Presentation Transcript

1. Prelisting Inspections for Real Estate Professionals

2. Course Objective

   To better understand: The difference between a prepurchaseand a prelisting inspection How each impacts the sale How prelisting inspections put more control in the hands of the real estate professional

3. Quick Overview

   Most homes are inspected Most offers are made contingent on a home inspection Most home inspections are requested by the buyer The buyer has most of the control

4. The Inspection’s Role in the Sales Process

   Who’s in control? The buyer chooses the inspector The buyer owns the inspection report The buyer may exaggerate what the inspector actually said The seller and agent have to wait days before knowing if the house “passes”

5. Inspections and the Sales Process

   Real estate professionals can be proactive and order a prelisting inspection The inspection provides shared information, allowing the sale to go forward An offer made contingent on an inspection is still not a sale, it’s merely a possible sale

6. Goals of a Prelisting Inspection

   To share unbiased information about major components and safety issues To discuss repair, maintenance or safety issues beforehand To repair certain items in advance To move the sale forward

7. Prelisting Inspections

   Advantages to the real estate professional: Reduce the number of offers contingent on an inspection Fewer buyers will walk away from multiple offers Sell a house faster Sell closer to the asking price Market a property as preinspected

8. Prelisting Inspections

   Additional advantages to the real estate professional: Most sellers believe their homes are worth more than they are Preinspections help agents and sellers set realistic sales prices Preinspections help overcome “pride of ownership”

9. Prelisting Inspections

   Additional advantages to real estate professionals : May show a copy of the inspection report or a summary at an open house May list in MLS as preinspected May put “Preinspected” on yard sign May persuade seller to make repairs or adjust asking price

10. Prelisting Inspections

    Advantages to the seller: Openly disclosing maintenance/repair items boosts buyer confidence Can choose the inspector Only one inspector coming to the home Can emphasize positive aspects of the house Can discuss findings in earnest

11. Prelisting Inspections

    Advantages to the seller: Can reduce the number of days the house is on the market Everyone has the same information Can choose what items to repair Can sell for more if repairs are made Can repair items, then reissue report

12. Prelisting Inspections

    Advantages to the buyer: Instills confidence Saves time Removes anxiety: “What if something’s wrong” Saves the cost of a buyer’s inspection

13. Prelisting Inspections

    Advantages to the buyer: Still has opportunity to ask inspector questions No unpleasant surprises Can concentrate on mortgage and closing May still order their own inspector if they choose

14. Who Pays for the Preinspection?

    Who pays for the preinspection report? The buyer? No The seller? Usually The agent? Sometimes If the agent does pay, it may help secure more listings.

15. Who Pays for the Preinspection?

    Can the inspector wait to be paid? He/she should not If the inspector is paid contingent on the successful sale, it could create or appear to create a conflict of interest

16. Who Pays for the Preinspection?

    If the seller or agent pays for the inspection, can they influence the inspector? Neither should try to influence the inspector The report should be accurate, factual and unbiased The buyer needs confidence in the report

17. Who Owns the Preinspection Report?

    Who owns the report? The buyer, ifthe seller chooses to make it available The seller, as he/she paid for the inspection Even if the agent pays for the report, it should belong to the seller The seller paying for the report reduces any potential liability to the agent

18. Informed Home Buyers

    Most buyers know little about construction Answering questions puts their minds at ease Informed buyers are more satisfied and can better anticipate and plan for repairs and maintenance Real estate professionals can focus on the next sale

19. Home Inspection Report Formats

    Home inspection report formats vary: Checklist or narrative Combination checklist and narrative Computer-generated Handwritten May or may not include summary May or may not include photos Should be delivered to buyer at first meeting

20. Home Inspection Report Basics

    Home inspection reports should: Be factual and unbiased — you can’t hide from the facts; put them out there Adhere to the industry standards of practice as per major trade groups (ASHI, NAHI, InterNACHI) Cover all major components Define terms used therein: (e.g., “acceptable,” “marginal,” “defective”

21. Professional Home Inspector

    Characteristics of a good inspector: Trained, thorough and unbiased Courteous and professional, and has the necessary tools and equipment Adheres to industry standards Has good written and oral communication skills Is insured and, if applicable, licensed

22. What an Inspector SHOULD Do

    Adhere to industry standards of practice and code of ethics (ASHI, NAHI, InterNACHI) Inspect readily accessible systems and components Report: Systems or components that aren’t working properly Explanations of the deficiencies Recommendations to correct Reasons with fact if certain systems or components were not inspected

23. What an Inspector Should NOT Do

    Predict remaining life of systems or components Offer advice on methods, materials, costs to fix components unless qualified to do so Offer to make repairs, refer specific contractors or receive referral fees Comment on market value Perform code inspections
24. Educate the Home Buyer

25. Ordering a Prelisting Inspection

    Immediately after listing Provide the seller with a list of inspectors or refer them to a trade group such as the American Society of Home Inspectors (ASHI)

26. Explain the Scope of the Inspection

    A good inspector: Explains the scope and limitations of an inspection: It is a visual review of readily accessible areas, random sampling of like items, etc. Invites the seller along for the inspection Explains how long the inspection might take, what the fee will be, and when the home seller can expect delivery of the inspection report Touches upon their training, experience and affiliations

27. Set Realistic Expectations

    The buyer should understand that no house is perfect: Expect ongoing maintenance The seller should anticipate that the inspector could find things he/she is unaware of The seller should understand this is an opportunity to repair those items or to adjust the asking price
28. Preparing the Seller

29. Inspector Needs Access

    Secure pets Turn off alarms Remove obstructions to: Furnace and water heater Electrical panel Attic Garage Crawl space, etc.

30. After the Inspection

    A good inspector will: Leave things the way he/she found them Verify that the furnace/AC is running and return thermostat to original setting Turn off lights or running water Make sure doors are locked, etc.
31. The Inspection Process: Grounds

32. Grading and Drainage

    Inspectors always look for grading issues Negative grading can lead to water intrusion Most drainage issues are quick and easy to fix

33. Driveway, Walkway and Steps

    Loose or missing handrails (inside or out) are a safety issue: Inspector will always look for these items These items are generally easy and inexpensive to repair in advance

34. Porches, Stoops, Decks, Balconies and Patios

    Support posts and stair stringers should have no earth-to-wood contact Easy to spot and repair in advance
35. The Inspection Process: Exterior

36. Roofing System

    Inspection of roof: The roof is a major part of an inspection The information known is best shared with the buyer: age, number of layers, type of materials, leaking, etc. It boosts buyer confidence

37. Siding and Trim

    There are many exterior coverings, such as wood, vinyl, stucco, brick, stone and synthetics All can be affected by vegetation, shrubbery and trees making contact with the siding

38. Windows and Doors

    Inspect for: Operation Alignment Weather-stripping Evidence of leaks

39. Garages

    Garage doors receive a lot of use Examining the operation, tracks, springs, openers and fit is important For child safety, auto reverse is a must

40. Pools, Hot Tubs and Spas

    Swimming pools and hot tubs are high-maintenance Having the pool cleaned and filters changed in advance boosts confidence

41. In-ground Sprinklers

    Irrigation systems can lead to: Underground leaks/erosion, which can greatly affect driveways, sidewalks, etc. Poorly placed heads, which can lead to water intrusion in the basement, etc. In the best case, sprinklers are high-maintenance
42. The Inspection Process: Electrical System

43. Electrical System

    The buyer wants to know: Whether the electrical service is large enough to meet their needs That it is safe

44. GFCI

    Regardless of the age of the home, an inspector will always look for and recommend GFCI protection: Bathrooms Kitchen countertops Unfinished basements Garages Crawl spaces All outdoor electrical outlets

45. Smoke Detectors

    National safety standards require smoke detectors The inspector will always look for them They should be in place and functional
46. The Inspection Process: Plumbing System

47. Plumbing and Fixtures

    Four consistent concerns with plumbing are: Is there adequate flow? Is there adequate pressure? Are there any leaks? Are the drains plugged or sluggish ?
48. The Inspection Process: HVAC System

49. HVAC System: Heating

    Check for adequate heating (gas furnace): Overall size, age and condition of unit Proper location of unit Adequate combustion air Adequate temperature rise Heat source in each room Condition, size and location of ducts Condition of blower/humidifier Heat exchanger (mostly hidden) Check for flue gases and other leaks around exhaust and in supply air Dirty filters obstruct flow and affect temperature rise Thermostat unit responds to controls

50. HVAC System: Cooling

    Check for adequate cooling: Overall size, age and condition of unit Outside unit, clean, level and up off the ground, suction line insulated No obstructions interfering with unit Discharging heat-ambient test Adequate temperature drop (14 to 22 degrees F) Blower clean and variable speed Dirty filters obstruct flow and affect temperature drop Thermostat unit responds to normal controls
51. The Inspection Process: Interior

52. Walls, Ceilings and Floors

    Walls, ceilings and floors can be covered by a wide variety of materials Inspector checks for deflection/tolerance in floors, bowing or cracking in walls, cracks, stains or wet spots in ceilings Operation and fit of doors and windows from the inside Repairing and painting minor stress cracks can alleviate a lot of concern from buyers

53. Kitchen

    Cabinets: Countertops, tile and backsplashes Stoves: Operable burners, not timers Disposal: Inspect for smooth operation, excessive noise Dishwasher: Condition, leaking, proper air-gap device Ventilator: Recirculating or nonrecirculating Other Built-ins: Microwaves, trash compactors, refrigerators

54. Bathrooms

    Can be one of the most expensive areas to replace or refurbish With simple maintenance, expensive repairs can be avoided
55. Thank you for your time!