Pre-List Home Inspection
It’s common in today’s market to provide the buyer with a pre-listing home inspection of the property before exposing it to the market. The inspector usually makes him/herself available during the marketing of the home to answer buyer questions, eliminating the need for a buyer to do their own home inspection.
You might be asking yourself:
“what is the advantage to providing a home inspection to the buyer and how does this benefit me as a seller?”
There are numerous advantages for you, especially in a market where multiple offers are common:
- If a buyer has done a home inspection on another house but lost it in competition, the buyer may be reluctant to spend more money on another home inspection, fearing they may not be the highest bidder once again, and pass on your house instead of making an offer.
- If a buyer does not have time to do their own home inspection before the offer date they may also pass on your house.
- You have the chance to fix things before you put the house on the market instead of buyers walking away because their inspector found a problem you weren’t aware of.
- The inspector is chosen based on reputation and credentials instead of relying on the buyer, who may use a friend or a company who may not be qualified to inspect your house.
- It avoids having a parade of home inspectors through your home before a multiple offer situation by all interested buyers.
- A pre-listing home inspection helps you comply with full-disclosure real estate laws because it guarantees you haven’t overlooked a defect or material fact for which you could later be held liable.
The objective is to set the conditions that will attract as many offers as possible on your house and/or to eliminate any possibility the buyer will walk away from a deal because they have found deficiencies with the house that you were not aware of. With a pre-listing home inspection, there are no surprises.
Seller A puts his house on the market and does not provide a pre-list home inspection. There are 3 offers on the property, 2 from buyers who have done a home inspection before the offer date and submit unconditional offers and 1 from a buyer who submits a conditional offer upon a satisfactory home inspection. The highest bid, by tens of thousands of dollars, is from the buyer who submitted the conditional offer.
Although you understand the risks of accepting a conditional offer versus a firm offer, the price is too tempting to pass up. The next day the successful bidder has buyer remorse concerned they overpaid for the house. They perform the home inspection and find a reason to either renegotiate the sale price or walk away from the deal. The buyer asks for an exorbitant price reduction that, if you agree to, will result in the sale price being lower than the price on the firm offer you rejected. Your choices are to agree to the price reduction or go back to the second highest bidder and see if they are still interested in your house. Most of the time, the second bidder will no longer be interested or will offer you a lower price than they did before. Making the matter worse is recording the transaction as “having fallen through on a home inspection” on the Toronto Real Estate Board system which may threaten your deal with future potential buyers. This is not a good place to be “caught between a rock and a hard place”.
Get Your Ducks In A Row
We are much too experienced to compromise OUR client’s position in this way, but sadly, we know it has happened to clients represented by less experienced and less thorough agents. The unfortunate part is this could be avoided by providing a pre-list home inspection costing no more than $500. The lesson is not be penny wise and pound foolish but to “line up all your ducks in a row” to ensure a smooth transaction and as many offers as possible to achieve the highest sale price.
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