Can a home inspection affect the sales price of that home you are about to sell? The short answer is yes, it can. But you don’t have to let it.
You can achieve this when you understand what the home inspection is, why buyers want a house to be inspected, what home inspectors look for in the property, and the advantage a home inspection gives to the buyer during the home buying process.
If you are reading this, chances are that you are a homeowner on the verge of selling your home and you are concerned about how much control you have over the eventual sale price of the property. Like every seller, you want to do everything to avoid events that could force you to sell the home below your desired price. And the one event that has the power to do that is the home inspection.
Regardless of whether a seller conducts a prelisting home inspection or not, most homeowners already have a fair idea of the problems that exist with their home. By being honest with buyers and letting them know about the existing problems before the home inspection, sellers help themselves in two ways. Firstly, they build trust with the buyer, and secondly, they give buyers the chance to factor in the cost of fixing the problem when making their offer. This ensures that the buyer has a fair idea of the condition of the home and the home inspection becomes a mere formality.
In conclusion, the main thing buyers want to know when they conduct a home inspection is if the seller's information about their home is complete. The more you know about your home, the less power the home inspection has to lower its sales price. If you want to relieve yourself of the stress of worrying about the home inspection, take control of the situation by knowing more about your property.
What is the home inspection and why do buyers have them?
The home inspection is that part of the home buying process where the structures and systems of a home are meticulously examined by a professional home inspector for any flaws that the seller may have failed to disclose or is unaware of. It involves a thorough examination of all parts of the interior and exterior of the home.
The two reasons that buyers want the home inspection done are trust and maximizing value. As with all financial transactions, there is mutual distrust between homebuyers and sellers. As OmniKey Realty explains, buyers are never sure when sellers are disclosing the full information about the details of a home. Therefore, the buyer seeks the opinion of a neutral third party about the actual condition of the home in order to determine its true value.
Based on the outcome of the inspection - the home inspection report - the buyer can come to the following conclusions about the home:
What can sellers do about this?
Selling anything to people is hard. But when the thing you are trying to sell is a house, the level
of difficulty goes into the stratosphere. Prospective homebuyer's have to cross major hurdles to
reach the point where they are finally ready to buy a home. After going through all that stress,
the last thing they want is to buy a home they will be unhappy with in the future. That is why
most homebuyer's are typically slow to make buying decisions.
The majority of them want to be sure of every aspect of a home before they commit to buying it.
And even when they have agreed with the seller on price, they are still not convinced. That's why
buyers conduct a home inspection before paying for a home. The inspection helps to assure the
buyer that they are making the right decision in buying that particular home, explains McCaw
Management in Dallas/Fort Worth. But while home inspections help buyers, they can be a
problem for sellers.
Because home inspections happen after a seller has agreed on the sales price with the buyer, but
before the buyer pays for the home, they can be gut wrenching. The inspection can undo all that
the seller has done to get to that point. That is why sellers typically view this part of the sales
process with fear. However, there is a way for homeowners to minimize the uncertainty of the
home inspection; they can have a pre-listing home inspection.
What is a pre-listing home inspection?
A pre-listing home inspection is the same as a home inspection. Its difference is in its timing and
in who pays for it. Unlike the home inspection, which happens after a buyer has agreed to buy
the home; the pre-listing home inspection takes place before the seller puts their home on sale.
Secondly, it is paid for by the seller, not the buyer. Why would a seller add the extra cost of a
pre-listing home inspection to the expense of selling their home?
There are good reasons for doing this. Below we explain the good and the bad things about
conducting a home inspection before you list your home.
Pros of a pre-listing home inspection
1. Minimize stress
As already explained, having a pre-listing home inspection can help homeowners be more
confident when selling their home. Knowing that a buyer's home inspection will not reveal
anything that can upset the sale can be very reassuring.
2. Price the home accurately
Knowing the actual condition of their home gives sellers a more accurate basis for setting the
sales price. It also offers them an edge during negotiations because their pricing is not arbitrary
but based on provable facts about the home they are selling.
3. A chance to make important repairs
Homeowners will usually take steps to improve their home before they put it on the market.
Most sellers focus on aesthetic improvements. But conducting a pre-listing home inspection can
provide vital information that helps owners make more functional repairs to the home.
4. Reduce the likelihood of re-negotiations
After the home inspection, if they don't walk away, many buyers use the inspection report as a
basis for renegotiating the sales price. And if they try to negotiate the price downwards, they may
press the seller to do repairs before they pay for the home. A pre-listing inspection reduces the
chances of this happening.
5. Give buyers more confidence
During business transactions, there is mutual suspicion on the part of the buyer and seller. But
when the seller can hand the buyer a copy of a home inspection report from a neutral third party,
it reduces the buyer's suspicion that the seller may be hiding something.
6. Makes the estate agent's job easier
Selling is easier when sellers know the true condition and actual value of what they are trying to
sell. The home inspection can help the seller's real estate agent do a better job of convincing
buyers. The agent can speak with greater confidence.
If you are a home buyer considering purchasing a residence, you may be asking yourself – is hiring a home inspection company really necessary in this day and age. Times are changing, the whole real estate purchase process is evolving, and with the ease of online sites like Zillow, Redfin, Opendoor, and others, searching for a home for sale has never been easier.
I can do so much research myself and know so much about a home before I even step foot into the place. So is a home inspection needed?
There are 3 reasons home inspection companies remain a critical part of a real estate transaction in 2020 and beyond. Times are changing, no doubt about it.
Every facet of the home purchase process is being optimized as technology advancements push the real estate industry as a whole toward solutions that benefit a more knowledgeable home buyer.
So let’s explore the top trends we have noticed in our dealings with home buyers, that have highlighted the importance of a home inspection.
1. Increase in For-Sale-By-Owner and Low-Fee-Listing PropertiesTraditionally, a homeowner would find a local real estate agent to help them list their home for sale. The agent would do research on comparable sales in the neighborhood and area, help the seller establish a listing price, arrange photographers to help present the property in the listing, and then coach the seller on the best ways to prepare the home for showings.
With the advancements in online listing platforms, sellers are finding that getting their homes listed for sale is a quicker and easier process than ever. Many sellers are taking the leap to list the home themselves without the help of a real estate agent.
According to the National Association of Realtors statistics, FSBOs accounted for over 7% of home sales in 2017, with this percent expected to grow to over 10-12% in 2019.
Other sellers may be seeking help from low-fee listing service companies that can get the home listed for a flat-fee or lower commission rate.
While there are upsides to these advancements, the downside is the potential loss of a real estate professional helping guide the seller through the process of preparing their home, properly completing disclosures, and knowing what repairs may be needed to help the home sell.
The results of these changes can be a home that isn’t as prepared for sale as it could be.
The role of the home inspector in representing the buyer grows in importance in cases like this, more so than usual. When a seller does not take advantage of the experience of a local real estate agent in preparing their home for sale, they may not address concerns prior to listing their home for sale.
And of course sellers loves their homes, so they may not clearly understand the need to repair or replace certain items prior to listing.
The critical eye of a good home inspector can help discover deferred maintenance items, immediate repair concerns, and items to monitor over time.
2. The rise in iBuyer Owned ListingsThe latest trend in today’s real estate market is the rise of the iBuyer option for home sellers. This is where large real estate companies like Zillow, Redfin, Opendoor, or smaller local real estate companies will purchase your home directly instead of selling it.
The pain points in selling a home can all be eliminated when a seller chooses to work with an iBuyer to purchase their home.
Nobody really enjoys selling a home. Cleaning your homes, putting up with multiple showings, fixing nagging issues you have ignored, the stress of negotiating with a buyer, etc. – nobody looks forward to these items.
Along comes the iBuyer, willing to make a cash offer to purchase your home and take away all this headache. Certain home sellers find this option attractive and take advantage of it. The iBuyer company now owns the home and needs to clean and prepare the home for sale.
In reality, iBuyer’s are basically the new version of home-flippers. Their goal is to turn around the property and sell it for as much profit as they can with the least amount of investment possible.
That isn’t to say that there isn’t real value in what these companies are providing for sellers and the market. But they may be willing to leave in place concerns present in a home, in hopes of selling without the need to repair or replace defects or maintenance concerns.
Enter the home inspection company, representing a home buyer’s best interests. Home inspectors have no financial role in a home purchase, allowing them to be completely independent and unbiased in reporting on concerns observed.
If you have any doubts as a home buyer looking at a home that has been through the iBuyer process, having a professional home inspector on your team to give you a fair and unbiased review of the home, can give you peace of mind and a solid understanding of the condition of the home.
3. Technology Advancements Available to Home Inspection CompaniesWhile the overall real estate market has experienced advancements, the home inspection industry has itself experienced improvements that benefit inspectors, and ultimately the buyer. Leading the way is the availability of tools and processes that were not something inspectors had years ago. Providing enhanced service offerings to buyers and their real estate agents helps to understand the complete condition of the home being purchased.
Infra-red scan tools have improved in features and dropped in pricing, allowing a home inspector to carry an IR camera in their tool bag. IR scanning can reveal moisture concerns, electrical issues, insulation concerns, and leaks that may not be readily visible to the naked eye.
Mold testing services that were once only available to industrial-hygienists and special labs, are now services home inspectors can offer, with fast turnaround on results, even next day in many cases.
Many home inspectors are adding sewer scope inspection services to their offerings, which allow inspection of the inside of the main sewer line leaving the home, to verify the condition of this buried line.
Others are adding Water-Quality-Testing, Pest-Inspections, Asbestos-Testing and other services that are above and beyond the basic home inspection standard of practice.
Finally, the quality of the report produced by a home inspector has significantly improved as technology advances have found their way to this niche industry. See one of our sample reports here.
Reports accessible via a website link are becoming standard, with high-resolution pictures of areas of concern, detailed write up of concerns with informational links, and the ability to share report concerns with agents and sellers to clearly communicate issues noted during the inspection.
The Times They Are a-ChangingThe only constant in life is change. The real estate industry is in the midst of broad changes that will impact how buyers and sellers interact in the sale process of a home. Overall the changes are positive and helpful, but not without growing pains.
As with many changing industries, certain roles or processes get eliminated or minimized as technology advances. In the case of a real estate purchase transaction, many of the changes we are seeing only highlight the importance of a home inspection in the real estate purchase.
Getting solid information on the condition of a home is critical in the decision-making and due-diligence process.
By all means, use the new tools available when searching for a home. But don’t overlook the importance of hiring an independent, qualified home inspector to help you understand the home’s condition.
What’s the Difference between a Home Inspection and an Appraisal?By WIN Home Inspection Twitter Facebook LinkedIn
When you’re getting ready to buy or sell a home, an appraisal and home inspection are part of the process. Since both assessments require a deeper look at your home to aid in the sales process, many first-time home buyers have difficulty differentiating between the two. However, there are some key differences between them:
What is a Home Appraisal?An appraisal provides valuable information for the buyer and seller, but an appraiser’s primary mission is to protect the lender. Lenders don’t want to own overpriced properties, so appraisers take a look at a home before the lender grants final approval for a buyer’s loan.
Although appraisers will take note if a house shows signs of neglect – from chipped paint to broken windows – this is not their primary focus in determining a home’s value. Instead, they’ll look at a variety of other factors, including:
What is a Home Inspection?An appraisal isn’t a substitute for a professional home inspection. While the appraiser formulates an opinion of a property’s value, the home inspection will educate the buyer about the condition of the home and its major components.
The inspector will key in on the home’s existing and potential future issues, alerting buyers of any red flags or areas that need repair. This will not only help the buyer negotiate a fair purchase price, it will also give them an idea of the home’s safety and potential maintenance needs.
Inspectors take a deeper look at a home’s overall condition and mechanical systems, including the state of the home’s:
By Ron WynnCreators SyndicateReal estate watcher: Seeing ‘boom’ in single-family homesCompass Vice President Mike Aubrey argues even before the coronavirus outbreak, many families were moving out of cities and into the suburbs.
Whether it's a $300,000 condo or a $4,000,000 home, stuff happens. If you're buying a piece of real estate, reserve a 10- to 20-day contingency period to do your due diligence, which includes a thorough physical inspection, termite inspection, sewer line inspection, chimney inspection and mold inspection. Even though the fees you will pay to complete all these inspections can come to $1,000 or more, it is well worth it in the long run!
If the news you receive after an inspection is really bad and you are still within your contingency period, you can abandon your purchase completely and receive your full deposit back.
4 COSTS HOMEBUYERS OVERLOOK MOST OFTEN, ACCORDING TO A MILLIONAIRE BUILDER
If you choose to move forward with your purchase, you can negotiate repairs with the seller, although the seller is not obligated to say OK to all, or even any, of your requests.
VideoIf the deal falls apart, however, the seller is obligated by the laws of disclosure to disclose the content of your inspection to subsequent buyers and forward the inspection reports upon request.
Particularly in today's robust market, you'll usually hear the seller say, "It's an old house, and it's being sold as is." I often hear buyers say, "We're paying top dollar, and we should not have to pay for deferred maintenance and urgent repairs."
If the news you receive after an inspection is really bad and you are still within your contingency period, you can abandon your purchase completely and receive your full deposit back.
The question then becomes "What is a code violation, a health and safety hazard or an urgently needed repair versus a cosmetic need, a typical aging system still in operative condition or a complete upgrade of no urgency?"
VideoFor this you need a trained eye to read and understand your inspection reports. A good realtor will walk you through the process and help identify the most significant issues, prioritizing issues from urgent to not so significant or urgent.
THE BEST TIME TO BUY YOUR SECOND HOME
If you are without the assistance of a trained realtor or adviser, look first at mold, water intrusion and drainage issues, as these are the most difficult to remedy and the most expensive to fix.
Water intrusion can affect foundations, walls and structure, leading to health issues and impacting resale and future property value.
Next, look for dry rot in the roof, roof eaves, windows, subfloor and door jams, all of which would be noted in your termite inspection.
Also, take serious note of your sewer inspection and chimney inspections. Depending on where your sewer ties into the city lines, a sewer replacement could cost $10,000 to $25,000, most often closer to $12,000.
VideoCorrecting poor drainage involves diverting water away from the foundation, which might necessitate French drains and additional rain gutters. These costs totally depend on how many drains are needed and where they would tie into the city disposal. Costs might range from $8,000 to $25,000.
A cracked chimney that is deemed a fire hazard will need to be replaced from the break, usually at costs averaging $10,000, more likely $15,000 in a two-story home.
Hillside properties are another animal completely. They require the opinion and guidance of a qualified geologist, and perhaps even a structural engineer and a civil engineer. This is serious stuff, so do not cut corners by going to someone inexperienced.
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Also, be savvy about an overloaded, antiquated, old-style electrical system; the modern lifestyle puts a lot more pressure on the electrical system than a toaster oven and a few floor lamps.
The roof is an expensive item to be conscious of, and earthquake retrofitting is something to look at, too, if it has not been handled previously. After that, most items are of less of financial consequence but still worth being considered.
Don't skimp on inspections, qualified advice and repair estimates. Pick your battles based on the significance and urgency of the repairs needed and the costs associated.
Be sure your request for repairs is well written and supported with realistic cost estimates. And finally, be sure you are in the hands of a competent, qualified and caring real estate broker who will guide you through the process.
Ron Wynn has been among the top 100 agents in America for over 10 years, as noted on REAL Trends/Wall Street Journal. Ron has represented over 2,200 sales totaling over $1.5 billion in sales volume in his 30-plus-year career as a real estate broker in California.
SOMERVILLE, N.J., April 1, 2020 /PRNewswire/ -- April is National Home Inspection month, and this year the industry is seeing shifts in ways home inspections are conducted. With the coronavirus threat facing everyone, industries including the home inspection industry are adapting to reduce the spread of the virus while still serving their communities.
"Our number one priority is to help keep our families and our communities safe," says HouseMaster President and CEO Kathleen Kuhn, a 35 year veteran of the industry. "Fortunately, a home inspection does not require face-to-face contact. Prior to the pandemic, we would encourage buyers to participate in the home inspection process to help them better understand the condition of the home. Today, for the most part we are going solo. If the home is not vacant, we ask home sellers to stay secluded in a part of the home away from the inspector. Our inspectors are taking careful to follow all CDC and Health Canada recommendations."
In addition to conducting a home inspection without any attendees, HouseMaster is using technology to assist real estate professionals and their customers in a number of ways, including:
For more information about home inspections, visit housemaster.com.
Headquartered in Somerville, N.J., HouseMaster is the oldest and one of the largest home inspection franchisors in North America. With more than 325 franchised areas throughout the U.S. and Canada, HouseMaster is the most respected name in home inspections. For almost 40 years, HouseMaster has built upon a foundation of solid leadership and innovation with a continued focus on delivering the highest quality service experience to their customers and providing HouseMaster franchisees the tools and support necessary to do so. Each HouseMaster franchise is an independently owned and operated business. HouseMaster is a registered trademark of HM Services, LLC.
Home inspections can save homebuyers big; here’s just how muchAly J. Yale The Mortgage Reports Contributor
Saving by inspectingHome inspections can offer serious value. In fact, according to a new analysis, they save buyers an average of $14,000 per home purchase.
Verify your new rate (May 12th, 2020)Serious savingsThough most buyers pay between $200 and $500 for their home inspection, a new analysis from Porch.com shows the fee more than pays for itself in the long run. In fact, a home inspection saves the average buyer around $14,000 on their home purchase.
According to the report, the average list price before an inspection is $226,600. Post-inspection, the average closing price is just $212,400.
As the report explains, “Home inspections can be extremely prudent investments, saving homebuyers from unforeseen fiscal challenges. Citing necessary repairs, agents can knock thousands off the price their clients might otherwise have paid.”
About 36 percent of buyers said their inspector even provide estimated repair costs for each issue found.
Home inspection checklist: What to expect on inspection day
Insights into inspectionsFortunately, it seems most buyers have recognized the power of inspections. Eight in 10 recent homebuyers used an inspector in their purchase, paying about $377 on average.
The majority of these buyers used the inspector recommended by their real estate agent. Others used recommendations from friends or family members, or the seller made the inspection decision. Most chose the first inspector they considered.
Buying a house? Know these common home inspection findings — and what they cost to fix
In 86 percent of cases, the inspector found an item that needed repairs. Nearly 20 percent of inspections revealed a roof issue and 18 percent showed an electrical problem. Issues were also often cited with windows, gutters, plumbing and fencing.
Problems with heaters and roofs helped negotiations the most. When inspectors noted an issue with the heating system, buyers were able to negotiate the price $1,250 lower on average. With roof issues, it was $1,000 lower.
March 23, 2020 3 School Street, White Plains, New York 10606 USA Vol. 36 Issue 12
Consumer Alert - State Board For Engineering Adopts Opinion Of State Engineering Law
"It is the opinion of the Board that the inspection and examination of single and multiple family residential, commercial, industrial or institutional buildings, regarding their structural, electrical and mechanical subsystems for proper integrity or capacity, constitutes the practice of engineering as defined in the "law." Any attempt to determine the structural integrity or capacity of a building, or any subsystem thereof, other than detection of problems by visual inspection or normal operation of the user controls, constitutes the practice of engineering. This would include the diagnosis and analysis of problems with buildings and/or the design of remedial actions. Therefore, an individual who advertises or practices in this area shall be registered as a Professional Engineer in the State of New York."
Home buyers and other persons retaining the services of a home inspector should carefully review the opinion to understand the difference between the services of a Licensed Professional Engineer (P.E.) who provides home inspection services and those persons who provide home inspection services and are not licensed to practice engineering.
A recently passed bill replaced Nebraska’s 1937 law regulating professional engineering. As part of the new law, there is clarification regarding who may use the title of “engineer”; the new law requires an accredited degree to practice engineering and a date has been set after which noncompliance may invoke a fine of up to $10,000.
In order to help improve the regulation of the home inspection industry, the State of Pennsylvania has established the Pennsylvania Home Inspectors Board to regulate home inspectors. The Governor signed a new bill giving licensed engineers and architects the authority to perform home inspections. The Association of Realtors said that both realtors and home buyers have had difficulties dealing with home inspectors who did not have the appropriate background and qualifications to determine the condition of a property. The previous law required home inspectors to be members in good standing of a home inspectors trade organization. Apparently, the former requirement was not satisfactory and the new law grants licensed engineers and architects the authority to perform home inspections. The realtors association expects that the new board will improve the professionalism in the home inspection business and will also improve the services provided to home buying consumers
Florida residents can expect prompter investigations for complaints regarding the improper practice of engineering and more active enforcement of the State licensure law. This is a major victory for Florida residents as well as for the Florida Engineering Society which was instrumental in getting this legislation enacted.
Georgia Governor Sonny Perdue has rejected and vetoed a Home Inspector Licensure Bill (H.B. 1217) which would have established a State licensing board and set guidelines for the content of home inspection reports. Georgia home buyers who choose a licensed Professional Engineer to conduct their pre-purchase home inspection in lieu of a non-engineer home inspector are still protected by statutes governing the practice of engineering.
It is the policy of the National Society of Professional Engineers (NSPE) that those aspects of building inspections that require the application of engineering principles constitute the practice of engineering and should only be performed by licensed professional engineers. Such aspects include, but are not limited to, the evaluation of commercial, industrial, and institutional buildings and residential dwellings, regarding the structural, electrical, plumbing, or mechanical systems.
Further, it is the position of the National Society of Professional Engineers to encourage legislative or administrative regulations that require real estate professionals to provide a home inspector qualification disclosure notice to prospective purchasers of residential real property. This notice shall explain the scope of practice and authority of persons licensed as professional engineers versus persons not licensed as professional engineers offering to provide home inspections.
This policy is not intended to prevent or affect:
1. The practice of architecture;
2. The normal or routine inspection of buildings by designated municipal building inspectors or other authorized governmental officials for code compliance; or
3. The identification and reporting of evidence of apparent system failure, defects, or improper performance through observation or normal operation of user controls, provided that, as needed, engineering evaluations are referred to an appropriate licensed professional engineer.
To give your home a competitive edge when it’s time to sell, make sure it is in good physical condition. This not only makes your home more attractive and desirable, it also simplifies the negotiation process when the time comes for the buyer’s pre-purchase inspection.
According to home inspection experts, approximately half the resale homes in the market today have at least one significant defect. Routine maintenance is the best way to prevent major, costly problems from developing in the first place. If you have been putting off those repairs, now is the time to make them.
A Home Seller’s Check ListOver the years, ASHI has identified a list of common problems that typically appear on buyer’s home inspection reports. Early correction of these problems can increase a home’s appeal and its selling price. It also sets the stage for a favorable home inspection report for the buyer, and thereby helps to expedite the sale.
The following 6-point checklist can help you achieve these marketing goals.
1. CHECK THE MAJOR SYSTEMSAfter size, style, and location, a home buyer’s primary concern is the condition of the home’s basic structure and major mechanical systems. Most buyers do not want to invest a great deal of money correcting problems in such critical areas.
A pre-listing home inspection of the visible and accessible home components can reveal most of these problems, and include recommended repairs, if needed, on the following major items: