Should I Get a Pre-Listing Inspection Before I Sell?

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

www.kellyazzarello.com

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.

What Improvements Should I Make Before Selling? What Adds Price, Value and Sellability?

Three different goals

Sellers often ask what improvements "add value," but there are three separate goals, and the best project for one may not help the others.

·         Price: raising what buyers are willing to pay.

·         Value: what an appraiser will support, which depends on condition, features and comparable sales.

·         Sellability: how many buyers will want the home and how quickly. Removing objections often does more here than adding features.

Fix first: condition and risk

Problems buyers fear come first, because they cost you in negotiation and can cancel a deal. These include water problems, roof and drainage issues, safety items, pest damage, and unpermitted work. They rarely add to the price, but leaving them can reduce it. See our hidden-issues series [LINK] and our checklist of overlooked prep items [LINK].

A word of caution: Washington's contractor registration law (RCW 18.27) generally lets homeowners work on their own property without a contractor registration, but that exemption does not apply to someone who performs contractor work on their own property for the purpose of selling, demolishing or leasing it (see RCW 18.27.090(12) and RCW 18.27.010). In practice, if you are repairing or remodeling to get a home ready to sell or rent, assume the owner exemption may not protect you, and hire a registered contractor for that work. Permits, electrical work and plumbing work have their own separate rules, and unpermitted or poorly done DIY work may also have to be disclosed on the Form 17. To check your situation, contact the Washington Department of Labor & Industries (L&I) or an attorney.

Freshen next: appeal

These changes often have the best return on cost because they change how the home looks and feels in photos and at showings.

·         Deep cleaning and odor removal

·         Paint in light neutral colors

·         Lighting and window coverings

·         Decluttering and storage

·         Curb appeal and a clean exterior

·         Refinishing existing hardwood floors

Decide carefully: larger projects

Kitchen and bath remodels, new hardwood or other flooring throughout and additions that increase square footage are expensive and can take months.

Carpet, paint and hardwood refinishing may be worthwhile as they specifically speak to whether the home will be "move in ready" for a buyer. These can also be done relatively quickly and inexpensively compared to major remodels.

Whether any of these pay back depends on their current condition, the home's price range, your neighborhood and what comparable homes offer. Ask your agent what buyers in your price range expect before starting.

Skip or limit

·         Projects chosen for your own taste, such as unusual finishes or colors.

·         Upgrades that leave a known defect unfixed.

·         Large DIY projects because they always take longer than expected; your time is better spent on other things to prepare for the sale.

·         Anything that needs permits that require extensive lead time.

What order should I do these in?

1.  Get an agent walk-through and a list of what buyers will notice.

2.  Find the causes of any major problems and fix them, especially to mechanical systems like heating, air conditioning, or roofing, plumbing, etc.

3.  Do the "appeal" work that costs little and offers bang for the buck.

4.  Price larger projects against the likely return, or choose to alter the listing price and/or provide a buyer credit instead.

From Our Own Experience

One of our listings a few years ago was a home in bad shape, with unfinished projects and a lot of deferred maintenance. The sellers were motivated to sell, and needed to get the house on the market quickly. However they didn't have the funds (or credit) to do any major work before listing.

In preparing the home we had to identify:

1. What could be fixed within the timeline and budget
2. What needed to be disclosed on the Form 17 (Seller Disclosure), and whether it was addressed or not.
3. How to keep the sellers focused on what they needed to do to move
4. How to address the ability to keep the home "showing ready" while on the market.

Our Approach

After multiple meetings with the sellers, we decided to manage the project ourselves, freeing the sellers to focus on packing and moving.

What we did:

1. Identified and managed handyman services to fix the issues that were relatively easy. This included making any non-licensed repairs (doors, painting, etc.) to touch up and create a more updated look.
2. Worked with the sellers to identify a vendor to recarpet the home. As part of this process we initiated a three-stage plan with the vendor:
   • Vendor removed the carpet and padding one day
   • A handyman was employed for a single day to remove squeaks and prime the sub floors (to address pet stains, etc.)
   • The carpet vendor returned to install the carpet and padding
3. Managed disposal of old, unneeded items (aka junk). This included furniture, yard waste, old tools, unwanted clothing, and other items. For this the disposal company needed to make three separate trips to the transfer station.
4. Replaced most lightbulbs to provide consistent, bright quality light throughout the home.
5. Yard cleanup with a professional landscaper.
6. Managed a set of cleaners to provide a deep clean for the home.
7. Professional staging (funded by us) to make the home attractive.

What we didn't do:

1. Take on major remodeling or time consuming repairs.
2. We documented and disclosed any issues that required licensed repairs that were not critical or safety concerns.
3. Priced the home with the understanding that the buyer would need to invest in it to "make it their own". This allowed us to limit the pre-listing investment while providing both the buyer and seller an advantage.

The Result

Even though this home was put on the market in a traditionally difficult time to sell, through pricing and all of the prep work we were able to market the home well. In the end, we had a near record number of showings and open house groups through, and within the weekend had multiple offers and were able to improve the listing price considerably without any contingencies, a quick close, and a plan for the sellers to move on with their lives.

While this was one of the most challenging homes for us to list, and we did a lot more work than we originally planned, we were able to provide the seller with a solution to their issue in a way that was beneficial to them.

Thinking about selling in the Seattle Area?

Kelly Azzarello Real Estate | Compass

kelly@kellyazzarello.com | (425) 830-6457

www.kellyazzarello.com

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.