Is Getting a Pre-Inspection Worth It?
In a more balanced market the home-buying process typically includes buyers having a home inspection done after the ratification of a contract on a home. Home inspections identify problems with the home, areas that need attention, or issues that could be potentially expensive to remedy. Items inspected include the plumbing system, electrical system, grading, foundation, roof, kitchen, bathrooms, and more. The buyer agent makes a list of items the buyer would like fixed prior to settlement and that list is negotiated with the listing agent until both parties agree.
But in a market that is extremely favorable to sellers, buyers don’t have the luxury of requesting such repairs; in fact, in many multiple offer situations the buyers will waive their right to an inspection in order to make their offer more competitive. One way that buyers can maintain their edge over other offers while protecting their interests is to opt for a pre-inspection of the property.
What is a pre-inspection? Instead of having an inspection done after contract ratification (assuming the offer is accepted by the seller), buyers can have a pre-inspection done before writing an offer on the home. This way the buyer can uncover potentially expensive or concerning problems with the home prior to making an offer. If the buyer decides to move forward on the home, they can waive the inspection contingency to make their offer stand out amongst the competition. Though they won’t have the opportunity to negotiate repairs, the buyer will know what they are getting into before purchasing the home.
How does a pre-inspection work? The buyer agent works with the listing agent to find a window of time, typically at least two hours, that the buyer, agent, and inspector can visit the property. This can be tricky, especially if there is great demand for the home and other buyers are trying to get in to tour the home. That is why it is crucial to have a buyer agent who is keeping in close contact with the listing agent and can be proactive and prompt in scheduling the showing and inspection.
The inspection report is exhaustive, including pictures, descriptions of problems, and recommended solutions, and is usually returned the same day as the inspection or the next morning at the very latest. Based on the findings of the inspector discussed at the inspection and in the report, the buyer can decide whether or not to move forward on making an offer on the house. If the major systems in the home are really old and need to be replaced soon or if there are expensive or dangerous issues with the house that are cause for concern, then the buyer can make the decision to pass on the house. But if the report is satisfactory to the buyer then they can move forward with making their offer and make it even stronger by waiving the inspection contingency.
What’s the catch? Home inspections aren’t inexpensive. Especially if buyers keep losing out on house after house, the inspection fees can add up quickly. But this can still be less risky than opting to write an offer on a house, waiving the inspection contingency without getting a clear picture of the house, and then wanting to void the contract if the buyer gets cold feet. At this point if the buyer wants to void and has not included contingencies to provide a legal out, then the EMD is on the line and could be forfeited— which is typically thousands of dollars.
What if you don’t have the time or the money to have a pre-inspection? Many companies offer “walk and talk” inspections that are less formal and much shorter. The inspector still looks at major systems in the house but will not create a written report of their findings and they will be less exhaustive in the scope of their inspection. Instead the agent or buyer can take notes with the inspector and can base their decision to move forward or not with an offer to purchase the house. This informal inspection is typically a fraction of the cost and time.
The advantages of doing a pre-inspection or walk and talk inspection is that buyers can waive the inspection contingency to make their offer stronger, or can decide to walk away from the house and not make an offer knowing there are deal-breakers for them. The disadvantages are that pre-inspections are not cheap, especially if buyers keep doing them and are continually losing to other offers. They are also time-consuming and can be hard to schedule with very popular homes.
Want more of the inside scoop on writing a competitive offer? Contact the Tamara Kucik Team at 301-780-HOME (4663) to find out more.