Pre-Listing Inspections

[thirst]

I have a question for those of you that are out there that have been in the business longer. I have some agents in my area that are really wanting to push pre-listing inspections. My question is do you guys do an abreviated inspection for prelistings or do you do a full inspection. I understand both sides of this but it seems to me that as a seller I would want a full inspection to reveal anything that may be wrong prior to me listing the home. I would not want the buyer to be able to come back on me as the seller and using this as leverage. The agents around my area prefer just an abreviated inspection which I am happy to provide. Just wondering what you guys out there are doing for your pre-listings. Thanks for the input.

[dchew]

Do the inspection and report the same as you would a pre-purchase inspection. Report the facts accurately and make sure that the report is clearly written. Be sure to check the report content and phrasing to make sure that the text flows correctly.

A pre-listing inspections benefits both the seller and the buyer if the inspection is done the way it's suppose to be.

[Brian E. Kelly]

Full inspection.

[David P. Valley]

I do Pre-Listing Inspections just as I would do for a Buyer's Inspection. They are both thorough and to the point and the report does not change a bit.

[thirst]

Forgot to ask the ever important question. Do you discount the price of the pre-listing inspection? My realtor has asked me to discount but like I said also just wants an abreviated report. By abreviated I mean roof, hvac, interior being rooms, bathrooms, and kitchen/laundry, exterior but not grounds, plumbing but not under the house, electrical, foundation but not under the house. Before you knock me on this I would prefer to do a full inspection and not these. I have only done one this way and am reconsidering doing any more.

[David P. Valley]

Originally Posted by thirst

Forgot to ask the ever important question. Do you discount the price of the pre-listing inspection? My realtor has asked me to discount but like I said also just wants an abreviated report. By abreviated I mean roof, hvac, interior being rooms, bathrooms, and kitchen/laundry, exterior but not grounds, plumbing but not under the house, electrical, foundation but not under the house. Before you knock me on this I would prefer to do a full inspection and not these. I have only done one this way and am reconsidering doing any more.

My pricing remains the same. Nothing changes.

[nwagner]

Originally Posted by thirst

My realtor has asked me to discount but like I said also just wants an abreviated report.

A classic case of the used house salesman trying to eliminate the "risky" thorough inspection that she has little or no control over, at a reduce price, with you assuming the liability risks. From what I have heard from other Pre-Listing experiences, you will stop getting these anyways when the realtor objects to the findings. I wouldn't fall into this trap- RUN!

[Russel Ray]

Originally Posted by thirst

I have a question for those of you that are out there that have been in the business longer. I have some agents in my area that are really wanting to push pre-listing inspections. My question is do you guys do an abreviated inspection for prelistings or do you do a full inspection. I understand both sides of this but it seems to me that as a seller I would want a full inspection to reveal anything that may be wrong prior to me listing the home. I would not want the buyer to be able to come back on me as the seller and using this as leverage. The agents around my area prefer just an abreviated inspection which I am happy to provide. Just wondering what you guys out there are doing for your pre-listings. Thanks for the input.

Well, I was going to say that I do an abbreviated inspection, but then, after reading all your post, I think you'll have to define your version of "abbreviated inspection." Here's mine:

My LIST inspection is not a NACHI SOP inspection because I don't describe anything unless the description in and of itself indicates a signficant problem. In other words, describing the water supply pipes as "lead water pipes" indicates a signficant problem. Describing the roof as a "wood shingle roof" indicates a significant problem (due to our high fire hazard county). I find no need to include fluff such as the following in a LIST inspection:

The house was a wood-frame structure with stucco siding, a modifed gable roof covered with concrete tile on a raised foundation with multi-pane windows. There was a concrete walkway at the street curb, a concrete driveway, and a brick walkway leading from the driveway to the front entrance.

No one cares.

I also don't include minor stuff such as the following:

Door hinge loose in bathroom one
Small hole in screen window in bedroom two
Window in bedroom one and bedroom three does not close fully due to cable wire running through window from bedroom one to bedroom three.
Drawer stops not present on drawers in kitchen
Doorknob hole in wall in bedroom two
Etc.

All of that stuff does get put into my STANDARD, PREMIUM, and TECH inspection reports, but it's just not necessary for a LIST inspection. They are selling the house and just don't care about that stuff. They want to know:
Is the roof okay?
Is the electrical okay?
Is the heating and cooling okay?
Is the water heater okay?
Is the plumbing okay?
Is the structure okay?
Is the fireplace and chimney okay?

There ya go.

By the way, that is the same type of stuff that property investors want to know. If you're not making a six-figure annual salary, even in a slow market, then you're not doing enough marketing, you don't have a Referral Rewards Program in place, you haven't diversified your business by offering choices, you haven't read The Power of P, you're not working with property investors (who love "slow markets," also known as buyers' markets), etc. If anyone needs the name of property investor groups in your neighborhood, email me at russel.ray@nachi.org. I've been involved in 818 property renovations in 7 states in 33 years and have a lot of resources. Plus, it looks like I might be getting back into the property renovation business with some investor Clients of mine for whom I've been doing WALK inspections.

As my wise ol' grandmother said, "In good times and bad, take 10% of your gross income and spend it on marketing." It works.

[Russel Ray]

Originally Posted by thirst

Forgot to ask the ever important question. Do you discount the price of the pre-listing inspection?

I don't discount it per sé. I simply offer inspection choices and let my Clients choose which inspection fits their needs. If they don't know, then I go into education mode, asking them questions about what they are trying to accomplish with an inspection and then recommend the appropriate inspection for them. For example, on a 1,500-SF house, the following would be my prices and my most common recommendation:

LIST - $299 (not for buyers under any circumstances)
BASIC - $399 (for price shoppers)
STANDARD - $499 (for everyone, but particularly brand new, never-been-lived-in)
PREMIUM - $899 (for the overly rich, such as sports stars)
TECH - $1,699 (for those coming here from states that have licensing)

Originally Posted by thirst

My realtor has asked me to discount but like I said also just wants an abreviated report. By abreviated I mean roof, hvac, interior being rooms, bathrooms, and kitchen/laundry, exterior but not grounds, plumbing but not under the house, electrical, foundation but not under the house.

Sounds like your Realtor used to work with me and has now moved into your area.

Originally Posted by thirst

Before you knock me on this I would prefer to do a full inspection and not these.

I would never knock you for offering your Clients choices.

Originally Posted by thirst

I have only done one this way and am reconsidering doing any more.

How come?

The very nature of your post seems to indicate that you do not have an inspection protocol in place for such "abbreviated" inspections. Without such protocols in place, one can run into problems. Create those protocols, as I have done with mine, and you'll have no problem. You'll probably also find that both your Clients and their Realtors really find you a joy to work with because you understand that different Clients have different needs for different circumstances. And those differences many times mean choices in type of inspection and in pricing.

Interestingly, before I started offering choices, my average inspection fee was $249 (rounded to the nearest dollar). That was when I only had one inspection type. When I started offering choices, my average inspection fee started climbing. And when I got to fourteen different types of inspections and finished my "home inspection" business on June 30, 2007, my average inspection fee was at $394 (rounded to the nearest dollar). As a "property consultant" since July 1, 2007, my average inspection fee continues to climb. It's currently at $405 (rounded to the nearest dollar).

If you can create inspection protocols for different types of inspections, the very nature of advertising the highest priced with the lowest priced provides perceived value to all of them. The very fact that I can, and do, charge $1,699 for a home inspection certainly indicates a lot of value from my company. And since people naturally want to buy the best value at the lowest price, they'll stick with my company when shopping, finding that all the choices they need are right here. No need to go anywhere else. One-stop shopping (kind of one-stop shopping with Realtors when they create an advertising list of preferred vendors).

[Russel Ray]

Originally Posted by nwagner

A classic case of the used house salesman trying to eliminate the "risky" thorough inspection that she has little or no control over, at a reduce price, with you assuming the liability risks. From what I have heard from other Pre-Listing experiences, you will stop getting these anyways when the realtor objects to the findings. I wouldn't fall into this trap- RUN!

Or perhaps the Realtor understands that all of those b.s. descriptions just aren't necessary for a LIST inspection. The seller, I'm sure, already knows that, for the past 37 years, they have lived in a wood-frame structure with stucco siding, a modifed gable roof covered with concrete tile on a raised foundation with multi-pane windows, with a concrete walkway at the street curb, a concrete driveway, and a brick walkway leading from the driveway to the front entrance. Etc. Why should they pay for you to put that in writing? Note the major defects, HELP, follow up regularly until the home closes escrow, make money, and move on.

Since I have never, ever been an "unbiased third party," as so many inspectors claim they are, I have no problem working with sellers and sellers' Realtors when they get the buyer's inspection report because they will be different. The sellers will want to know why I didn't note something and the buyer did. However, if you create your inspection protocols to find all the major defects, and you define what a "major defect" is, in your opinion (might not work for states that have licensing and specific reporting standards, like Texas, but remember that all states leave wiggle room since they allow two people to agree on the scope of the "inspection"), then you won't have any problems. However, as I explain to my LIST Clients, "Understand that real estate changes on a daily basis. Also understand that, quite often, the guy who comes to work on the furnace damages the water heater sitting two inches a way, so when the buyer's agent notes to the damage to the water heater, and I didn't, call me so we can compare notes." Never had a problem, and my willingness to work with sellers in this fashion since I implemented choices has led to a significant increase in LIST inspections.

And we wonder why the public (i.e., sellers and sellers' Realtors) don't want pre-listing inspections! Well, I don't. I know why, and I solved that problem. One inspection type does not fit all! The sooner we as an industry realize that, the better our industry will be because we'll be doing even more inspections. And that, I believe, means more money!

[Frank Newman]

For those who do such inspections, do you ever see the Realtors wanting to use the pre-listing inspection on both sides of the deal? I think that could be a possiblity in areas where inspections are not legally or universally required.

[David P. Valley]

Originally Posted by Frank Newman

For those who do such inspections, do you ever see the Realtors wanting to use the pre-listing inspection on both sides of the deal? I think that could be a possiblity in areas where inspections are not legally or universally required.

I'd like to see PRE-LISTING INSPECTIONS as a STANDARD for all homes that are placed on the market.

[Russel Ray]

Originally Posted by Frank Newman

For those who do such inspections, do you ever see the Realtors wanting to use the pre-listing inspection on both sides of the deal? I think that could be a possiblity in areas where inspections are not legally or universally required.

Because of the Leko Decision of January 2001, virtually all information about real estate is available through transfer disclosures. Home owners are becoming quite savvy in saving old inspection reports of any nature and receipts for work done, as well as requesting copies of permits from contractors. Contractors once were notorious for not getting permits, but charging for them anyway, and then pocketing the money, only to have the homeowner find out several years later that the work done was not permitted, opening up a huge can of worms with lots of expenses since many times those contractors not filing permits usually are fly-by-night entities.

In my inspection reports, I have the following prominently displayed:

I cannot control the interpretation and use of my reports by third parties, and I shall not assume any legal responsibility or liability for third party interpretations of any part of this report beyond the date of the inspection. Since real estate conditions change on a daily basis in response to occupants’ use, deferred upkeep, and environmental conditions, third parties may read this report but shall not rely upon its contents for any purpose. Future buyers who enter into a purchase contract for this property should call me for a personal on-site review and update of the conditions described in this report. A discounted fee for the update is available as long as the update request is scheduled for a date within 60 days of the date of this report. Failure to comply with this request shall relieve and hold harmless individually, jointly, and/or otherwise, Russel Ray and his employees or agents, and their successors and assigns, of any responsibility or liability, moral or legal, to the eventual buyers in contract for any property condition, any lack of understanding, and/or any possible misinterpretation of disclosed conditions contained within this report.

Especially with my LIST inspections, I do get a lot of business resulting from that paragraph.

[nwagner]

Originally Posted by rray

Or perhaps the Realtor understands that all of those b.s. descriptions just aren't necessary for a LIST inspection. The seller, I'm sure, already knows that, for the past 37 years, they have lived in a wood-frame structure with stucco siding, a modifed gable roof covered with concrete tile on a raised foundation with multi-pane windows, with a concrete walkway at the street curb, a concrete driveway, and a brick walkway leading from the driveway to the front entrance. Etc. Why should they pay for you to put that in writing? Note the major defects, HELP, follow up regularly until the home closes escrow, make money, and move on.

Of course they know those basics, I find the problems is that they think they know stuff like a tar flashed skylight should not be reported because it has yet to leak.

With all that realtors seem to "know" about homes, why would they bother contracting our services before listing in the first place? If I were an agent, I would find it rediculous to waste hundreds of dollars if I "knew" what was wrong, only to have some "nitpicker" force me to disclose items of concern that I "disagree" with and for it to not make the property the least bit more marketable. I do not see a carbon copy of a checklist nor one of those disclaimer-heavy eye candy electronic reports drumming up leads, let alone compel someone to buy a home they otherwise would not.

And we wonder why the public (i.e., sellers and sellers' Realtors) don't want pre-listing inspections! Well, I don't. I know why, and I solved that problem. One inspection type does not fit all! The sooner we as an industry realize that, the better our industry will be because we'll be doing even more inspections. And that, I believe, means more money!

I have to disagree with your philosophy that every road to business success is paved with choices in the form of levels of service. I strongly suspect that the reason why pre-listing home inspections do not sell is because of what I stated previously. A realtor's job is to sell a home. A mere home inspection report likely is not going to do much to sell that home. In fact, it may make it harder to sell that home. If the pre-listing home inspection could compel more people to look into the home (generate more leads) while not turning them away with either overtly harsh evaluations or an apparent lack of criticalness, then they probably would be hit. Until then, I imagine all the choices in the world aren't going to compel agents to fork over a hunk of their advertising budget to us.

[Russel Ray]

Originally Posted by nwagner

Of course they know those basics, I find the problems is that they think they know stuff like a tar flashed skylight should not be reported because it has yet to leak.

And your point is? We're talking about pre-listing inspections, so there's no need to describe the roof as a gabled roof with skylights and composition shingles. There is a need to report a "tar flashed skylight." In fact, I report all skylights because they are leaks waiting to happen.

Originally Posted by nwagner

With all that realtors seem to "know" about homes, why would they bother contracting our services before listing in the first place? If I were an agent, I would find it rediculous to waste hundreds of dollars if I "knew" what was wrong, only to have some "nitpicker" force me to disclose items of concern that I "disagree" with and for it to not make the property the least bit more marketable. I do not see a carbon copy of a checklist nor one of those disclaimer-heavy eye candy electronic reports drumming up leads, let alone compel someone to buy a home they otherwise would not.

I don't think I ever said that Realtors seem to know everything, nor even that sellers knew everything. But in a pre-listing inspection, there simply is no need to describe the home. Let the buyer's inspector do that because I bet he'll come up with the exact same description: "Wood-framed two-story home on a raised foundation with a gabled roof, one chimney, and composition roofing."

Originally Posted by nwagner

I have to disagree with your philosophy that every road to business success is paved with choices in the form of levels of service.

Not every road, just more roads. The more roads there are, the more people can use those roads.

Originally Posted by nwagner

I strongly suspect that the reason why pre-listing home inspections do not sell is because of what I stated previously.

Ah, so, we both have our suspicions.

Originally Posted by nwagner

A realtor's job is to sell a home. A mere home inspection report likely is not going to do much to sell that home. In fact, it may make it harder to sell that home.

Actually, Realtors seem to be finding out slowly but surely that homes that have pre-listing inspections sell more quickly and sell for more. After all, a pre-listing tends to show honesty and integrity on the part of the seller, a desire to be upfront and forthright with problems. Now if the report shows that the seller has a dump, well, dumps typically are harder to sell, unless one is working with property investors.

Originally Posted by nwagner

If the pre-listing home inspection could compel more people to look into the home (generate more leads) while not turning them away with either overtly harsh evaluations or an apparent lack of criticalness, then they probably would be hit. Until then, I imagine all the choices in the world aren't going to compel agents to fork over a hunk of their advertising budget to us.

It will if one markets those choices appropriately. Marketing is a continuing process, not a one-time effort.

Some courts here have declared that a Realtor who is making 3% commission on a $500,000 sale ought to spend $199 on a pre-listing inspection that they are very knowledgeable about what they are trying to sell. There also are several smaller brokerages here who require their sellers to have pre-listing inspections (I have two under my sole tutelage), and there are many major brokerages that encourage their agents to use pre-listing inspections, even teaching them how to use them to their advantage in marketing.