What Is An Exclusive Listing?
This week, we’re talking about home inspections and how it impacts the buying and selling process. There are many ways to go about inspections – both for different reasons and by different people in the process. It might surprise you.
It may seem pretty obvious that a home buyer would want an inspection report for a property they are interested in purchasing. Most likely, they do not know the home intimately. As a buyer, you’ll have only walked through the property once or twice. You like what you see, however, you’re also not likely an expert on what to look for in the mechanics of a home. You may also have ‘fallen in love’ with the place. Therefore, you may be viewing it only with an emotional reaction or ‘rose coloured glasses’. The purpose of having home inspections done is to give the place a once over by an inspector. They have the training, certification and experience with no emotional attachment. And, they’ll go through a checklist of areas and items to investigate. This is to advise the buyer of any defects or potential upcoming replacements (i.e. roof, furnace) in advance of the sale being completed or ‘going firm’. If the home requires thousands (or more) of dollars in work over the short-term, any buyer would want to know in advance. And sometimes, those details are not obvious. This would be the most common type of inspection situation and the reason for it. It can be done by a buyer before offering or as a condition within an offer.
As a buyer, home inspections can make or break your offer based on what you are purchasing and when you choose to do an inspection. Because, in a heated market, many properties ‘hold back’ offers and elicit bidding wars. This means, submitting an offer that is conditional on the inspection may cause you to be out of the running as the winning bid – sometimes even regardless of the price you offer.
Why? First, there could be other multiple competitive offers without conditions. Second, the seller may have elected to hold back offers, so they can sell firm on offer day. They do not want to give buyers any additional time to inspect the place where they could change their minds and walk away from the deal. In order to have a winning bid, it is typical for a buyer to have already done their inspection. It’s best to not have the inspection condition in your submission paperwork on offer night. In fact, you should consider not having any other conditions for that matter! Getting your ducks in a row before offering is imperative, but that’s another article for another day! This means that buyers may sometimes have to pay for a few inspections on properties they do not end up being the successful buyer of. Home inspections can range from a few hundred dollars close to and over a thousand for one with many extras. It’s one of the expenses of being a serious, competitive buyer and it’s important for those buyers to be aware of it.
As the seller of a property, you may elect to have a home inspection done shortly before listing your property for sale. We call this a pre-list inspection. There are three main reasons a seller may choose to do this.
First, although a seller knows a lot about their home, a pre-list home inspection reduces the number of red flags in an inspection report. An inspector will help to point out small faults that can easily be remedied before going to market. For example, missing handrails or switch covers over an electrical outlet, or a leaky faucet. All of these things can be quickly and inexpensively fixed. And from here, they can be removed from the inspection report before the listing goes live on MLS where the report and property are available publicly.
Second, a home inspection will tell buyers about the details of your property. Beyond the aging components and possible defects, it’ll tell buyers that as the seller, you are willing to ‘show your hand’ as it is. It’ll reveal all that’s known about the home at this particular point in time. An honest seller wants buyers to know what they are walking into so there are no surprises later. A surprised buyer may suspect foul play and return to surprise the seller with legal action. Any known issues, either patent (obvious) or latent (existing but perhaps not yet visible) can be listed. This ensures the buyer has the opportunity to know all before buying.
Finally, the third reason is for the convenience of the seller. For popular listings, that can mean many inspection appointments. In particular, you’re looking at bookings before the offer, at an average of three hours per inspection. If there are five separate bookings in one week of showings, that’s approximately 15 hours put into separate inspections. Additionally, if you need to live in your home during the listing and showing period, that’s also time you’ll need to spend trying to find somewhere else to be. You’ll need to give the potential buyer and inspector privacy and time to look at the property. And, the process is also intrusive to any other buyers who have a showing at the same time, for them to get a true sense of the place.
All of this to say, if you decide to have a pre-list inspection report and make it available to would-be buyers, that may satisfy some and dissuade them from completing an inspection of their own. And, you save those buyers a few hundred dollars each! If you are a seller who wants to use this strategy, you should be certain to use a reputable inspection company. This will further reassure the buyers of the report integrity. However, in any case, buyers may still wish to pursue their own home inspection. As a seller, having a pre-list inspection does not necessarily mean no inspections by other parties. But, it may cut back on the total number of other inspections to make things a little easier for you. If you are buying or selling with a reputable real estate agent who has the right experience, they should have recommendations for inspectors they trust.
Just as there are agents who specialize in certain areas or types of properties, there are different inspectors who specialize in certain types of properties. We have different people we like for varying applications, and refer our clients to the right person for the job. What immediately comes to mind is one company that is best for pre-list home inspections, and another independent inspector who is best for buyers inspecting before an offer date. Also, rural properties have characteristics that require a different inspector than one would use downtown.
One other suggestion is having home inspections done regardless of a transaction. When I bought my home, I bought it in an ‘as-is’ condition. I knew full well that it required a lot of work in upgrades. However, I had a trusted inspector report on what he saw and what he felt the home needed. I had already moved in: it was a done deal. But, having him give his opinions and a report on the house provided me with a ‘bill of health’ for the property. It also told me when I’d expect to replace or upgrade certain parts of the property. Sometimes, when my buyers purchase without an inspection (by choice or circumstance), I suggest this to them for peace of mind. In addition, they can keep on eye on things the inspector tells them they should be monitoring over time.
The inspectors do the best they can to find out as much as they can in the short window of time they are allowed to review a property. Unfortunately, as their contracts say, they can only comment on what they can see and have access to. So, there are limitations in some ways. Keep in mind, it’s not a complete guarantee that if anything is wrong with the house an inspector will find it. However, it’s our best opportunity to learn as much as we can before moving ahead with a purchase or sale. It may not always be perfect. But, if time allows and you’d like to get a professional opinion, it’s a wise decision to pursue home inspections.
Fox Marin has a list of specialized inspectors we trust and rely on. We’re happy to refer you, for any of your real estate transactions. Buying or selling, give us a call at any time. Let’s talk about what you have in mind and how we can bring in the best person for the job.
This article is written by Fox Marin Sales Representative, Ian Busher. With an extensive background in carpentry and contracting, Ian is our resident “Renovations Expert”! He takes pride in his ability to assess the quality and condition of a house. This, in tandem with his talent for speaking to the feasibility and cost of potential renovations, and his eye for the aesthetic details of a property, makes him a powerful partner for anyone looking to buy a home in the Toronto real estate market.
[image source: Unsplash]