Monday, September 22, 2008

Preservation of Equity by Home Inspection

Selling or buying a home may be one of the most stressful events a person faces in his or her lifetime and in this challenging current marketplace real estate agents are working more closely than ever with home sellers to sell homes as quickly and for as high a value as possible. As a result, many real estate agents are now advising sellers to schedule a home inspection prior to putting their home on the market.

By utilizing a prelisting inspection, which is a home inspection that is paid for by the seller before a house is put on the market , sellers not only reduce the possibility of last-minute surprises during negotiations, but also give themselves a marketing edge by providing educated buyers with upfront information on the condition of the home. Rather than await the results of the inspection which, is more often than not a contract contingency, the proactive seller can effectively disarm the potential for over inflated contract price negotiations.

It is far less expensive for a home seller to fix a problem than to allow it to become a tool in negotiating a lesser sale price for their home. A conservative estimate states for every dollar of identified repairs, the buyer would be looking at double, or sometimes triple, that amount in a price reduction. A wise home seller who, for example, learns from their home inspection that portions of the roof need repair, may opt to repair that section immediately rather than having the problem become a price-negotiating tool. Paying $5,000 for the repair is far more enticing than losing $10,000 in the sale.

Being aware of the home’s potential problem areas before putting the house on the market creates a conducive and trusting environment between the seller and the buyer. A prelisting inspection reduces the stress that might be involved in a transaction if major repair issue were to be discovered during the time the house is in escrow.

If, for example, three weeks before a house was to close the water heater or furnace failed, the seller would need to rush to schedule a repair which might potentially cost thousands of dollars. If these issues had been discovered in a pre-sale inspection, the seller would have avoided the stress and unforeseen expenditure of having to address these needs with such short notice.

With the growing number of housing inventory and the resulting increased leverage afforded the buyer, many real estate agents are encouraging home sellers to conduct a prelisting inspection in order to reduce the chance of a deal quickly falling into jeopardy or being lost altogether because of last-minute surprises.

The prelisting inspection tells the seller exactly what needs to be addressed and assists them with prioritizing the repairs. The seller can determine what they want to fix and can create a budget for repairs or they can choose to make allowances to the buyer for any major repairs uncovered by the inspection process . Once the inspection is completed the house is ready to sell with no hidden problem areas waiting to surprise the realtor, the seller and the buyer.

Even a newer home with marble counter tops and hardwood floors may have problem spots. Buyers who are looking to make a big investment will appreciate the added touch of a prelisting inspection that is included in the home’s marketing materials. This valuable information proves that the seller has all the information laid out for the buyer which shows good faith and disclosure and will undoubtedly help to make the sales transaction process smooth and seamless.

While much of the increase in prelisting inspections has been driven by real estate practitioners who have witnessed just how quickly and easily they can sell a home with such information readily available for buyers to view, the latest trend is for the sellers to initiate the inspection in the spirit of protecting their interests. Being able to present these reports reinforces the fact that the seller has nothing to hide and is beneficial to preservation of equity.