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Benefits of Pre-Listing Inspections

Article by Lance Dunahoe, courtesy of Texas Realtor Magazine


If you have been a real estate professional for a while, you have probably experienced three common facts about home inspections: No house is perfect; nobody likes surprises; and the sales price of a home never goes up after a buyer’s inspection.

Every property is unique, but whether it is a 100-year-old bungalow in an established neighborhood or a modern mansion in a new subdivision, they all have one thing in common: Every home is subjected to day-to-day wear and tear caused by people or natural conditions and almost always needs something serviced, repaired, or replaced. However, many homebuyers, sellers, and agents seem to still be surprised when they don’t receive a 100% clean inspection report. Because of this unrealistic expectation, contracts get renegotiated, deals fall through, transactions go into legal disputes, and client-agent relationships fall apart. One way to avoid these situations is​ full disclosure​ by having a pre-listing (or seller’s) inspection.


It’s Good Business

Transparency in business is simply a good idea, and a pre-listing inspection is one of the best ways to be totally transparent, reduce liability, and set realistic expectations for everyone involved. There are no secrets; issues are disclosed and addressed; it’s honest, proactive, above-board, and puts you and your seller in control of the information. And since the first offer (and subsequent counteroffers) are based on better, more accurate information, transparency leads to faster, headache-free sales and fewer eleventh-hour negotiation shenanigans.


It Smooths Out the Transaction

Most buyers make purchase decisions based on emotion. In a typical transaction where there is no pre-listing inspection, the buyer orders an inspection that reveals some major and minor issues that neither the buyer nor seller was expecting. That new information can derail the entire deal. The buyer wants the seller to fix ​everything​, the seller doesn’t want to fix ​anything,​ and you just want to help both parties get the deal done. At this point, the buyer typically has three options: accept the property as is, negotiate repairs and/or a reduced price, or terminate the agreement.


Sometimes the ensuing negotiations go smoothly and the deal is made. Other times, there’s a stalemate, the deal dies, and the house goes back onto the market with an ugly inspection report to disclose and a negative mark on its sales history.


It Leads to Confident Buyers

A pre-listing inspection can make a buyer more comfortable, provide peace of mind, and take away much of the worry and fear that go into a major purchase decision. For example, let’s say that your pre-listing inspection reveals that there is foundation settlement, a very common condition in many Texas markets that often becomes a deal-breaker. But with a pre-listing home inspection, the sellers are still in control of the deal and have time to get proper evaluations and estimates from foundation repair companies or engineers of their choice. If the professionals recommend installing piers to reinforce the foundation, the sellers now have the choice to have the work performed or make a price adjustment. Either way, the information is transparent. If the foundation is repaired, it becomes a non-issue and adds value due to a transferable warranty on the work performed. If the foundation is not repaired, the sellers now have realistic expectations for the sale. If your sellers decide not to make repairs or cannot afford to, they at least now know about the issues that will likely affect the sales price.


It Reduces Liability

Bad news doesn’t get better with time, and avoiding it doesn’t mean it doesn’t exist. Issues with a home will eventually be discovered by the buyer’s inspector and have to be disclosed and addressed at either the seller’s or buyer’s expense.

Also, things can go wrong with the home after closing. When deficiencies with the home are not discovered before closing, however, surprise issues can become legal issues that your client—and possibly you—could be held liable for. By having a third-party inspector document the condition of the home with a pre-listing inspection, the seller will be disclosing everything that is known and greatly reduce the potential liability from anything that might arise after closing.


It Puts You in Control

When selling a home with a pre-listing inspection, you can work with the seller​ to decide what, when, and how to address any issues before the house goes on the market. That means no more reacting. You and your client are on your timeline to get estimates, make repairs, or consider price adjustments. And more information can help you justify the price point, reduce the buyers’ fear, and decrease the number of negotiation problems or unpleasant surprises while increasing the speed of the sale and the level of satisfaction for all.


Who Pays?

The seller typically pays for a pre-listing inspection; however, some agents offer to cover this expense as an added value instead of offering a commission discount. Other agents use the pre-listing inspection as a tool to set seller expectations and manage listings with obvious challenges. The agent can then gauge the seller’s commitment to the sale. If big issues are discovered during the pre-listing inspection that a seller is unwilling to address or consider making concessions, the agent can choose whether to continue working with a reluctant seller or invest time and marketing dollars elsewhere.

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