What a pre-listing inspection is
A pre-listing inspection is a home inspection you order before you list the home. It gives you the same kind of report a buyer's inspector would write, before a buyer is waiting for your answer.
Our default is to have homes pre-inspected before they are put on the market. The thinking is simple: knowing is better than being surprised by bad news. We have discovered many issues thanks to pre-inspections that would otherwise have surfaced during the buyer's inspection period, potentially losing the sale and having to put the home back on the market.
Addressing what you find can be done in three ways:
· Fix it before the buyer asks. Pay for the repair before or during listing.
· Offer money back at closing. Instead of repairing it, you give the buyer a credit and they arrange the fix themselves. Lender limits on credits vary by loan type, so check with your agent first.
· Lower the price. If the roof is near the end of its usable life, you price the home below what it would be with a new roof. The buyer sees the issue already reflected in the price.
If you don't have a seller pre-inspection, consider keeping some funds in reserve in case the buyer's inspection finds something. The same three options apply, but you will be working through them during the buyer's inspection period instead of on your own schedule.
Pros and cons
| Pros | Cons |
|---|---|
| You find problems first, with time to get quotes and choose a contractor. | It costs money up front, and you pay whether or not you sell. |
| You avoid rushed repairs and "emergency" pricing after a buyer's inspection. | What you learn becomes something you know. If it is a material issue, it may need to be disclosed on the seller disclosure statement (Form 17). |
| It helps you complete the disclosure statement accurately. | Buyers may still do their own inspection, so it does not replace theirs. |
| You can price the home with the real condition in mind. | Findings can lead to repair costs you hoped to avoid. |
| A clean report can build buyer confidence and reduce surprises. | A report can age. If conditions change, it may need an update. |
| It can make negotiation smoother, because both sides see the same facts. | Some buyers may ask for more because they see the list. |
When it is most worth doing
· Older homes, or homes with deferred maintenance.
· Crawl spaces or attics that no one has checked in years (see [LINK to Topic 14: The Number One Thing We Recommend Before You List: Inspect the Crawlspace]).
· Estate and parent-sale situations, where the seller does not know the home's history (see [LINK to Topic 17: What Do I Have to Disclose When I Sell My Home, and What If the Home Is in an Estate?] and [LINK to Topic 19: Selling a Parent's Home After a Move for Aging Issues]).
· Homes with known or suspected moisture, pest, sewer or roof concerns.
· Sellers who need to move quickly and cannot afford a sale that falls through due to inspection issues.
Think about specialty inspections
A general inspector may recommend more specific inspections, such as a sewer scope, a pest inspection, a chimney inspection or a crawl space review. These answer one specific type of issue, and often require a special license or experience.
How to use the report
1. Read it with your agent. Sort items into safety, major condition and minor.
2. Find and correct causes first. Fix the leak before replacing the stained drywall.
3. Decide what to fix, what to disclose and what to price in. Get written estimates for items you will not fix before listing. Form 17 must be completed by the seller, not the agent.
4. Keep receipts and warranties for any work done, and be ready to share them.
5. Decide whether to share the report. Ask your agent how this works, and how it affects your disclosures.
What not to do
· Do not order an inspection and then ignore what it finds.
· Do not hide a known problem. Disclose material issues that are current, or that were recent and corrected, where Form 17 asks. Insurance claims, such as fire, water damage or an accident that damaged the home, are common examples, but not the only ones.
· Do not hire a friend (or contractor) as the inspector. Use a qualified, licensed inspector.
· Do not use a report that is old or no longer matches the home. Treat it as out of date when anything significant has changed since it was written (a leak, storm damage, a repair or remodel, a long vacancy) or when enough time has passed that a buyer could reasonably question it.
From Our Own Experience
An estate listing we had did not have a seller pre-inspection. It was an older home, but "everything worked" and the estate representative felt it was not necessary to pre-inspect, to list it "as is", and to price it accordingly.
The buyer's offer was accepted with an inspection contingency, which included a sewer scope. Unfortunately the sewer scope found that the sewer main had collapsed in two places. The house was unsellable without these being corrected, and that took time, inspections, planning, and money. While the fix would have been the same, and might have cost slightly less if found in a pre-inspection, it would have been far less stressful. The home would probably still have gone on the market at the planned time.
There is no blanket solution or direction here. It is far more important to understand the potential impacts than it is to always do (or not do) something like a pre-inspection. The sellers need to be comfortable with their choices, as well as understand that the buyers may identify not having a pre-inspection as a risk and will offer and negotiate accordingly.
Thinking about selling in the Seattle Area?
Kelly Azzarello Real Estate | Compass
kelly@kellyazzarello.com | (425) 830-6457
Instagram: instagram.com/kellyazzarello
YouTube: youtube.com/kellyazzarellorealestate
Disclaimer
This post is general information about real estate topics. It is not legal, tax or financial advice, and it does not replace a professional inspection. Rules and practices differ by situation and change over time. Check current requirements and talk with a licensed professional, such as an inspector, contractor, attorney or CPA, about your own property.
