Pre-Inspected Listings - The Future of Real Estate

[hausdok]

By Alan Carson

Home inspections have traditionally been for the benefit of the purchaser. Pre-inspected listings benefit all parties - purchasers, vendors and Realtors.

Deals Won't Fall Through

Home inspections, performed as a condition of the offer, can kill deals. Sometimes this is because the purchaser gets cold feet; sometimes there's a big problem no one knew about. Sometimes it is because the house has been mis-represented; sometimes it is because the home inspector scared the purchasers by not explaining that minor and typical problems are just that - minor and typical.

If the home inspection is performed prior to the house being listed, all parties will be aware of the physical condition of the house before an offer is drawn. There will be no surprises after the fact. Deals will not fall through.

Pre-inspected Listings Avoid Renegotiation

In a buyers' market, most houses have to be sold twice. It takes a lot of work to get a signed Agreement of Purchase and Sale. Then the home inspection is done and the purchaser wants to renegotiate.

If all parties know the condition of the house prior to the offer, there is no need for renegotiation. As most real estate agents know, renegotiation is very difficult. Vendors have already mentally sold the house; purchasers are suffering buyers' remorse. Egos, pride and frustration can muddy the already emotional waters.

A vendor who pays for a home inspection will be further ahead than one who has to renegotiate. He of she may even sell the house faster.

Unrealistic Vendors

An inspection at the time of listing can also help a Realtor deal with a vendor who has unrealistic expectations. The inspection report is good ammunition for explaining why you can't ask top bucks for a house which is not in top condition.

Repairs Prior To Sale

Sometimes, the home inspection will reveal items which should be repaired immediately. A pre-inspected listing allows the vendor to repair the problem prior to putting the house on the market.

If the inspection occurs after the Agreement of Purchase and Sale, the purchaser could walk, renegotiate or, depending on the inspection clause, the vendor may have the option to repair. A repair done by an unmotivated vendor may not be the best repair and may not meet the purchasers' expectations. This has caused more than one deal not to close.

Peace Of Mind For The Purchaser

There is no doubt that part of the value of a home inspection is a guided tour of the house for the prospective purchaser. The inspection company can return to do a walk-through with the purchaser, if requested.

Reputable Inspection Companies

Pre-inspected listings will only have value if the home inspection company is perceived to be reputable, qualified and properly insured. Prospective purchasers will have little or no faith in a report done by someone they perceive to be in the vendors', or Realtors' pocket.

Summary

We believe that the future of home inspection lies in pre-inspected listings. Offers are cleaner and deals are less likely to be renegotiated or fall through. Pre-inspected listings afford purchasers, vendors and Realtors the information and protection they all deserve.

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About the Author: Alan Carson is a Principal in Carson Dunlop, one of Canada’s largest home inspection firms (founded 1978) and Past President of ASHI (American Society of Home Inspectors). Alan can be reached at carson@carsondunlop.com. Carson Dunlop is the distributor of inspector training and report writing materials. For more information on Carson Dunlop call: (800) 268-7070.

[kurt]

Boy, I think he's wrong on so many points it's kind of funny.

[Jesse]

Shopping for a house last year, I entered a home in Forest Park, about 90 years old. On the kitchen counter was an inspection report. The listing agent said something to the effect of, "It was already inspected, so you won't have to worry about that." I quickly paged through the report before looking around.

Into the unfinished basement first, I dragged the wife, where we found the concrete block foundation had some major displacement - behind the headboard of a curiously placed twin bed(remember: unfinished basement). Back up to the kitchen for that inspection report. The foundation problem was nowhere to be found.

I love this game.

[Mike Lamb]

How about starting with the first sentence from visionary Alan Carson.

Home inspections have traditionally been for the benefit of the purchaser.

Duh. Ya think? Who in the world is this sentence directed to? Oh, I know now: Idiots.

The first sentence should be, "Home inspections are for the benefit of the purchaser." The rest of the fairy tale is now moot.

[Jim Morrison]

I admire him for trying, but all but the dullest fools will see that for the work of fiction it is.

[randynavarro]

Wow, I thought Alan Carson was kind of a guru in the home inspection biz.

Is this real?

My first year in the biz I discovered how worthless pre-listing inspections were / are.

[Neal Lewis]

I have done quite a few of the pre-listing inspections, but it certainly isn't the future of home inspections. If the house is in estate or the owner has no clue what the condition of the house is, there can be some value. I make it clear that the report is not to be relied on by a buyer.

And what's up with calling a seller a vendor? Never heard of that in these parts.

[ozofprev]

In a perfect world, everything Carson said would be true.

If HI credentials were consistently representative of high ethical and educational standards, then a buyer would trust the seller's report. That is the world I would like to see. But for now... back to the real world.[:-weepn]

[kurt]

I know. It's so out of touch w/NAR driven realities, it's laughable.

Does anyone remember the dot.com meltdown when stockbrokers were doing "due diligence" and also advising & representing the sellers?

I'm sure there'll be a fair number of these, but I think it will be a segment of the market that isn't too bright. I mean, how many folks are so dense they're going to accept the realtors selection?

[Chad Fabry]

I mean, how many folks are so dense they're going to accept the realtors selection?

uhh, currently maybe 95% ?

[Jim Katen]

Originally posted by Neal Lewis

. . . And what's up with calling a seller a vendor? Never heard of that in these parts.

It's a Canadian thang.

- Jim Katen, Oregon

[ozofprev]

Hey Chad,

Aren't you supposed to be outside working? You got beautiful weather for it. [:-snorkel

BTW: email me if you need extra muscle. If I can, I'll come help.

[Les]

I see this piece as another reason most inspectors "don't get it". "I, personally, see it as yet another pioneer of the business making money selling his ideas with no regard for the "profession".

My fear is the people that really care about home inspection are getting tired of trying to keep some ethics in the mix. Those old farts retire, move to Mexico, make a secure living, or just give up and do it their own way and to hell with the crowd and national orgs.

Oh well!

[Lewis Capaul]

Would you buy a home because the Seller's inspector found no major defects? I certainly wouldn't. In a slow market a pre-listing inspection may be of some use as a marketing tool, and it may provide the seller with information about conditions he knows nothing about, how many home owners spend much time in their crawl space for example.

They have their uses, but I don't believe they are the "future".

Here's a link to what realtors think of the Idea:

http://activerain.com/blogsview/109357/ ... u-Have-the

[ozofprev]

Lewis, good link - thanks!

And Les is right again. If everyone was as helpful and sincere as him, this industry would be in much better shape. I'm swearing off the big associations and going independent.

See?-->http://www.inspectbuffalo.com/Hibiz.aspx

[RAB]

It is my experience that, after discussing the pre-listing inspection with a potential client, they typically decide it may not be a good idea. The primary problem is the situation where a known defect as a result of a pre-listing inspection is innocently left out of a disclosure form. That creates unacceptable liability potential for the seller. Even more common would be the situation where the buyer's inspector discovers more defects than the seller's inspector. Now there is a two-fold problem: the buyer trusts the seller less, and the seller has a claim against the inspector that performed their inspection.

[Brian G]

I could do a few of these per year if I kept my mouth shut about the downside. People call about it once in a while, I tell them about the state's disclosure law, and they never call back.

Brian G.

Me & My Big Mouth [:-bigmout

[Chris Bernhardt]

I see no trend toward prelisting inspections in my area. I have had the same experience as Brian, when I explain the drawbacks they usually forget the idea.

My nightmare is walking up to Home Depot and seeing "and Home Inspections" on their big sign of additional services.

Chris, Oregon

[kurt]

Originally posted by Chris Bernhardt

My nightmare is walking up to Home Depot and seeing "and Home Inspections" on their big sign of additional services.

Chris, Oregon

Oh Mama, it's true.......

Back in the heady days of ASHI "Branding" ascendency, there was the consultant fever'ed Chapter Leadership Day where "Branding" was being "rolled out".

One of the brilliant ideas favored by many was having ASHI members standing out front of the local Home Depot flogging our supposed excellence en mass.

ASHI-it'es would wear the familiar l'orange aprons of servitude, fluffing for Le Depot de Maison.

Lottsa folks thought this was a really good idea. I sheeeet you not.

If you don't believe it, ask Morrison; he was there.....

[davidnice]

3 words:

No buyer protection.

[aaronm]

I'm not sure if it's the rare Canuck air crossing Kenmore on the Lake or the high he must experience from counting his royalty checks, but Mr. Carson is truly on a flight of fancy regarding pre-listing inspections.

I field several calls a month requesting pre-inspections. My advice to the callers is this: don't do it. Why do the buyer's job for them? Do you really want all of that information you'll have to disclose to all future prospective buyers? What kind of drugs were you taking when this little gem of a thought occurred to you? If they insist, then I suggest that they hire the least experienced inspector they can find; you know, the guy with the highest license number and few synapses. How much can a guy like this find anyway?

There's one exception to this rule: attorneys. They need all the disclsure help they can get. They are the only pre-inspections we perform.

Maybe Mr. Carson lives in a commune of attorneys?

[hausdok]

Hi,

Well, first of all, I'm afraid there isn't any Canuck air in Kenmore on the Lake. We're about a hundred miles from Canada and about 2500 miles from Mr. Carson. Second, Alan Carson isn't me. I'm just the Editor here and I posted the article submitted to me for publication. I'm not sure what you meant by "royalty checks."

A pre-listing inspection concept works fine, and the NAR actually encourages its own members to do them. However, the reality is that most sellers and their agents just don't want to know what's there and are hoping that the inspector will be a half-blind-checklist-totin' buckethead who'll be so afraid of losing real estate referrals that he'll intentionally forget to mention half the stuff he sees. That's the way it is and it's not likely to change anytime soon.

I have to ask you, what kind of drugs were you taking when you advised potential clients to hire an idiot to inspect the homes they were selling? Let's just say that they took your advice, hired morons, and those deals went through with the sellers knowing there was stuff there that was wrong that the checklist-totin-buckethead missed. Do you think that the seller's opinion of our profession will have been enhanced or degraded by that experience? Who do you suppose will come under the gun when the buyers later find those issues; the seller? Hardly, it'll be the inspector, and when word gets around that you gave that kind of advice to a potential client and got him jammed up in court, you'll be the secondary recipient of that flawed approach.

I don't differentiate between lawyers and other people; they all get the same inspection - done with my usual near-OCD attention to detail.

Over the past 11 years, I've done a couple of dozen pre-listing inspections. I've encouraged the client to leave the inspection report lying there with all of the other information about the house, so that everyone can see it and read it. I tell the client they don't have to fix a damned thing prior to listing it - just make sure that everything in that report is included in the state-mandated disclosure report. I'm told that in about half of those instances the reports sat there unread and in every circumstance the buyers hired their own inspectors - none of whom found more wrong with those houses than I'd found. Almost all of those deals went through fine. In only one of those deals was there a minor snafu. The client told the buyers that he'd set his price based on what I'd disclosed to him in my report. Even knowing about all of the issues, and after his own inspector was unable to uncover additional stuff, the buyer insisted that the price be lowered further because he felt that my client hadn't lowered the price enough. They negotiated a bit and then my client dropped his price enough to make the deal happen. The fact is, he hadn't lowered his price a cent based on my report - he priced it exactly where his realtor and he agreed was the best price. In the end, the house sold for more than $25,000 over what would have been his bottom line.

In England, home information packs (HIPS) containing a home condition report (HCR) were supposed to have become law on June 1st. However, over the past year, as the deadline neared, the mortgage lenders, banks, real estate folks, and everyone else who typically makes money off of home sales, began making more and more noise - expressing a lack of confidence in the new home inspection profession in England. Consequently, about six months ago the government gutted the HIP law and removed the mandatory HCR requirement from the process, but left in the provision that said that every home had to have a mandatory energy assessment and that the inspectors would do those. The special interests continued to make noise - saying that there wouldn't be enough inspectors, that they weren't necessary, etc., so that when the deadline rolled around full implementation got rolled back still again and now all of those thousands of inspectors - having spent thousands on government-mandated training - are now up in arms. The whole thing is so convoluted that I've given up trying to report/explain it here.

The bottom line is, that strictly from an inspector's viewpoint, a situation where the seller is hiring us is, in my opinion, the golden fleece. If, by law, every home had to be inspected when it were put up for sale, we could rest assured that in times of low inventory our business would still be going strong, because fewer buyers would try to strengthen their negotiating position by going to the table with an inspection contingency waiver. Plus, work for us would double, because people, being people, would still hire their own inspectors, hoping that their own inspector will find something that the other guy missed so that they can force a reduction in price.

MOWTPC

ONE TEAM - ONE FIGHT!!!

Mike