The Importance of PreSale Inspections Q&A

QUESTION:

“I am thinking of selling my house and a Realtor friend of mine suggested that I have the house inspected before I put it on the market. I don’t think that’s really necessary because we have only been in the house for five years and we have not made any changes. Won’t the buyers pay for an inspection when they buy the house? Is there any real reason why I should do it?” – A.C., Fremont

ANSWER:

“Regardless of how long you have lived in your home, the best protection you can give yourself is to have your house inspected prior to listing the property. Pre-sale inspections not only tell you the current condition of your home, they also help you to comply with a seller’s disclosure requirements, and limit your exposure to future liability. In California, a seller is responsible for disclosing every “known” material fact that may affect the desirability of the house. This includes potential “red flags”, and conditions which may indicate a problem such as, noisy neighbors, poor drainage, an un-permitted addition, illegal wiring, or unstable soil.

The fact of the matter is that most sellers know very little about the house that they own, and are often unaware of hidden concerns. Think about this. When was the last time you looked in the attic, or under the house? Have there been modifications or additions to the house that were not done with permits or not to code? The answers to these will be the basis of the information that you must legally disclose to a buyer prior to your sale of the house.

In most real estate transactions, a seller does not provide disclosure information to the buyer until after the buyer signs a contract. Usually, within 3 days of signing a contract, the sellers provide this information to the buyer. Any information that is not disclosed or is discovered after receiving the disclosure statement, can potentially create a situation of vulnerability for the seller, and delays in the sale.

To get a Realtor’s perspective on the value of ordering pre-sale inspections, I spoke with Tony Bruno, of the Coldwell Banker office on Walnut Avenue in Fremont. Tony is a well respected, and experienced agent who encourages a pre-sale inspection on all of his listings. “A pre-sale inspection not only protects my sellers from liability exposure”, said Tony, “but it also simplifies the transaction by putting all the information we know about the property up front. This benefits the buyers because they can review this information prior to making an offer, and can then decide if they want to proceed.

“The current market is absolutely a seller’s market, and most homes are being sold ‘as-is’. This gives the illusion that the seller is protected and that a buyer cannot sue, but this is not true. Sellers still have liability for anything that is not disclosed to the buyer”, Tony cautioned. He commented that a seller should order at least a general house inspection and a termite inspection. However, prudent sellers may also get roof, chimney, and sometimes appliance inspections.

The general house inspection will include an inspection of the property site, drainage around the building, the building exterior, the roof, chimney and the utility disconnects. It will also include the interior of the house, the electrical wiring, plumbing lines, the furnace and the water heater, and finally, information about the structural framing in the attic and the garage and the presence of any health and safety concerns.

Once the seller has this information, they have the opportunity to decide whether or not they want to fix or correct an item before they enter into a contract with a buyer. By disclosing this information up front to a buyer, a seller can prevent the buyer from trying to negotiate repairs on those items after they enter into the contract.

Tony stated, “I try to make the selling process as easy and painless a possible for both the buyers and sellers, and I have found that when all the facts are presented up front, each party can make intelligent and confident decisions about the transaction. In fact, local Realtors can now post this disclosure information on the Multiple Listing Service when they list the property. Buyers can view this before they even come to see a listing.”

If you are working with a Realtor, discuss the inspection reports with your agent before you make any decisions. Agents can often advise you whether or not it would be in your best interest to have certain items repaired. Correcting health and safety conditions, drainage or structural concerns is far more important than fixing something that poses little exposure to liability, or a minimal cost to fix. Your agent can also help you establish the terms of the sale based on what is being disclosed. If you would like to talk with Tony more about how sellers can benefit from the use of pre-sale inspections, he can be reached at 510-608-7626.

All About Homes has developed a three page check list called the “Seller’s Property Review”, that home owners can use to help evaluate the condition of their homes. If you would like to receive a copy of this checklist, visit our website or call our office.

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