Home Inspection Tips for Sellers: Benefits of a Pre-Listing Inspection

"Homes sell more quickly and for more money when they have a pre-listing inspection."- Stephen Gladstone, Past President, American Society of Home Inspectors (ASHI)

You don’t need us, or anyone else to tell you, that the real estate market is challenging — pandemic, or not! Because of this unusual market and the anxiety it is creating for buyers, we think that more sellers should consider getting their home inspected prior to listing it. A pre-listing inspection is a home inspection conducted for the seller, according to the same standards of practice as a buyer’s inspection.

The only difference is that the seller of the property is hiring the inspector to inspect their home. The inspector inspects the home and provides a report to the property owner. A detailed and thorough inspection should provide the seller of the home a clear and concise understanding of any problems or issues in the home, giving them an opportunity to either fix the issues or reveal them and show how they have adjusted the price.

This may alleviate some — or many! — of the stresses associated with home sales. That's why a list of home inspection tips for sellers can come in very handy. While similar to buyer's inspections, pre-listing inspections do have a different purpose.

Let's dig in!

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Why Do Sellers Need a Home Inspection?

As most people are aware, home buyers are facing significant pressure in the current real estate environment. The factors that create this pressure on buyers are:

• Limited inventory
• Area continues to be extremely desirable for live/work
• Aged/old home and condo inventory
• Dramatic rises in property values in recent past
• Above-mentioned items appear to be present in several markets around the country

This increased pressure places buyers in a difficult position – should they play this competitive game? Should they offer more than asking? Do they have time for a buyer's inspection, or should they waive the inspection contingency, waive a radon contingency, or (gasp!) waive the mortgage contingency? Can they pay cash (somehow??)? Each one of these factors is stress-inducing, much less all of them.

Why should a home seller be concerned if the buyers are facing these stresses? Here’s why:

• Buyers can be intimidated and back away from the market for a period of time
• Buyers may opt to back out of a deal in mid-transaction even when the house is fine, just because they have become nervous
• Buyers’ anxiety may be preventing them from making wise choices and offers

What if there was a way to alleviate stress for buyers? Alleviating stress might allow the buyers a chance to compete more confidently against other buyers and put their best foot forward on a property they love. More competition could result in an increased selling price for you.

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Getting a pre-listing home inspection may just do that.

Seller's inspections can take place before the house goes on market, giving sellers time to work through any issues. Reports can then be provided immediately when property goes on market, if desired by the seller, and give potential buyers time to look at before placing offer. Buyers can have a chance to get to know the home better before the offer stage. Once they know the condition of the home, they can place their offer knowing everyone is working off the same information.

This should lead to a more confident perspective on the part of the buyer, and a more competitive environment for the offer stage. Buyers can remove an inspection contingency from their offer (if they choose to), thereby reducing the chance of backing out, reducing the timeframe, and reducing (removing) the chance of coming back asking for money off the property.

Home inspections for the seller:

• Can result in aggressive/competitive offers from buyers because they can waive the inspection.
• Helps to prevent buyers from “coming back” with new information that allow them to ask for money off their bid price.
• Leverages the data to give the buyers a chance to put their best foot forward.
• Appears transparent - which lowers buyers’ anxiety. (Especially first-time home buyers)
• Is transparent - giving the buyers a realistic picture of the home, then let them compete for it!
• Speeds up the offer window because of the lessened need for a buyer’s inspection
• Helps to minimize liability for the seller (“It was right there in the report!”)
• Helps to reduce ill-will during transaction: buyer is not creating problems by asking for stuff to be completed or money off.

Wouldn’t a pre-listing inspection be a variation on the concept of seller’s disclosure? Why disclose information if you don’t have to? Doesn’t non-disclosure create more competition?

Our home inspection tips for sellers suggest the opposite: more knowledge about the property up front can give buyers a less stressful field on which to compete. The seller would create an environment where it is not a mystery, and therefore this should create more confidence, leading to more competition.

First-time buyers are especially vulnerable to anxiety. They are afraid that anything could come up- and the concept of waiving an inspection is particularly stress–inducing, and can scare off first-time homebuyers. That's why home inspection tips for sellers include answering some of the following questions:

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What if there are serious problems with the home?

Any serious problems can be addressed because they will be identified in the inspection. Sellers can then verify the seriousness of the issue, and take one of two paths when presenting the property: fix the issues or adjust the price accordingly. In a traditional buyer’s inspection, the anxiety level goes way up when a big issue is discovered, and then the buyer is going to want to be more conservative because now they are worried, and don’t know the extent of the issues.

They may also be stressed because they are concerned that the seller attempted to hide these issues. Demands for price reductions for costs to repair on the buyers’ side is often going to become an overly high, aggressive amount, because the buyer wants to be conservative (so once they own the home the scope does not become more than previously estimated).

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What other advantages are there for a seller?

Finding hidden/concealed damage or other previously-unknown problems: On a buyer’s inspection, we might find termite damage, for example. Even damage the homeowner has never seen before or known was there. Getting a seller’s inspection instead gives the seller time to do further testing as needed to verify and prove that there is no extensive hidden damage.

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Can pre-listing home inspections help avoid the “deal killers”?

Below see typical reasons that we’ve seen people back out of deals- and how a pre-listing inspection can head this off at the pass, preventing it from becoming an issue.

Structural – framing or foundation

This one is definitely the number one reason we see people cancel a deal. Sellers might not even know they have a structural issue- or one that might be perceived as a structural issue- until the buyer comes along with an inspector. Issues identified by a seller’s inspector can be followed up, and in a more relaxed timeframe, with a structural engineer as needed. No more inspector mentioning “structural engineer” on the buyer’s inspection because it was already identified! Any/all repairs that were identified as needed can be estimated and presented as desired.

Unknown amounts of potential pest damage

The main issue we see regarding pest damage is not just the damage that is visible at the time of the inspection, but what about concealed damage- is there termite damage inside the walls and ceilings? Or none at all? Getting this identified during a Pre-Listing Home Inspection can give the seller time to open up the wall and prove there’s no additional damage, or find the damage and repair it.

Poorly executed repairs

This is similar to the pest issue. If we find exposed framing that was poorly framed or repaired, then what about the other areas that we can’t see? Getting a Pre-Listing Inspection will help to identify where repairs and/or further investigation is necessary.

Harmful or potentially harmful building materials (i.e. asbestos) – Getting a seller’s inspection is a great way to identify and deal with this before the home goes on the market. You’ll be able to get quotes, and make a plan for removing right away or after you move out, or whatever works for you - rather than have it come up on the buyer’s side inspection and cause further problems in the deal.

Environmental (i.e. USTs or mold)- If you have an underground storage tank, or other significant potentially harmful and costly environmental issue (and you might not even know it), it would be hugely beneficial to get that dealt with before it comes up on a buyer’s inspection.

Bottom line is this: we think knowledge is power- and this power can be leveraged for a much more smooth transaction because of the transparency a pre-listing home inspection can create. This kind of transparency can also stimulate competition and inspire confidence! Of course, any seller should consult with their real estate professional and attorney prior to making any decision to hire an inspector, but we do see many advantages to this concept.

Let us know what you think about our home inspection tips for sellers - we’re always curious, and we’re happy to discuss our process with anyone. To get an idea of what our inspection reports look like, go ahead and visit our website at www.mkchi.com and see a sample report. We also have answers to frequently asked questions on our FAQ page.

Best of luck with your transaction!