Inman

3 must-knows about prelisting inspections

Q: Recently, I read an article of yours in which you told a seller to have her home inspected before putting it on the market. I will be putting my mom’s house on the market, and in watching many of the real estate TV shows, I had never heard or seen this idea before.

Can I really obtain the home inspection in advance? The process always seems to have problems after the prospective buyer gets the mortgage and then pays for his or her own inspection. It would seem like a good selling point if the property already had a clean inspection or the indicated repair were already taken care of. –Albert W.

A: You absolutely can — and possibly should — obtain an inspection on your mother’s home before you put it on the market. Given the way mortgage lending guidelines have tightened up and the fact that appraisal and condition issues are killing a larger number of transactions than at any time in memory, obtaining prelisting inspections differentiate your home from the overwhelming competition and boost your home’s chances of selling by helping satisfy prospective buyers that the property will:

Here are some things you should think about as you decide whether to move forward with obtaining prelisting inspections and figure out a plan around how to leverage the reports.

1. Prelisting inspections won’t make the deal, but they can help optimize your chances of closing the deal. Buyers are not going to buy a house they wouldn’t consider otherwise because it has reports, but if they are debating between your mother’s home and another property, a clean bill of house health, documentation that needed repairs have been completed, or even reports showing what needs doing and a corresponding discount can help push buyers off the fence.

As you noted, many homes fall out of escrow because of condition issues not discovered until the transaction is partially underway. Sometimes, advance inspection reports can surface issues, allow you to get repairs completed and thus avoid that issue.

However, at other times, prelisting inspections show issues too big for you to have repaired that will be deal-killers for almost any mortgage lender. In this case, you do yourself the favor of forgoing even bothering trying to get it past a mortgage lender and empower yourself to list it as a cash-only sale for a fixer-upper price.

2. Having prelisting inspections may change your disclosure requirements. You don’t mention whether your mother has passed away, but if so, and you are selling her home on behalf of her estate, you could very well be exempt from many disclosure requirements, depending on your state’s law. (Consult with a local real estate agent to find out.)

However, once you obtain prelisting inspections, you will have a legal duty to provide information about any defects turned up to prospective buyers. That still might make sense, especially if the home is in great shape or you do elect to invest in necessary repairs. Just be aware that by obtaining the inspections you might heighten your own legal duties vis-à-vis making disclosures about the condition of the home.

3. Your prelisting inspection won’t replace the buyer’s inspections. To be clear, whatever inspection(s) you obtain won’t be the inspection — it will just be an inspection. You’ll want to expressly advise the buyer that the prelisting inspections — and I would encourage you to consider a pest inspection, property inspection and a roof inspection — are for his information only.

You don’t want the buyer to rely totally on it and forgo his own due diligence for liability reasons; your aim is to either verify the place is in good shape, clear the place of major repairs or brief them on why the property is being priced in that way and what they’ll need to do (or won’t need to do) later, assuming you can negotiate an as-is offer.

But you also want the buyer to still obtain his own inspections, so he can attend, ask questions, select the inspector and not fault you for anything that is missed. And you should work with your listing agent to require that the buyer sign your written advice to get his own inspections, as well as to make the property available to the buyer for just that purpose.