As realtors, when it comes to spotting a property’s warts, you’re caught between a rock and a hard place.
Recommend an inspection that falls short, is not thoroughly thorough, and your clients won’t be happy with you. Recommend the gold standard of inspectors and the chances are that much more that your offer may get scuttled.What to do?
A big trend that seems to be helping the sale of homes today is something called the pre-home inspection, which is essentially a home inspection that’s being commissioned and paid for not by the buyer, but by the seller.It’s widely viewed as a proactive approach in which the seller is laying their cards on the table by fessing up all that is wrong with their property. The thinking goes that potential buyers will see this as a benign and honest move, one which motivates them to put in an offer. And according to a national home inspection franchise company, that theory seems to be working.
“It’s definitely a growing trend here,” says Jay Gregg, director of marketing for Pillar to Post Professional Home Inspection. “It’s pretty common in the eastern U.S. They’ve found it helps sell houses faster and for more money.”Besides helping the seller assess the true value of the property, it can also relieve anxieties the seller might have about the property.”
That’s what happened with a client of Gord Haines’. A relative of the client had told her to replace what he suspected was knob and tube wiring. He said he could do it for $10,000. But Haines thought she should have her home inspected before agreeing to such a big job. Good thing as she learned there was no knob and tube wiring at all in her house.“A pre-inspection is good for the seller to find out about issues they may not know about,” says Haines, a sales rep with Royal Lepage State Realty in Hamilton. “Was that lady happy!”
The other issue around home inspections that irks Haines is the way inspectors communicate, which tends to come from a highly negative, all-or-nothing place. Often, he says, an inspector will point out the problems within a home without providing context. That leads to a lot of gun-shy, fearful buyers who run the other way. Inspectors need to learn to better explain the issues they uncover so that buyers don’t view every issue as do or die. “We want competent home inspectors but also ones that are good communicators,” he says. “If they go through and say there’s a problem here and this is how you resolve it or there’s an issue here but you can live with this for two or three years… We need them to better explain things.”
It makes sense that older homes are often targets for home inspections. That’s what drives Deirdre Slowey to recommend home inspections for both buyers and sellers. And as Toronto’s real estate market heats up, it’s becoming even more imperative that sellers provide proof that their property is sale worthy.By persuading sellers to get their homes inspected it provides a sense that the seller is upfront, open and honest, says Slowey. However, she’s known buyers that don’t exactly trust those inspections and to test it, get one of their own.
Because a relatively clean home inspection removes many objections a home buyer might have, this tool is often used in hot markets to encourage multiple offers.
“Currently, if there are any conditions attached to an offer, the seller will reject it,” says Slowey, a sales rep for Royal Lepage Real Estate Services Ltd. “The seller doesn’t want to put their house on hold. They want a firm offer on the night they are accepting offers. Having a home inspection available removes that condition.”
Sometimes a seller does not do a home inspection and in preparation for the competition around multiple offers, clients have the option to shell out $500 to $600 for a home inspection in advance of the seller entertaining offers. It’s a gamble, but it’s one more and more clients are willing to take especially in a red-hot real estate market.
For Ottawa’s Jan Ayres, a broker with Royal Lepage Team Realty, the pre-inspections are also a great tool for a seller who suspects their property may be subject to multiple offers because it lends more strength to the offer if the buyer can remove that condition.
“At the end of the day, you’re protecting your clients and their best interests and you’re providing a better service helping the seller sell and helping the buyer buy,” says Ayres. “I’d say $500 is money well spent for peace of mind.”
In Vancouver, a seller getting home inspections is much less common, according to Jay McInnes of Macdonald Realty in Vancouver.“I’ve only seen it twice in five years,” says McInnes, who sells strictly condos. “I wish it was that way because it would be a lot easier. Buyers and sellers would get peace of mind and it would clear up a lot of things for the pre-purchase process.”
Still, McInnes always recommends buyers obtain a home inspection, and most of his clients do, more as a tool to learn about the property they’re investing in rather than as leverage to negotiate a lower price. He typically gives clients three referrals and prefers dealing with the large inspection firms as opposed to boutique companies.
Vancouver’s Luigi Frascati has had a similar experience. The agent for Sutton Centre Realty in Burnaby believes pre-inspections are useful only to the extent that the seller is willing to either carry the cost of repairs, or actually make the repairs or absorb the cost through a purchase price reduction. “If not, they are useless,” says Frascati. “It’s interesting to note how sellers are more willing to spend the bucks on, say, an appraisal (to justify the price) or staging than they are on a pre-inspection. I have recommended pre-inspections a few times in the course of my practice, but for now I still have yet to come across a seller who is willing to take on my recommendation.”
As for the typical gripes against inspectors, Frascati has a few. His centre on the rising cost of home inspections (a cost he says has doubled in Vancouver in the past 10 years) and the difficulty agents have in suing inspectors for negligence.“My beef is that I am afraid all this instills a false sense of security when it comes to the scope of inspections and the diligence of inspectors by somehow making inspectors feel – I hate to use the term – above the law since their trade seems to be protected by their association, much to the detriment of consumers.”
Have your experiences with home inspectors been generally good, bad or so-so? Do you think the industry needs to adhere to a higher level of accountability? Do you recommend home inspections for your sellers? Share your stories with us.