Okay, it’s time to let you in on one of my trade secrets. This trick is for sellers, and I’ve never seen it fail. While there’s some pain up front, it adds significant money to my sellers’ bottom line and it shaves the time on market needed to sell.
It’s called a “Pre-Listing Inspection,” and it still hasn’t caught on in Wisconsin. Here are the five most common questions my sellers ask about pre-listing inspections.
What is a pre-listing inspection?
A pre-listing inspection is a full home inspection, done by the seller, before the home goes on market.
How does a pre-listing inspection work?
Prior to listing their home for sale, the seller has a home inspector completely review the property. Next, the seller and I review the inspection report together to decide what to repair and what to disclose. Then repairs are made. The inspector re-inspects to verify that the work was done and issues a new report. Finally, I list the home on market and make the report available to all potential buyers.
How do we decide what to repair and what to ignore?
We begin by looking for items that make the property tough to finance. Next, we address simple fixes and inexpensive repairs that buyers will make expensive. Windows with bad balances, electric outlets with reverse polarity, double-tapped electrical breakers, and missing smoke and carbon monoxide alarms are all common and easily repaired items.
What’s the advantage to repairing things now, and why do we want to disclose problems?
Repairing things now mean that the seller decides how the work is done. Instead of a full electrician at $75/hr, a handyman can fix reverse polarity problems [where legal]. Instead of the buyer demanding the best possible smoke and carbon monoxide alarms, the seller may buy and install decent alarms that are on sale at a big box discount store. Windows can be fixed with inexpensive repair parts versus a buyer demanding new windows. Even jobs that require tradespeople are less expensive; instead of having to use whoever is available in a time crunch, sellers have the luxury of time to bid out jobs.
Wisconsin law offers huge benefits to sellers who disclose. In our standard contracts, issues known to buyers before they draft an offer cannot be called defects. In plain English, Buyers cannot demand repairs or back out of contracts if they knew about a problem ahead of time! Sellers benefit because buyers are more locked down, cannot demand costly repairs on disclosed items, and because buyers who know more about the property are more comfortable and easier to work with during the sale.
How will this net a higher price?
Buyers generally demand $2,000-$5,000 for every $1,000 in defects. This comes from ignorance and annoyance. Ignorance is easy to understand. Since buyers rarely know how much it will cost to repair an issue and are not contractors, they always assume the worst and pad their estimates. The other part is annoyance. If the buyer must take care of the problem, disrupt their family, and pay out of their own pocket, they want additional concessions for their annoyance. Pre-listing inspections put a stop to both of these problems.
If you want to sell and want to discuss the significant financial benefits of a pre-listing inspection, please send Mike Kwiatkowski and email or give him a call! He is always happy to help!