Just as a buyer needs to do their due diligence, a seller
needs to do theirs so that bad judgment calls don’t derail
BY CARA AMEER
Cara Ameer, a top-producing broker associate from Northeast Florida, writes
about working with buyers and sellers, sticky situations and real estate
marketing in her regular Inman column that publishes every other
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After several days (or weeks) of negotiating, an agreement between the buyer
and seller is finally reached! The buyer is excited that they’ve found their new
home, the seller is glad they will be able to move on to whatever is next and
the agents are glad that their goals for that listing have come to fruition.
Contrary to what might be depicted on television or what many real estate
agents think, when a contract is executed is not the time to begin celebrating.
It marks the beginning of a long and uncertain process to a potential closing.
There are almost always inspections to go through as well as an appraisal, if
the buyer is getting financing. Much can go wrong with so many hands in the
pot, and the fear of the unknown is real. Murphy’s Law is alive and well in real
estate, and if the other shoe can drop, it will find a way.
The best way to increase a seller’s chances of crossing the closing finish line
is to have a prelisting inspection done before ever coming on the market. Here
are seven reasons why:
1. What you don’t know can hurt you
Knowledge is power, and surprise is never a good thing. It is easy for sellers
to have a superficial and inflated view of their home. What could be
wrong, they think? They’ve lived there for x years and if there was something
seriously wrong, they would know it. Or, they just bought the home four years
ago and had it inspected then — why would they need to do this now?
You see, it is those very thoughts that can come back to bite sellers. When
was the last time your sellers went on their roof, looked in their chimney,
crawled around in their attic or basement or under the foundation? Do they
know how old their water heater and HVAC are? If they live in an older home,
what about the plumbing and electrical systems?
This is exactly why you should have a pre-listing inspection. So you can get a
grip on the physical health of your home.
2. You might not have to fix everything
Having a pre-listing inspection does not mean your sellers have to fix every
item that comes up — but they do need to disclose everything. This is where
you — the agent — come in to strategize with your seller on a plan of attack
and what makes the most sense given the market, your competition, time
frame for moving, etc.
Some things might need to be fixed in order to give comfort to a buyer or to
qualify for the kind of financing they might be doing. For example, if there are
buyers obtaining FHA or VA financing on homes in your area, any wood rot or
termite damage will need to be fixed before the buyer can obtain the loan.
There might be items that are major vs. minor that you and your seller will
need to take into account when pricing the home as they can definitely have
an affect on what a buyer is willing to pay. Homes with older roofs, HVAC’s
and water heaters on top of other repairs, coupled with a home that needs
cosmetic updates can be viewed as “a money pit” in the eyes of a buyer.
If you are faced with a multitude of expensive items nearing the end of their
life, you might need to consider replacing at least one and be willing to offer a
home warranty to provide some coverage to the buyer for the first year of their
ownership. The 15-year-old HVAC might be working great now, but that does
not mean it won’t fail in the near future.
3. Disclosure is not an unpleasant surprise
Many sellers fear that by having an inspection, they will then have to disclose
everything to a buyer which may cause them to pay less for the house. The
truth is, a buyer is going to find out anyway, but it will be after they’ve already
agreed upon a price and terms that they might not want to pay after the
outcome of that inspection.
Avoid buyer’s remorse by shifting the knowledge of the home’s condition to
the front end of the transaction rather than after the negotiation. Although a
buyer will still have the property inspected by their own inspector, the
information found will not be a surprise.
All houses have “things” that are found on an inspection. Even new homes
that are under construction or nearly complete have items that need correction
by the builder after they are inspected — this despite having a project
manager who oversees the subcontractors working on the house.
4. It can keep the deal together
Back to the “surprise is never a good thing” concept, when you leave
discovery of the home’s condition entirely to the buyer is when problems arise.
The seller has already agreed upon a price and terms and depending on your
home and the time of year it is on the market, the actual time to go under
contract may have taken longer than what you thought.
You will have grown weary from numerous showings, second showings and
“almost offers” that have never materialized. Now, you finally have a buyer
and the transaction may be in jeopardy because of the outcome of the
The buyer wants to renegotiate the purchase price and/or ask for all repairs to
be made or a huge concession to account for what was found. The sellers
don’t feel like giving anymore, especially when they might be selling for less
than what they thought (which is how most sellers often end up feeling). They
could be paying closing costs on behalf of the buyer in addition to agreeing to
leave certain appliances, such as the refrigerator and/or washer and dryer.
Everyone goes into full-on crisis mode trying to obtain estimates for the
repairs and it is a hurry-up-and-wait game trying to get contractors over to
look at the findings and then even more waiting to get their written quotes.
Keep in mind that buyers and their agents don’t always have a realistic handle
on the true cost of repairs found from an inspection and might inflate or over-
exaggerate the potential costs on purpose as a way to beat down the agreed
upon price or force the seller to make repairs. Buyers might seek opinions
from overpriced vendors trying to upsell, and sellers will find themselves
running interference with this information trying to get their own quotes.
All of this chaos ensues while the clock keeps ticking on the inspection time
frame as set forth in the purchase contract. Most contract time frames never
take into account the real world of waiting on repair specialists.
Although most transactions are handled this way, it doesn’t mean that they
should be. By being proactive, you can help your sellers avoid the stress of
the unknown and level the playing field between them and the buyer by
recommending a pre-listing inspection. Wouldn’t it be better to have done your
homework, know what you will or won’t fix (or in some cases have already
tackled it) and obtained estimates on all else?
What is unknown is simply an excuse most times for not taking the time to find
something out ahead of time rather than after the fact. Sticking your head in
the sand like an ostrich and being in denial of any inspection issues is not
going to help get the home sold.
5. Incompetent inspectors can ruin a sale
This one is starting to become a serious problem in our industry. Just as the
swell of real estate agents has increased as the market has improved over the
last few years, so have the number of home inspectors.
What is required to become a home inspector varies from state to state and
just because some states require licensure does not automatically grant that
inspector sound judgment and the ability to legitimately diagnose/interpret a
home’s condition. A license is never a substitute for competence — ask any
seasoned real estate agent who has listed properties the amount of times they
have had to run interference with an inspector’s report that was full of
The prospect of rookie inspectors who have only been functioning as an
inspector barely a year or two — and who are running their own shop with
virtually no support system and a more experienced inspector to mentor them
— is cause for concern. They are crawling through someone’s largest
investment and they don’t know what they don’t know and only know enough
to be dangerous.
Newer inspectors often discount their fees as a way to build their business,
and so what looks like a bargain compared to what more experienced and
savvy inspectors charge is often at the expense of the transaction. Buyers
might shop by price alone or an agent gives them a “coupon” that
the inspector sent out in an email blast to agents hoping that it would generate
some referrals. The agent might be newer and might have not vetted the
inspector and doesn’t realize all inspectors, like agents, are not the same.
I have run interference with incompetent inspectors more times than I care to
remember. It has been as simple as claiming a microwave in a newer home
was not operable to the more serious: an allegation that a metal roof was
improperly installed on a home that was located across from the ocean and
was literally one good storm away (inspector’s wording) from being blown off.
The roof was installed when the home was built, and it was a newer home.
After that buyer walked away, a few months later a category 2 hurricane hit(it
was projected to be much larger on impact to the area) and the home
sustained no damage whatsoever, and the roof was still standing. A roofer
came to examine the roof after the first inspection and determined it needed
some minor repairs but was properly installed.
An inspector with little knowledge of metal roofs made a bad judgment call.
This not only scared the buyer but also the seller who was in “shock and awe”
by the discovery and went into a tailspin calling the original builder, the county
building department, etc.
My favorite inspector misdiagnosis was an inspector who had barely been
licensed about a year claiming a nine-year-old house with a three-tab shingle
roof, located 20 miles from the ocean and a 40-minute drive away, needed the
roof replaced, because in Florida, those roofs have a shorter life. After that
happened, two other home inspectors checked the roof along with a roofer
and concluded no such thing.
There were some shingle repairs that needed to be made largely as a result
of solar panels that had been installed on the roof about two years ago. That
buyer walked after wanting to find a way to claim “hail damage” as a way to
get a new roof installed, trying to push the seller to contact their insurance
company. We did get another buyer and the second buyer did their own
inspection, after which their inspector determined the roof did not need to be
Although buyers have the right to choose whatever inspector they want,
having your own inspection done by a vetted, experienced, adequately
insured and credible inspector can be a huge asset when you run into
situations like this. That inspector will be available to consult with you during
the home sale process and can assist with running interference should an
incompetent inspector cross the home’s path.
6. You’ll have a smoother transaction and a faster closing
All parties want a purchase and sale process that is free of hitches and can
close within a reasonable period of time. By getting a pre-listing inspection,
the risk of the unknown is eliminated and the parties will enter a negotiation
feeling confident and empowered.
If a seller is unable or does not wish to take on repairs, the property can be
priced accordingly. At the same time, if a seller has replaced a big ticket item,
like a roof or HVAC, it might help the home sell faster as the buyer might be
willing to make an offer and pay a higher price because of it.
A significant portion of time that is normally eaten up by the inspection period
and all of the back and forth trying to resolve repairs is reduced since everyone
is aware of the issues and has a handle on what will or will not be done.
7. The home will be more insurable
Some repairs might have to be made for the next buyer to get insurance or
they will likely need to have them done within the first 30 days of owning the
home in order to get a lower insurance rate. If a seller has an an older home
with knob and tube or aluminum wiring, for example, a buyer might run into a
snag getting insurance or the quote might be much higher than anticipated.
The seller might have lived with older electrical or plumbing and not had any
issues, however, this can become an issue for the next buyer. It is easy for
sellers to become numb to issues that don’t concern them. Unfortunately, real
estate transactions don’t work like that, and these are serious concerns any
buyer would have before sealing the deal.
Buyers are often hesitant to take on significant projects, like a whole house
rewire or re-plumbing, unless they can get it at the right price or a seller is
willing to pay a significant portion of their closing costs to offset the amount
such a project will cost.
Why risk a seller’s home sale while an unknown inspector could potentially
wreak havoc on the home’s condition and ultimately thwart the entire
transaction? Knowledge is power. Just as a buyer needs to do their due
diligence, a seller needs to do theirs so that bad judgment calls don’t derail