have knowledge of. The final decision should be yours based on asking the appropriate questions of inspectors you interview. Although the state of Oregon has strict certification laws for home inspectors, not all are required to be certified and not all those who are have prior experience in building or inspection fields. It is possible for someone with little or no knowledge of building to take a class or even an on-line or correspondence course and become state certified. In addition to getting recommendations, do your research and ask questions.

What do you charge? Many times this is the first or only question asked. How many services can you think of where the cheapest is your best choice? While the most expensive doesn’t necessarily guarantee the best quality, the cheapest one seldom does. Rather than looking for the lowest dollar amount, concentrate on getting the best value for your money.

The best inspectors often do not have one set fee that applies to all properties.
Every house is different so the inspecton should be tailored to fit each one. The fee should not be set by square footage alone, assuming every house is the same. It should be, based on several factors including how much time is required to thoroughly inspect the home and produce a quality report based on its unique features.

So, should you be shopping for the cheapest inspector in town to inspect the safety and structural integrity of the biggest investments of your life? With fees usually ranging between $350 and $500+, the difference between the cheapest inspector and the most expensive is probably only $50 to $100. The health and lives of your family, as well as your financial health could depend on it.

Brent Lerwill Brentwood Home Inspections – http://www.brentwoodinspections.com
brent@brentwoodinspections.com Coos Bay, Oregon, 541-888-3761, cell 290-9870
2008 American Institute of Inspectors Secretary-Executive Committee
Habitat for Humanity board member

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