Stories From The Street – July 2014

Having your Home Inspected Could Save You Thousands!!!

Should I Have my Home Inspected Before Selling?

One of the services that I offer as part of my package is a Pre-Listing Listing Home Inspection on your home. Is it necessary for every house that I list/sell? No. Can it be beneficial in certain circumstances, and put thousands of dollars of additional profits in sellers’ pockets? Absolutely

Some things to consider are the age of your home and any recent upgrades that you may have completed which could enhance the value of your home. You should probably know what inspectors do before determining if a Pre-Listing Home Inspection is worth the $350-$450 cost before you list? Note: If when meeting with sellers we determine that a Pre-Listing Inspection is beneficial for you then this is included in your upgraded package. A home inspector will visually inspect your home. He can’t go behind any walls or tear out any drywall or flooring to look behind. So he visually inspects the structure to make sure it is sound. He will check the electrical systems to make sure everything is wired and grounded correctly and up to code – at the time it was installed or updated. He will check plumbing, all faucets and drains to make sure that they are functioning properly. And he will check all appliances that will convey with the house including kitchen and laundry. He will do a visual inspection of the roof to determine how much useful life it has remaining and will check the attic for any possible leaks. Finally he’ll check the heating and cooling systems to make sure that they are functioning properly and have been maintained. Additionally, there might be Radon, Mold, Well Water, Septic, and Chimney inspections that buyers could request but are not typical of a ‘home inspection.’

So now that you know what a home covers and what might be found in a home inspection, is it worth it?

Each house is different and sometimes the $350-$450 for an inspection is not enough juice for the squeeze? So I don’t recommend that all sellers do one. Especially on newer homes or homes in which I can tell the sellers are up-to-date on all maintenance issues and have kept up with the ‘mechanicals’ of their home.

But when I do recommend doing one, the reasons are to ELIMINATE ALL NEGOTIATIONS AND LOW-BALL OFFERS. What buyers are looking for when they do a home inspection is additional items to negotiate for a reduction in price or money out of a seller’s profit to remedy these “inspection” issues. Doing a pre-listing home inspection is flipping the normal process. Typically buyers and sellers agree on a price, then do an inspection. We do our inspection before ever listing your home, and this inspection lets you know of potential issues that might arise and give you an opportunity to resolve these issues before buyers even view your home. By doing a pre-listing inspection the seller (you) is made aware of any potential issues that might arise during the process that could jeopardize the sale and cost you THOUSANDS of dollars in repairs down the line. By doing an inspection up front, we are able to remove potential obstacles before they can interfere with your sale. A pre-listing inspection benefits all parties involved. This gives you time to have the defects or issues remedied before selling your home, gives you time to get the repairs made to improve your home’s appeal, and helps us set expectations on repairs. Additionally, taking care of these issues up front can have substantial benefits in the listing price and sales price. By having time to remedy issues on a Pre-Listing Inspection this allows you to be able to do some of the repairs yourself or shop around to local contractors to fix the issues. Not being under the time constraints to fix the issue allows you to save money on repairs initially, but also buyers come into the process with a peace-of-mind that the issues have been addressed and are less likely to ask you to fix the minor issues that can slow down a sale or cost you thousands of dollars. By taking care of the issues, you eliminate possible resistance from purchasers. Every home is different, but conservatively, an extra $1,000 to $5,000 can easily be expected.

Just recently, I had a seller that did not have a pre-listing home inspection. The home was older, and the seller knew that she’d have to fix some issues once we got a contract and an inspection, but what happened during the course of the month from contract to settlement was unexpected and costly. She contacted me about 5 months before listing and had a meeting with Stacy and Sharon at Limelight Staged Homes. We gave my seller a list of ‘improvements’ to Scientifically Stage her home that included paint, carpet, new counters, paint cabinets, de-clutter, and properly stage to sell. This worked and the pictures by Annie and Sendsible Solutions were amazing. We received a solid contract within 3 weeks on the market at a price that was slightly above where I told her we would sell, so she was THRILLED.

The house appraised at that value, so that was one hurdle down. Next was the inspection.

From the home inspection report there was a laundry list of items that I did not anticipate. We received the request for repairs that included a new HVAC condenser outside and additional inspections for the well water and septic. I had my HVAC guy- Rick Myers, whom I’ve used for all 3 of the houses that I’ve built and for many other numerous jobs and who is a ‘good ole boy’ and about as honest as they come, do the install to the tune of $2,300. Next I called a Septic Inspector that I also know and trust. Note: I have learned more about Septic systems than I care to know over the past 2-3 years: How systems can fail, New BAT system requirements, How to install new tanks and drain fields. But the one lesson that I’ve learned is that, like in any industry, there are Septic companies that do what they can to make a system ‘Fail’ just so they can get the work on a repair/replacement. So having a guy I’ve worked with in the past and trusted was paramount. I was in a meeting with Stacy and Sharon when I got the call from Dave- the septic guy- that we had an issue with the Septic. I immediately had to excuse myself from that meeting and drive to check out the septic with my own 2 eyes. When I arrived, I saw what Dave mentioned when he called…. Failed Septic Tank and the inlet line was corroded shut. FAILED SEPTIC. So we had to get the county involved to get us the specs for the repair. Settlement was only a week away so I had to pull some strings and get Dave to adjust his schedule to get the work completed and inspected by the county prior to settlement. Cost to my Seller: $5,600

Finally we had a failed well water test… Levels of Total Bacteria were higher than potability limits allowed. I had to arrange for my plumber, Eddie Shelton to come and treat the well water. We first tried to ‘shock/treat’ the well and when the 2nd test result failed, I had to have Eddie come back out again to install a UV light and whole house filter so that my seller was turning over the house per the terms of the agreed upon contract. Another $1,950 expense to my seller. So, if my math is correct, these ‘Inspection’ issues ended up costing my client, my friend, $9,850 before she could sell her home. She was willing to do all the work, and since she bought the home 2 and a half years ago in a depressed market she ended up making a nice little profit, even with the added expense. And because the contractors that did the work are all guys that regularly do work with me they were fine getting paid the next week once we sold the house. So this is one way to handle issues that arise with inspections.

The other way would have been to do a ‘Pre-Listing Home Inspection’ and from this we would of known that a new HVAC condenser was needed. And the inspector would of recommended both well/septic tests and I could have had these done prior to listing. And we wouldn’t have been under the gun to get the work completed before settlement.

Additionally, I could’ve increased the listing price of the house by $10k and we might have been able to absorb the $9,850 ‘repair’ cost into a higher sales price. And I definitely would of marketed the house pointing out the New HVAC condenser, Brand New Septic Tank and inlet line, and a clean water report with a whole house filter and UV light. The downside is that my seller would have had to pay $10k before we even listed. The upside: I might have been able to absorb these costs into a higher sales price.

So, would a ‘Pre-Listing Home Inspection’ be beneficial to you? That is going to be your call. It depends on a myriad of factors. How quickly do you need to sell? Do you have cash available for repairs? Have you kept up on maintenance on your mechanical systems? Have you had recent upgrades to your home? When we sit down in our initial consultation, these will be questions that I ask to help best determine the course of action for your sale. Then when I provide your individualized specific written analysis, the ‘Pre-Listing Inspection’ is just one of 13 points that I will address as to best prepare your home for sale to attain maximum value.

Just like a business does when preparing for sale, we treat your home like a business and our focus is to enhance the perceived value and thus the ROI (Return on Investment) of you home.