Inspections are typically ordered by buyers during the escrow period to determine the condition of the property and request any credits based on the findings. Pre-listing inspections aren’t very common in LA County, but there are benefits and drawbacks for sellers doing them which we lay out below!
What are pre-listing inspections?
Pre-listing inspections are the same inspections that are done during escrow, except they are ordered by the seller prior to listing the property instead of the buyer during the transaction.
Some examples of inspections that are done are home, roof, mold, termite, HVAC, septic or sewer, structural, geology, chimney (if applicable), and pool (if applicable).
Doing these inspections in advance provide the seller with upfront information about the condition of their property so they’re not surprised during escrow.
What are the benefits?
Doing inspections in advance give sellers more control over repairs and can potentially strengthen their negotiating position, by allowing them to:
- Disclose any issues prior to accepting an offer which prevents surprises during escrow
- Fix, repair, or leave things “as is” on their terms
- List the property at a price that reflects the current condition
- Minimize the amount of credits that the buyer requests and escrow delays
- Minimize the risk of a buyer cancelling during the escrow inspection contingency period
- Minimize the chance of having to re-list a property that has already been on the market
Being aware of any issues upfront allows sellers to fix anything they want prior to putting their home on the market or account for it in the asking price. If big issues are found, regardless, the seller or buyer are going to have to fix them, so if everyone’s aware in the beginning, it can minimize any heat-of-the moment negotiations.
What are the drawbacks?
While making all parties aware of any issues upfront may be positive for some, there are drawbacks for sellers as well, such as:
- Scaring potential buyers away
- Some may not want to be aware (“ignorance is bliss”), and sellers are legally obligated to disclose any issues to a buyer
- Costly inspections and repairs
- Discovering new issues while doing repairs
- Delayed list date
- Giving more credits than originally anticipated due to additional issues uncovered during buyer’s inspections
- Listing at a lower price than desired to account for any issues
Preparing a home for market can be a lot of work for sellers already and adding on pre-listing inspections can cost them even more time and money. In addition, sellers may not want to open a can of worms before even listing the property and have to handle issues upfront. Sellers will have to provide some form of credit to a buyer regardless, so listing the property at market price and allowing the buyer to discover any issues on their own is less leg work for the seller.
No property is perfect (it’s the world of real estate!) so regardless, issues will arise at some point, whether it’s before listing on the market or during the transaction. So whether a seller decides to do pre-listing inspections or not is ultimately up to them. There are pros and cons to either, but talking it through with a trusted real estate agent is a great way to help you make that decision.
