Do you need a prelisting inspection before you sell your home?
Is a home inspection for sellers necessary? This is a question that comes up a lot in real estate and I think there is a potential for there to be a decent amount of money on the line. So it’s worth thinking about if doing a prelisting inspection would be a good option for you to do before listing your home.
There are two times when I think it's a really good idea to get a home inspection for sellers when listing your home. In one case, a pre-listing inspection can help prevent untimely terminations. And in the other, a pre-listing inspection can potentially bring you a much larger offer on your home.
Home Inspection for Sellers: Time Sensitive Sale
In the first case, I think the pre listing inspection is valuable when the seller's timeline
is short and any obstacles to maintaining that timeline could be very uncomfortable for them. This is how not getting the inspection could cause the home sale process to take much longer.
Over time, there are all kinds of things that could happen to your home that you may be unaware of. Moisture that isn’t properly routed away from your home can cause foundation problems in a couple different ways. It can cause wood eating fungus to eat away at the wood framing members of your home. It can cause shifting in the soil that could compromise the integrity of the foundation. Termites could also cause foundation damage that you may be unaware of. If you’ve lived in your home a long time, and haven’t had an inspection, a prelisting inspection could uncover any large items like these and potentially prevent a buyer from terminating the contract. Of course, if you do an inspection and become aware of a material fact, such as a foundation issue, you will be required to either repair it or disclose it.
Home Inspection for Sellers: Multiple Offers Expected
The other time I think a prelisting inspection is incredibly valuable, is when you are going into a sale in which you expect multiple offers. And when I say that I mean you should check in the MLS and see if the selling Realtor noted multiple offers under special circumstances.
If your neighborhood or your price point or your location very frequently has multiple offers on homes for sale, certainly you would want to prepare your home
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accordingly and market it really well in order to be able to get those multiple offers. Having had the home inspection can really help buyers feel some kind of safety when making those offers. And let me explain why.
When a buyer is making an offer in a multiple-offer situation, first of all the due diligence deposit is nonrefundable. It’s non-refundable in all situations, but in a multiple offer situation, buyers will often use an increased due diligence deposit to make their offer more desirable than others. And that can be really scary for a buyer when they don't know if there's anything wrong with the house. There could be a repair that could cost, $30,000 or $40,000 thousand dollars to fix. There are no guarantees that the seller is willing or even able to do the repair. And if they go into it with a $5,000 due diligence deposit trying to differentiate their offer from other people's offers so that you're willing to take there's over the competitors that could mean that they have to terminate the transaction and lose their five thousand dollars.
You have to understand how buyers are feeling when they go into these transactions. In many cases the buyer has saved up just enough money to put a down payment on a house and a handful of thousand dollars to do their inspection and appraisal and survey and things like that and so losing $5,000 like that could mean that they are no longer looking for a house and they have to wait a year until they save up some more money. So that's a really really big deal and it scares buyers away from making better offers.
If you have an inspection done on your property and the buyer has some kind of security that there is nothing wrong with house or at least nothing major wrong they are going to be much more comfortable making higher offers and making higher offers for the due diligence deposit which benefits you as the seller. A home inspection generally cost between $300and $500.
When you're not dealing with multiple offers, you're not necessarily going to make your money back but it does offer a lot of peace of mind and make the transaction run more smoothly knowing that there are no major unknown repairs that could derail a transaction.