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PRE-LISTING INSPECTION: HEAD OFF TROUBLE Great home-staging, great agents, great interest rates are not so "great" if you lose the deal because of hidden defects and damage discovered at the '11th hour'. Here's one way to help push sales faster while offering mutually-beneficial protection for all parties involved.
Sandy Schoon, ABR®, GRI, a sales associate with Arizona Best Realty in Scottsdale, knows firsthand just how quickly a deal can be put in jeopardy — or slip away altogether.
Schoon had a listing on an older house, built in the early ’70s. Two weeks before the sale was to close, the air conditioning system broke down. After some scrambling by the sellers and a $2,000 repair, the deal went through, but Schoon says the added stress could’ve easily been avoided.
“If you do an inspection and make the necessary repairs before listing a home, the house basically has a clean bill of health,” says Schoon, who has regularly recommended prelisting inspections to her clients during the four years she’s worked as a real estate salesperson. “It’s an opportunity to take care of things that could go wrong so that they won’t come back and bite you.”
Prelisting inspections — examinations paid for by the seller before a house is put on the market — are becoming an increasingly popular way for practitioners to not only reduce the possibility of last-minute surprises but also give their clients’ homes a marketing edge.
Although some practitioners suggest prelisting inspections for older homes or those in obvious need of repair, Susan Spellman, ABR®, a salesperson with Long & Foster, REALTORS®, in Williamsburg, Va., recommends them to all her clients. Her average sales price is about $700,000, and her clients tend to live in gated communities. “Just because a home has granite countertops doesn’t mean it’s well built,” she says.
She feels so strongly about prelisting inspections that if her clients don’t agree to do one, she gives them two options: sign a letter acknowledging they’re not following her advice or work with another practitioner. “I tell my clients not to be penny-wise and dollar-dumb,” Spellman says.
In the end, “my clients feel it’s been money well spent,” she says.
Schoon and Spellman both mention the inspections in all of a home’s marketing materials, and make the inspection reports, as well as any repair receipts or cost estimates, available during showings.
From the Experts
According to the “2005 Home Inspection Business Operations Study", the number of prelisting inspections has been increasing slowly but steadily during the past decade. The study, which is based on a nationwide survey of about 18,000 home inspectors (response rate: 14.7 percent) and covers business operations during the 2004 calendar year, found prelisting inspections accounted for about 2.6 percent of an inspector’s annual business, up from 1.5 percent in 1996. On average, an inspector conducts about 200 home inspections annually.
"Although the percentage of prelisting inspections is still relatively low, the increase is significant, especially as many real estate markets show signs of cooling," says Rob Paterkiewicz, a home inspection expert in Des Plaines, Ill. “Sellers are realizing it’s not just their market anymore. Thanks to the Internet, potential buyers are walking into homes more knowledgeable than ever before, and sellers know they must do everything they can to sell their house,” Paterkiewicz says. He estimates prelisting inspections might already represent as much as 5 percent of an inspector’s business, and he expects the trend to continue.
“A lot of this activity is being driven by real estate practitioners,” rather than consumers, says Dan Steward, president of a Tampa, Florida-based inspection franchise, because practitioners want faster transactions with fewer surprises or hiccups.
Like Paterkiewicz, Steward’s also seen an increase in prelisting inspection activity. “A prelisting inspection helps get buyers comfortable with the idea of making an unconditional offer. There’s also a greater sense of security because the seller and practitioner are being very forthright, demonstrating that there’s nothing to hide.”
The need to make certain repairs—such as to mechanical systems (heating and air conditioning, plumbing, and electrical) and to address safety issues (broken locks, loose handrails)—almost goes without saying. But the prelisting inspection can help the owner and practitioner decide which, if any, of the remaining projects to address before putting the house on the market.
Even if sellers decide not to make any of the suggested fixes, a prelisting inspection can still prove beneficial, Steward says. For example, it allows sellers to obtain cost estimates for needed work, so they can offer potential buyers an appropriate, not excessive, discount off the listing price.
Gale Colvin, director of technical training for a Memphis, Tennessee–based home inspection company, says a prelisting inspection should follow the same standards and protocols as any other inspection. “More than likely the buyer will conduct a second inspection, and you don’t want any surprises,” he says.
A Smooth Ride
By bringing potential problem areas to light before sellers put their house on the market and creating an environment of trust and goodwill between sellers and buyers, prelisting inspections can reduce parties’ stress level and eliminate many of the bumps that can throw a deal off track, says Long & Foster’s Spellman.
“You want a smooth, successful transaction,” she says. “If the house doesn’t sell, it’s a lose-lose for everyone.”
Written by CHUCK PAUSTIANFormer Senior Editor, REALTOR® Magazine
by Corrie Reed
You only get one chance to make a first impression.
Before placing your home for sale, follow these easy tips for an exterior home make-over.
Get started: Solicit the help of at least one honest friend. Get in your car ,with friend in tow, and drive up to your home. Then, approach the front door as a potential buyer would. What things you notice about the home? Given the homes exterior appearance, what would you assume about the interior? List positives and negatives. Consider how you will highlight the positives and correct or minimize the negatives. Remember, your goal is to create a look that will appeal to the most buyers. Keep that in mind when making improvements to your home. Clean: Remove any trash or debris from your yard. Power wash sidewalks, driveway, and roof to remove dirt and mildew. Power wash siding and window sills as well. Clean windows. Remove any spider webs from eaves, overhangs, and corners. Clean out gutters. Make it tidy: Remove any toys and store out-of-sight. Likewise, remove any gardening tools or implements and store out-of-sight. Neatly coil any water hoses. Landscape: Remove all weeds and dead plants. Rake and dispose of fallen leaves. Mow the lawn. Edge sidewalks and driveway. Remove any stray growth between brick, stone, or concrete. Trim bushes and hedges. Prune back tree limbs that are touching your home. Consider removing any trees or shrubs that obstruct the view of your home. Big fixes: Replace an old, damaged roof. Repaint your homes exterior. Purchase a more attractive front door. Small additions that make a big impression: Add new hardware to your front door. Place decorative numbers on your home. Replace porch lighting with more decorative ones. Add color and life with plants and flowers. Paint or replace your mailbox. Keep in mind: If your backyard is visible, clean it too. Since buyers may drive by in the evening, review your home then as well. You may need to add lighting that will accentuate the home’s exterior features at night. Maintain all improvements while your home is on the market. Tip:
Have your home inspected prior to listing your home. A home inspector will point out any repairs or improvements that need to be made. The inspector will also give you an overall evaluation of your home’s condition. Based on the results, you may choose to address the repairs or with the advice of your Realtor®, you may build in the cost of repairs into your home’s asking price. All of the good points found during the inspection can be highlighted in your home’s listing. Knowing your home’s condition prior to listing, will minimize surprises down the line for both you and the buyer.
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