pros and cons of pre listing inspections for sellers

Pros and Cons of Pre-Listing Home Inspections For Sellers

pros and cons of listing inspections
Several companies are pushing pre-listing home inspections these days, but are they a good idea for Sellers and Buyers?

I’ve been inspecting homes and commercial buildings for many years now. I’ve seen all types of fads and industry changes come into the marketplace. Pre-listing home inspections aren’t anything new. But now there are several organizations really pushing them on real estate agents and consumers. While on the surface, they may sound like a great thing, you need to know the pros and cons of pre-listing home inspections before diving into the deep end. (also known as Sellers inspections)

What is a Pre-Listing Home Inspection

Okay, first let’s get something clear. I’m not a real estate agent. I provide top of the line Tulsa home inspections. This article is my opinion only based on many years in the business. Use this article is for informational purposes only.

So now that I have that I have that out of the way, let’s get down to what a pre-listing inspection really is.

A pre-listing home inspection for a Seller should basically be a full fledged home inspection. Really the only difference is that it’s done for the Seller instead of for the Buyer of the property.

When someone decides to sell their home, they typically get it ready and wait for Buyers. Once a Buyer shows up and signs the contract to buy the home, it’s up to them to get all the inspections done. If any problems are found, then the Buyer decides if they want the items fixed and if so, they start negotiations with the Seller on which items they want fixed, if any.

With a Pre-Listing home inspection, the SELLER hires a home inspector to come and look over his/her/their home before putting it on the market to sell.

Now I can hear some of your right now. “Hey, that sounds like a great idea!” Well, it can be, but read on.

If after the pre-listing inspection some items are found that need to be fixed, the Seller of the home generally has two options. Either fix the repairs themselves or just let the Buyer see the report and tell them what needs to be repaired.

Still sounds great doesn’t it?

Well, if this was Utopia, it would be. But this is the world we live in and not everything goes as planned, does it?

Advantages to Having a Pre-Listing Home Inspections

Even the best homes will need repairs from time to time

There are advantages to a pre-listing home inspection. Here are some that come to mind:

  • They may alert a Seller to serious issues with their home before putting it on the market
  • A Buyer may not choose to have another home inspection performed by their own home inspector
  • Some industry experts state that homes that have pre-listing inspections performed sell quicker
  • It may improve Buyer confidence
  • May prevent negotiations down the road

Okay, so let’s take a look at each of these benefits of having a pre-listing home inspection.

A Sellers Pre-Listing Home Inspection May Identify Hidden Problems with Your Home Before Putting it on the Market

This is true. But only if you have a qualified home inspector perform the inspection. But for the sake of argument, let’s say you did hire a good one.

Some Sellers will attempt to fix everything on their inspection report generated from the home inspectors findings. This is a good thing if done by competent and qualified professionals. If done by the cheapest person they could find on Craigslist, not so much.

In this case, it certainly pays off in the long run.

Some Sellers who consider themselves handy will attempt to fix a lot of these problems as well. This can be a good or bad thing. Usually, when I see them, it’s more of a bad thing rather than good.

Some Buyers will be Happy with the Pre-Listing Home Inspection Findings and Not Hire Their Own Home Inspector

For a Seller, this is a good thing. I believe this is one of the main benefits those who push pre-listing inspection are hoping for.

Some Buyers just want in the house. In this case, a Sellers inspection report may be all they need to sign on the dotted line. This is especially true if the Buyer has made repairs, or allowed allowances for, major issues.

Do Homes That Have Had Pre-Listing Inspections Sell Faster?

An article in Realtor Magazine stated all the reasons why a Pre-Listing inspection would help homes sell faster.

In my experience, it does seem that SOME homes do sell a little quicker. But then again, there have only been a few homes I’ve seen this happen to, and they were in sought after neighborhoods.

The premise behind this theory is assuming the Seller has made repairs to all major discrepancies on the Inspection Report. Now you can imagine some Buyers going for this and forgoing their own due diligent inspections. Which in turn causes the home to close faster. So technically, this claim may be true.

Pre-Listing Home Inspections May Prevent Negotiations Down the Road

Few people like to negotiate real estate deals. It can be very difficult and tempers can flare quickly and with little warning.

Some Sellers believe this alone is good reason to have a Sellers Inspection on their home.

As stated above, some Buyers just want in the home and will take it on good faith that the home inspection was thorough, and the Seller is honest and that everything from the Inspection report has been fixed by competent and licensed Contractors (if license are required)

What more could a person ask for? Right?

Well, if it all goes down this way, that’s good for both parties. But I rarely see it happening this way. Maybe in the Land of Oz, but certainly not in the good Ole U.S.A!

Disadvantages of Having a Pre-Listing Home Inspection

Now we get to the cons of having a Pre-Listing home inspection. Some of the disadvantages are:

  • Sellers have to pay for the Inspection
  • Major issues may arise that the Seller hadn’t counted on
  • The Seller may have hired a ‘soft’ inspector
  • The Buyer may still have their own inspector who may find things the Seller’s Inspector Missed
  • Sellers must disclose any defect found to the Buyers, even future Buyers if the current Buyers back out
  • Seller may not want to negotiate on discrepancies found by Buyers Inspector

Let’s take a closer look at each of these Cons.

Sellers Have to Pay for the Inspection

A typical pre-listing home inspection can cost $350 to $800, or even more depending on the home. This is just another cost the Seller will have to assume. If the Buyer decides to go ahead and hire their own home Inspector, the Seller may see this as wasted money.

What If Major Issues Are Found During the Pre-Listing Home Inspection?

I believe most Sellers think their home is a 7 to 9 on a scale of 1 to 10. I believe most do not believe there are any major issues with their home.

In fact, I can’t tell you the number of times I’ve performed an Inspection for the home Buyers and found major defects only to have the Sellers say “We bought this home 3 years ago, why didn’t our Inspector find these things?”

What they’re really saying is “Our home inspector could not have possibly missed this 3 years ago!”

Every time I hear this, I just want to say “Probably because you hired an incompetent home inspector who was referred to you by your Agent!” But being the professional I am, I don’t. I simply say “You’ll have to ask him/her.”

Big I digress.

The truth is, if major issues are found and the Seller does not have money to correct these items, then they are left with a few choices. Generally they have to come off the price of the home.

But a lot of Buyers don’t want to move in and immediately have to start fixing a home they just bought!

What Happens if the Seller Hired an Inspector Who Missed a Lot of Things?

I see this one the most with homes that have had a Pre-Listing Home Inspection for the Seller.

They blindly trust their Agent to recommend an Inspector. He/She comes out and does their normal “drive-by” inspection. They may even stick a sign in the yard saying how the home has had a Pre-Listing Home Inspection.

Then a wise Buyer comes along and hires their own Inspector. Yes, even knowing the Seller has had the home inspected.

The Buyer’s Inspector then finds major discrepancies with the home. Discrepancies the Seller’s Inspector didn’t find. Now the Buyer wants to negotiate.

This generally leads to several issues.

The Buyer now sees the Seller in a less than favorable light. “Were the trying to hide these defects?” “They had a pre-listing inspection, why didn’t the other Inspector find these defects?” And the questions go on and on.

This is where I find myself many times. I’ve had Buyers who told me I wouldn’t find much because the Seller has already had the home inspected and I’ve had Buyers who kept that info from me to see what I would find (like it would affect my inspections anyhow)

In fact, I can’t think of one time I’ve inspected a home that has had a Sellers pre-listing inspection performed that I didn’t find more discrepancies than the Sellers inspector did.

And I know several inspectors who had the same results.

Why do the pre-listing Inspectors miss so much? I don’t know, but many inspectors have a mind set that they don’t want to find ‘too many’ things wrong or they’ll stop getting referrals from Real Estate agents.

If this is the only way they know how to inspect, then it carries over to their Pre-Listing home inspections as well.

Should Home Buyers Hire Their Own Home Inspector if the Home has had a Pre-Listing Home Inspection by the Seller?

Yes. Not only yes, but HELL YES!

You see from the real life examples above, just because the Seller has had a Pre-Listing home inspection doesn’t mean they used a competent home inspector.

You, as the Buyer, have a responsibility to hire your own Home Inspector and if needed, a certified Mold inspector as well. One who’s responsibilities are to you, not the Seller. And you better make sure you get a darn good one.

It’s not unheard of for Sellers to try and take the cheap way out when making home repairs. I’ve seen it many, many times.

Having someone come in and attempt to make repairs on the cheap can make finding these repairs very difficult. It’s way easier in most cases to hide damage rather than to fix it correctly.

This is why you need the best home inspector money can buy. And 9 times out of 10, that isn’t the Inspector your Agent recommends!

Do Sellers have to Disclose the Inspection Report or Defects Found on a Pre-Listing Report?

In every state that I’m aware of, the answer is a very definite YES!

Furthermore, in most of these States, the Seller must disclose the Inspection report as well.

Do all of them do this?

No.

There are tell-tell signs that another inspector has inspected the home. I’ve seen it on more than one occasion. I’m inspecting a home and I see signs another inspector has recently been there. I ask the Seller or one of the real estate agents if they’re aware the home has been previously inspected. Of course, the Seller and Seller’s Agent say, “NO” (if they’re at the Inspection)

Once I’m lied to, I start thinking about what else are they lying about! And nearly everytime, at the end of my Inspection, I know what they were lying about and why they were lying about it. (usually, it’s a major defect, or three, that will cost thousands to repair)

Once I disclose my findings to my Buyers, it usually ends up putting a very bad taste in their mouth about the home and the honesty (or lack of) of the Sellers. Things can go down hill from there.

How To Choose A Home Inspector for a Pre-Listing Home Inspection

I have an advantage over many other home inspectors in my market, and really, across the Country.

I have a small home repair company also. I do home repairs on the side. I could never decide which I liked best, working on homes or inspecting them. (and no, I don’t work on homes I inspect and I don’t inspect homes I work on)

Much of this work is repairing discrepancies on home inspection reports performed by local home inspectors.

This gives me an insight on which home inspectors in Tulsa are good at what they do, along with the ones that are honest.

Sadly, I find that most reports only list about 10 to 15 discrepancies per home. Even homes that are 40 to 50 years old! The vast majority of these “discrepancies” are minor in nature. And nearly every time I walk in to make repairs to these homes, I see other major discrepancies that should have been called out.

A few months ago, I was making repairs to an older home. An Engineering company in Tulsa that advertises that they do home inspections had performed the Inspection.

The home was built in the ’60’s and there were 13 items that needed repaired according to the Engineers inspection report.

3 of those were burnt out light bulbs!

But the kicker was, during the course of my Inspection, I found an FPE Panel box the Engineer Inspector had failed to call out (they’re a safety hazard) and then I discovered the home had all Aluminum wiring which the Engineer Inspector had failed to inform his Clients about!

He had also called for Appliance Repair on a Jenn Air electric range. The problem was he couldn’t figure out how to turn it on, so he wrote it up as a defect!

When looking for a home inspector to perform a Pre-Listing Inspection, do your own due diligence and look for an independent home inspector. One who does not market to real estate. One that the real estate agents call a “deal killer” because he/she is too thorough.

In short, you want a bulldog of an Inspector. One who is working for you, not for your Agent. But these inspectors are getting as hard to find as three legged Unicorns! But they’re out there if you do your research!

What if the Seller does not Want to Negotiate On Discrepancies the Buyers Inspector Finds?

This happens more than most in the industry want to admit. I see it often.

The scenario plays out something like this.

The Seller has a pre-listing inspection. He may or may not have fixed all the defects. He may or may not have come down on the asking price to reflect those repairs.

Then Mr. Home Buyer comes along, loves the house but decides he/she wants to have their own independent home inspector take a look at the house.

The Buyer’s home inspector finds several major defects. Defects that didn’t show up on the Seller’s inspection report. Now the Buyer wants to negotiate the price to reflect the cost of repairs that need to be made.

Mr. Home Seller refuses because his Inspector didn’t find anything.

Guess what?

As a Buyer, you have several choices.

  1. Walk away
  2. Make the repairs yourself

That’s pretty much it if the Seller does not want to negotiate with you.

But then again, you have choices too! There’s plenty of homes on the market if a Seller doesn’t want to negotiate.

So you see, just because the Seller has had a “Pre-Listing Inspection” doesn’t mean you as the Buyer should let your guard down.

InspectorDon

I'm a professional home inspector who serves Tulsa, Broken Arrow, Owasso, Jenks, Bixby, Coweta and all of Green Country in Oklahoma.

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1 Comment

  1. I like how you mentioned that the seller can know of problems before selling the home! My husband and I are wanting to sell our home for the very first time and we want to make sure that we do everything right before we do! We’ll have to look into getting a home inspection!

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