Home Pre-Inspections

Home Inspections Not Just For Buyers

One of the toughest discussions I have with seller clients is over pre-inspections. They often just don't see the point of doing something that the buyer traditionally pays for anyhow.

I recently had this discussion with a client and was unable to convince him that it would be to his benefit. His argument was, "None of the people I talked to had a pre-inspection...I don't see the point of spending $400." My statement back was, "Sure, they didn't have one. Not all agents know to recommend them. But did you also ask them how they felt while waiting for the inspection contingency to pass or if they ended up re-negotiating the price or paying too much for repairs the buyer wanted?"

Sure enough, we had two big surprises on their inspection and now the buyer is nervous and the seller is possibly facing big repair bills. All stuff that would have been good to know before even going into negotiations.

Here are the benefits of sellers having a pre-inspection:

1) Get It Fixed On Your Terms
Knowing about problems ahead of time allows the seller to either price the house accordingly for needed repairs or to fix them ahead of time. If the buyer discovers the repairs during negotiations, THEY now have the power to negotiate how it gets fixed. Typically, buyer and seller both get bids (try doing that on short notice) and the average of the bids gets credited to the buyer off of the purchase price. Or the seller must rush to get it fixed before closing.

Knowing these problems ahead of time, the seller has time to research and get reasonable bids, save money and by having it fixed ahead of time, it becomes a NON-ISSUE to the buyer.

2) Removes Anxiety & Stress
Ask any recent seller about the home inspection period and they'll tell you that it is a nerve-racking experience waiting to hear what the inspector finds. If you've already had the inspection for yourself, you know that there will be no surprises. Quite a few times, I've provided a good home pre-inspection to the buyer and they didn't even bother with their own inspection!

3) Confidence in Negotiations
Often sellers want to keep a "buffer" in their price, "Just in case something comes up in the inspection." They worry that if they accept a lower offer, the buyer will still try to get even more money out of them after the inspection. This limits their negotiations and could risk losing a buyer over a couple thousand dollars.

Knowing exactly what to expect from the inspection gives more freedom to negotiate the offer. The buyer may think they'll get more off the inspection, but the seller already knows that isn't going to happen!

It also removes the buyer's inclination to randomly make a lower offer, assuming that there will be issues with the home inspection. Confidence in the condition of the property, because they have a copy of a recent inspection, can bring in higher offers.

4) Legal Protection
The best thing for a seller to do is to disclose EVERYTHING about their property, to avoid litigation for non-disclosure, down the line. If you provide a copy of the inspection to the buyer and disclose those defects on the Sellers real Estate Condition Report, a buyer certainly would have no case for non-disclosure - a seller wouldn't be expected to have more knowledge of home construction than a professional home inspector.

The $300 - 400 it costs for a pre-inspection could save you THOUSANDS of dollars in higher offers and buyer renegotiation. It's definitely worth the investment!

Sign of the times?

Recent Sale Shows That Buyers Are Out There

Last week I listed 822 E. Pioneer Rd in Grafton. The seller had purchased the home through me 8 years ago and had done a LOT of renovations. His wife had put a modern touch into the decor and it showed like a new home.

Still, it is a bit off the beaten path, so some families wouldn't like the location. And it is on the small side - with a mound system and private well - all things which could affect buyer interest. But it is on 1.24 acres and is move in ready.

We did a little staging/decluttering and updated some paint colors - most importantly the brown exterior to light khaki - and priced it "right," ie. a little less than the competition, so it wouldn't sit on the market too long. (The seller is transferring to Colorado.) I took over two dozen beautiful photos and video, created a floor plan and uploaded it to the web.

Within a day I knew we had priced it right (and agents said their buyers were also drawn by the gorgeous photos I took) because 15 showings were scheduled through the weekend! By the end of day two, we had 3 offers on the table. By the next day, another had arrived. I hadn't seen a flurry of offers like this (on a non-foreclosure) in a couple of years! (Although, my well-staged listing on 78th got competing offers within a week or so, too.)

I began to wonder if we hadn't UNDER-priced it! I even went back to the MLS and checked recent sales to see if there was anything I had missed and to make sure it would appraise for the price it actually sold for. Nope, the comps said $210k - $220k and we priced it at the $210k to be competitive. (It also doesn't hurt when the seller has equity available to price it right.)

Then I remembered that it's pretty hard to underprice a house - the market will always bring it to where it should sell. Sometimes a house will sell for more if you price it a little lower, but if you had started at THAT price, it wouldn't have recieved so many offers and may actually have sold for LESS. (I know, that's confusing!) And of the 15 showings, not all wrote offers and two even gave feedback that the house was priced above market value. The buyers - a young, engaged couple - had been looking for the perfect house and lot for months and this was it for them. So, it was simply priced RIGHT - especially since it's a first-time buyer house and those buyers are out in droves right now!

So, it was a matter of the sun, moon and stars all aligning themselves perfectly - with a little staging, photgraphy skill, updating, decorating, pricing and luck to help! But it shows that doing the right things when selling your home make all the difference in the world and buyers ARE out there willing to pay- so listen to what your real estate consultant advises - and remember: it's almost impossible to underprice a house!

Good News for Milwaukee Housing Market

A Rador Logic report published today, showed Milwaukee’s housing market resiliency in sales prices.

According to the report, "Year-over-year price dynamics improved in Milwaukee, St. Louis and Sacramento. In Milwaukee, where the housing market has performed relatively well throughout the housing crisis, home prices increased 1% from January 2008 to January 2009.”

Housing transactions in hardest hit parts of the country, such as Arizona and California, are starting to increase by double digits, which could also lead to stabilization in other parts of the country in the near future, according to the report.

The report also stated that, “On a year-over-year basis, the decline in home sales slowed in January, indicating significant demand for homes at “motivated” prices. Total home sales across all 25 metropolitan statistical areas (MSAs) tracked by Radar Logic declined 6% from January 2008 to January 2009, versus 36% from January 2007 to January 2008. Eight of the 25 MSAs displayed an increase in transaction counts compared to January 2008, and 12 more MSAs saw transaction counts decrease less in the year ending January 2009 than in the prior year.”