Every experienced home inspector has uncovered all manner of issues during their career. Some have seen so much that they recommend homeowners have their properties inspected on a regular basis. And the California Real Estate Inspection Association (CREIA) even compares regular home inspections for the health of the home to annual physicals for the health of the human.
But let’s get real. Most inspections don’t take place either until a homeowner needs to obtain permit renovations or until the house is in escrow with a buyer. When the seller furnishes a pre-listing inspection, however, everyone on both sides of negotiations can benefit.
We know that agents have the duty and responsibility to perform a “reasonably competent and diligent visual inspection” of a property offered for sale and “disclose to the prospective buyer material facts and defects that should have been discovered during the inspection.” (California Association of REALTORS®).
But, in some circumstances, a professional pre-listing home inspection can help sell a house more quickly and smoothly or even or for a higher dollar amount.
Does this home need a pre-listing inspection?
The most common time for a complete home inspection is when a home is in escrow, contingent upon passing muster with the buyer’s inspector. Other maintenance inspections, might take place when a homeowner is conducting major renovations such as roof replacements or kitchen remodels.
After a real estate professional conducts his or her visual inspections, it is important to gather any documentation related to home improvements, such as permits for additions, utility line changes, and other improvements.
If it turns out that the beautiful, expanded kitchen with adjacent family room has newer utility lines or a new indoor-outdoor living space that didn’t exist when the home was built, the seller should prepare to furnish permits.
When those permits cannot be furnished (or weren’t obtained), it is incumbent on the real estate professional either to disclose that information with the listing or to recommend the seller obtain permits retroactively. Note: Permits issued retroactively will require that the work completed complies with current codes (not those in effect at the time the work originally was performed).
Preparing to Inspect
Openness and honesty between agent and seller are key. Decide as soon as possible in your relationships which inspections, permits, repairs and other details will happen before listing. If the agent’s visual inspection indicates the need for possible retroactive inspections, permitting and repairs, that work may take up to a month to complete.
Fortunately, most sellers can expect to spend at least a few weeks cleaning, decluttering and depersonalizing their home before listing. During that time, their city’s building department and licensed contractors can manage the inspections, repairs and permits.
Who pays for the pre-listing inspection?
That depends! In the best-case scenario, the seller is so motivated to have a seamless sale experience that they may even have hired an inspector on their own. But in some cases, especially during emotional sales – such as of a longtime family home after a death, divorce or extreme financial hardship – the agent may want to offer assistance. Some agents even offer to cover the pre-listing inspection as a way of ensuring a smooth sale.
Transparency between seller and agent keeps things out in the open. The seller whose home absolutely needs repairs but can’t or won’t consider them for any number of reasons will have to get comfortable with a detailed disclosures list that may warrant a lower listing price or a buyer allowance.
Also factoring into the “who pays” question is the relationships that the listing agent has with his or her vendors, from inspectors to contractors. We’ll discuss these relationships – and how to choose reputable vendors – in a future article.
The trust factor
When more issues than are visible to the eye are disclosed to buyers, mutual trust grows. Knowing what issues were discovered during an early inspection allows agents, on behalf of their clients, to discuss upfront any concessions both seller and buyer will consider.
The buyer is as emotionally and financially invested in the process as the seller. While a listing agent’s fiduciary responsibility is to the seller, he or she is in a position to help that seller build trust with a large pool of buyers.
What buyer wouldn’t enjoy knowing from the start that a pre-listing inspection may provide more detail than the buyer’s inspection during escrow? That buyer will value the trust afforded them by the seller and the seller’s agent. And when those buyers are asked for agent referrals or decide to give online reviews or social media accolades, they’re likely to remember the helpful agent on the other side of their closing table at purchase time.
