After several days of negotiating, an agreement between the buyer and seller is finally reached! The buyer is excited that they’ve found their new home, the seller is glad they will be able to move on to whatever is next and the agents are glad that their goals for that listing have come to fruition.
Contrary to what you might see on HGTV the contract acceptance is not the end of the process. And it takes longer than 30 minutes to get a home sold. We find once the contract has been accepted about 40% to 60% of the work still needs to be done to have a successful closing. There are almost always inspections to go through as well as the appraisal if the buyer is getting financing. Much can go wrong with so people involved.
One way to increase your chances of actually closing is to have a pre-listing inspection done before ever coming on the market. Here are six reasons why:
- Surprise—the buyer’s inspector found out …
Knowledge is power, and surprise is never a good thing. It is easy for sellers to have an overly optimistic view of the condition of their home. What could be wrong, they think? “Sure my home has quirks but its livable. “ Or, they just bought the home four years ago and had it inspected then — why would they need to do this now?
You see, it is those very thoughts that can come back to bite you. When was the last time you went on their roof, looked in your chimney, crawled around in your attic or basement? Do you know how old their water heater and HVAC are? If you live in an older home, what about the plumbing and electrical systems?
This is one reason why you should have a pre-listing inspection. So you can get a grip on the physical health of your home.
- Not everything is a problem
Having a pre-listing inspection does not mean you have to fix every item that comes up — but you do need to disclose everything. This is where We, as your agents, come in to strategize with you on a plan of attack and what makes the most sense given the market, your competition, time frame for moving, etc. Many buyers are renting for longer before buying their first home and expect a home to be in great working order. They don’t want to fix anything.
Some things might need to be fixed in order to give comfort to a buyer or to qualify for the kind of financing they might be doing. For example, if there are buyers obtaining FHA or VA financing on homes in your area, any wood rot or termite damage will need to be fixed before the buyer can obtain the loan.
There might be items that are major vs. minor that you will need to take into account when pricing the home as they can definitely have an effect on what a buyer is willing to pay. Homes with older roofs, HVAC’s and water heaters on top of other repairs, coupled with a home that needs cosmetic updates can be viewed as “too much of a money pit” in the eyes of a buyer.
- When in Doubt Disclose!
Many sellers fear that by having an inspection, they will then have to disclose everything to a buyer. The truth is, a buyer is going to find out anyway, but it will be after they’ve already agreed upon a price and terms that they might not want to pay after the outcome of that inspection.
You may be able to avoid buyers remorse by shifting the knowledge of the home’s condition to the front end of the transaction rather than after the negotiation. Although a buyer will still have the property inspected by their own inspector, the information found will not be a surprise.
All houses have “things” that are found on an inspection. Even new homes that are under construction have items that need correction by the builder after they are inspected: Mike and Donnas’ own new house had over 70 items needing attention.
- It stops buyers from freaking out!
Back to the “surprise is never a good thing” concept, when you leave the discovery of the home’s condition entirely to the buyer is when problems arise. You have already agreed upon a price and terms and depending on your home and the time of year it is on the market, the actual time to go under contract may have taken longer than what you thought.
You will have grown weary from numerous showings and “almost offers” that have never materialized. Now, you finally have a buyer and the transaction may be in jeopardy because of the outcome of the inspection.
The buyer wants to renegotiate the purchase price and/or ask for all repairs to be made or a huge concession to account for what was found. You don’t feel like giving anymore, especially when they might be selling for less than what they thought (which is how most sellers often end up feeling). They could be paying closing costs on behalf of the buyer in addition to agreeing to leave certain appliances, such as the refrigerator and/or washer and dryer.
Everyone goes into full-on emergency mode trying to obtain estimates for the repairs and it is a hurry-up-and-wait game trying to get contractors over to look at the findings and then, even more, waiting to get their written quotes.
Keep in mind that Buyers and their agents don’t always have a realistic handle on the true cost of repairs found from an inspection and often inflate or over-exaggerate the potential costs on purpose as a way to beat down the agreed-upon price or force the seller to make repairs. Buyers might seek opinions from overpriced vendors trying to upsell, and sellers will find themselves running interference with this information trying to get their own quotes.
All of this chaos ensues while the clock keeps ticking on the inspection time frame as set forth in the purchase contract. Most contract time frames never take into account the real world of waiting on repair specialists.
Although most transactions are handled this way, it doesn’t mean that they should be. Wouldn’t it be better to have done your homework, know what you will or won’t fix (or in some cases have already tackled it) and obtained estimates on all else?
What is unknown is simply an excuse most times for not taking the time to find something out ahead of time rather than after the fact. Sticking your head in the sand like an ostrich and being in denial of any inspection issues is not going to help get the home sold.
- Not all inspectors are equal!
This one is starting to become a serious problem in our industry. Just as the swell of real estate agents has increased as the market has improved over the last few years, so have the number of home inspectors.
What is required to become an Inspector varies from state to state and just because some states require licensure does not automatically grant that inspector sound judgment and the ability to legitimately diagnose/interpret a home’s condition or the ability to explain things reasonably to a buyer. A license is never a substitute for competence — ask any seasoned real estate agent who has listed properties the number of times they have had to run interference with an inspector’s report that was full of misdiagnoses.
The prospect of rookie inspectors who have only been functioning as an inspector barely a year or two — and who are running their own shop with virtually no support system and a more experienced inspector to mentor them — is cause for concern. They are crawling through someone’s largest investment and they don’t know what they don’t know and only know enough to be dangerous.
Newer inspectors often discount their fees as a way to build their business, and so what looks like a bargain compared to what more experienced and savvy inspectors charge is often at the expense of the transaction. Buyers might shop by price alone or an agent gives them a “coupon” that the inspector sent out in an email blast to agents hoping that it would generate some referrals. The agent might be newer and might have not vetted the inspector and doesn’t realize all inspectors, like agents, are not the same.
We have run interference with incompetent inspectors more times than we care to remember. It has been as simple as claiming a microwave in a newer home was not operable to one of the more common problems we see: decks that are not up to current code even though they were code when built are identified as being safety hazards.
Although buyers have the right to choose whatever inspector they want, having your own inspection done by a vetted, experienced, adequately insured and credible inspector can be a huge asset when you run into situations like this. That inspector will be available to consult with you during the home sale process and can assist with running interference should an incompetent inspector cross the home’s path.
- Ease and getting to the closing table
All parties want a purchase and sale process that is free of hitches and can close within a reasonable period of time. By getting your home pre-inspected the risk of the unknown is lessened and the parties will enter a negotiation feeling confident and empowered.
If you are unable or does not wish to take on repairs, the property can be priced accordingly. At the same time, if you have replaced a big ticket item, like a roof or HVAC, it might help the home sell faster as the buyer might be willing to make an offer and pay a higher price because of it.
A significant portion of time that is normally eaten up by the inspection period and all of the back and forth trying to resolve repairs is reduced since everyone is aware of the issues and has a handle on what will or will not be done.
Why risk a seller’s home sale while an unknown inspector could potentially wreak havoc on the home’s condition and ultimately thwart the entire transaction? Knowledge is power. Just as a buyer needs to do their due diligence, a seller needs to do theirs so that bad judgment calls don’t derail the sale.