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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT recommends
that all homes be inspected by a licensed inspector prior to purchase
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Pre-listing Inspections
Having your home inspected by a NACHI inspector before you
list is the recommendation found in the new edition of the book, Sell
Your Home For More by Nick Gromicko.
Eventually your buyers are going to conduct an inspection. You may as well
know what they are going to find by getting there first. The author points out
that having an inspection performed ahead of time helps in many other ways:
- It allows you to see your home through the eyes of a critical
third-party.
- It helps you to price your home realistically.
- It permits you to make repairs ahead of time so that ...
a. Defects won't become negotiating stumbling blocks later.
b. There is no delay in obtaining the Use and Occupancy
permit.
c. You have the time to get reasonably priced contractors or
make the repairs yourself
if qualified.
- It may encourage the buyer to waive the inspection contingency.
- It may alert you of items of immediate personal concern, such as radon
gas or active termite infestation.
- It may relieve prospect's concerns and suspicions.
- It reduces your liability by adding professional supporting
documentation to your disclosure statement.
- It may alert you to immediate safety issues before agents and visitors
tour your home.
Copies of the inspection report along with receipts for any repairs should
be made available to potential buyers.
Pre-Listing Home Inspections
Now that you've made the decision to put your home on the market, there are
other things that you must consider. First of all, should you or should you
not have your own home inspection done? This is a question that a lot of
sellers ask themselves because they know that there is a large chance that
the buyer will have their own inspection done. Many times, these inspections
are required to be done by the buyer in the real estate contract whether the
seller had their own inspection done or not.
However, when the seller decides to have a home inspector do the job for
them, the next question they ask is whether or not they should have it done
before or after they list the property. The answer to this is to have the
inspection done before the property is listed on the market. This gives you,
the seller, the chance to see the condition of your home through the verbal
and written reports that the inspector gives you throughout the process.
This also helps you price your home correctly. If you put a price tag on
your home that is too high, then you could possibly cheat yourself out of a
sale, especially if the buyer has their own inspection done. However,
pricing it too low can make potential buyers wonder what is wrong with it,
that it would have such a low price tag on it.
You can also take care of the repairs before listing so that you can list
your home at market value rather than make a pricing adjustment for needed
repairs. You can also take care of the repairs at your own pace rather than
be rushed to do them after the buyer has had their own home inspection done
by a qualified pre-listing inspector.
What will the inspector look for
One of the first things inspectors look for is water damage. Water damage
could have occurred before you owned the home or during your ownership.
Common places for water damage are in the basement and the attic. If there
is any moisture, then that is also breeding ground for mold and mildew,
which is not healthy.
Other areas are the foundation, the quality of the building practices used,
the roof, the various systems running through the home such as the
electrical plumbing, and heating, and the overall structure of the home.
This verifies whether the home is safe or not and a report is provided to
you regarding what the problems are so that they can be repaired. Repair
bills usually do not run too high, so it might be in the best interest of
the homeowner to do the repairs before listing because the money lost on a
lower offer could be more significant than the amount of the repairs.
The benefits.
When selling your home, you can clearly see the benefits of having a
pre-listing home inspection. This practice is becoming more and more popular
and allows added security for the buyer because both the buyer and seller
have had inspections done. The realtors also like this practice because they
know that the purchase they are negotiating is a safe one and that the buyer
will not come back on them later asking them questions as to why they were
not informed of a certain problem. Inspections by both the buyer and the
seller tells the buyer that they are making a wise purchasing decision and
lets the seller know that they are selling someone a safe home.
NACHI's Lisa Endza and Nick Gromicko quoted by Los Angeles Times.
A new selling tactic: the pre-listing
inspection
Owners hope to head off trouble and speed sales by
hiring their own inspectors.
By Frank Nelson
Lost Angeles Times
August 26, 2007
JUDY MELLO wasn't looking forward to buying a new place to live, imagining a
lengthy, complicated and perhaps stressful experience.
"I figured it was going to drag on for months and months," she says.
"But it wasn't like that at all."
In fact, it took Mello, a retired registered nurse, a total of only 3 1/2
weeks to buy a $500,000 condominium in Carpinteria, a small coastal town a few
miles south of Santa Barbara.
Although a number of factors smoothed the process, Mello says an inspection
report commissioned in advance by the sellers played a large part in her
decision to buy and helped speed the sale.
As housing sales continue to bog down -- last month Southern California sales
were the slowest for any July since 1995, according to DataQuick Information
Systems -- property owners are turning to new strategies.
One tactic increasingly bringing buyers and sellers closer together is a
property inspection obtained by the seller before the home is even listed. A
seller's inspection report is not in lieu of one commissioned by the buyer,
but it often accomplishes the goal of signaling openness and good faith while
at the same time unearthing any unpleasant surprises.
In some cases, a preemptive seller's inspection means repairs, such as leaks
or faulty electrical wiring, will likely be completed in advance on the
buyer's behalf; less pressing matters may be flagged and the asking price
adjusted down accordingly. "To me, the report meant they were definitely
interested in selling and cared about selling to somebody who was going to be
satisfied," Mello says. "I felt comfortable that they were thinking
of my interests."
Colleen Badagliacco, president of the California Assn. of Realtors, says not
so long ago, when sellers were being bombarded with multiple offers, they
didn't have to worry that much about the shape of the home.
"Now, the seller has to go the extra mile," she says. For some, the
downside means making sure the house is priced right, taking disclosure to the
next level -- the more they know, the more they legally have to disclose --
and offering to fix things.
But on the upside, a pre-listing inspection that gives buyers a better idea of
where they stand and what, if any, additional work is needed, can also help
sellers fend off demands for unrealistic price reductions to cover repairs.
According to Dan Steward, president of Pillar to Post, a nationwide home
inspection company, buyers typically expect a $2 to $3 price discount for
every $1 worth of defects turned up by their inspector.
With their own report, sellers can choose, for example, to spend a few hundred
dollars fixing a plumbing problem that might otherwise mushroom into a claim
for more than $1,000 off the price and, in the process, spark further
potentially prickly negotiations.
"It definitely makes sense," says Chuck Miller, a 16-year veteran of
the real estate business and now associate manager and sales agent with
Coldwell Banker in Studio City.
In his own and other real estate companies, he's seen a marked uptick in the
number of pre-listing inspections, perhaps a rise of 10% to 15% in the last
year, and believes the ploy is helping sales move faster and more smoothly.
"Most people want to turn the key and walk in," he says. "They
don't want repairs, and they certainly don't want surprises. If they know they
have to do some work, they can at least prepare for that."
The National Assn. of Certified Home Inspectors, based in Boulder, Colo., also
has noted a rise in the number of inspections carried out for sellers, though
founder Nick Gromicko says they do not have national statistics.
However, on a local level, Gromicko does have some figures: "Our Denver
chapter went from doing less than 2% of their inspections for sellers last
year to doing 28% for sellers in 2007."
When Jack Lucarelli and his wife, Jeannie Wilson, decided to put their Toluca
Lake home on the market for $3.75 million, they followed agent Miller's
suggestion and first had an inspection.
The way it turned out, they need hardly have bothered. As Bob Wood, senior
inspector with Sunland-based LaRocca Inspection Associates, combed through
their 3,700-square-foot, two-story home, he was hard-pressed to find anything
wrong.
A little dry rot in one post in the backyard, two faulty sink stoppers, a
loose faucet and a cracked tile in the driveway. "It cost us about $18
for repairs," Lucarelli says, adding that the clean bill of health did
not surprise him.
He says that he and his wife -- both of whom work in the entertainment
industry -- have done a lot to the 1936 Spanish Mediterranean-style home and
always kept the place in top shape. "But we thought the inspection and
termite inspection were important to alleviate any fears or anxieties about
any internal, hidden problems," he says. "It's an added convenience
to the purchaser."
Chris Wrightsman, co-owner of LaRocca Inspection, sees these types of
inspections becoming more prevalent and estimates that the number of
homeowners choosing this option has risen about 5% in the last year.
He says the practice is much more common in Northern California, especially in
the Bay Area, and he expects the trend to continue to grow. "When
homeowners know the condition of their property, they can avoid a lot of
problems and price accordingly."
Lisa Endza, director of communications for the Boulder-based national home
inspectors group, says the cost of inspections ranges from $300 to $600,
depending on the size and age of the property.
Tom Valinote of Thousand Oaks, who inspected Mello's Carpinteria condo for the
sellers, runs Pillar to Post franchise offices in Camarillo and Goleta. Armed
with a digital camera, laptop and a 1,600-point checklist, he typically spends
two to three hours working through a house for an average cost of $425.
Inspections give sellers options, he says.
"They can say to the buyer: 'We found these problems. But we wanted to
make sure we sold the house in the best condition possible. So, we fixed
things, here are the receipts and now you don't need to deal with this.'
"
That approach certainly appealed to Robert and Judy Parkinson. Longtime Los
Angeles residents before moving to Oregon two years ago, they are in the
process of selling a Montrose house they've owned as a rental for about five
years.
Robert Parkinson says it was because they had never lived in the property,
which is almost 90 years old, that they opted for the pre-listing inspection.
"We wanted to do the due diligence and know the condition of the house
before we put it on the market," he says.
"We didn't want to get into escrow and have someone do their own report
and have a bunch of surprises. We mostly wanted to know that the price we're
asking, $615,000, is a good, fair, solid price. We wanted to have a real clear
idea of the condition of the house and do any work that needed doing. We felt
that put us in a stronger position."
The inspection brought to light a number of issues, he says, the main ones
being some plumbing, electrical and roof caulking work. They have now fixed
most things and feel that having the inspection and spending about $7,500 on
repairs were good moves.
The Parkinsons' agent, Gena Pinkerton, with Richard Keilholtz Realtors in La
Caņada Flintridge, says the feedback from potential buyers to the roughly
30-page pre-listing inspection report has been very positive.
People assume because the house is old that it must need a lot of work, she
says. "But the report shows that it doesn't. It's a huge relief for
people to know that."