Are Pre-listing Home Inspections Worth It? Here’s What Sellers Need to KnowMatthew StalcupHomeLight Blog

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March 31, 2021

The home inspections process is often one of the greatest obstacles to closing a swift sale. If the inspector finds issues with your property, your buyer can leverage these findings to negotiate a lower price or even walk away from the sale. According to the National Association of Realtors (NAR), home inspection issues were responsible for 11% of delayed contracts and 9% of contract terminations in 2021.

Thankfully, you can take a proactive approach with a pre-listing home inspection. By completing a home inspection before you list your home, you can tackle necessary repairs upfront to avoid related delays and price reductions.

The impact an early inspection has on your sale depends on your unique property and market conditions. We’ll break down how a pre-listing home inspection works and how it can benefit your home sale.

A woman conducting a pre-listing home inspection.
Source: (ALPA PROD / Shutterstock)

Pre-listing home inspections are just like standard inspections

A pre-listing home inspection is the same as a standard home inspection except that the seller pays for it before listing their home on the market.

Jennifer Smeltzer, a top-performing real estate agent in Jackson County, MO, advises sellers to complete the pre-listing inspection no sooner than two months before listing their property. This way, buyers trust that the inspection findings are indicative of the home’s current condition.

During a pre-listing home inspection, a certified home inspector will assess the property, noting the condition of major structural components and features. According to the American Society of Home Inspectors, a home inspection checks a home’s:

  • Electrical systems
  • Plumbing systems
  • Roofing
  • Heating and air conditioning systems (HVAC)
  • Foundation
  • Ceilings
  • Walls
  • Windows and doors
  • Insulation
  • Attic spaces
  • Basements

The inspector will determine whether there are any issues with these features, looking for signs of damage like leaks, cracks, faulty wiring, and code violations. It’s important to keep in mind that most home inspections do not evaluate the condition of the paint, wallpaper, and other finishes.

Here’s how a pre-listing home inspection can benefit your sale

The main advantage of conducting a pre-listing home inspection is it allows you to identify issues and complete repairs before a buyer is involved. Let’s take a look at how this and other benefits can accelerate the home sale process.

Get ahead of repairs

Common home repairs can take weeks to months to book and complete. A pre-listing home inspection gives you time to compare contractors and tackle repairs without the pressure of a buyer threatening to walk away from the sale.

Be aware that state laws mandate that sellers need to disclose known property issues to buyers. You’ll need to disclose any pre-listing inspection findings that you choose not to fix.

Reduce points of negotiation

Buyers often use home inspection findings to negotiate for a lower sale price or repair credits. For example, say an inspection reveals a major crack in the foundation that would cost $4,000 to repair. The buyer may ask that you either complete the repair or give them a $4,000 repair credit at closing. If the buyer included an inspection contingency in their offer, they can leave the deal with their earnest money intact if you don’t agree to their request.

With a pre-listing home inspection, you beat the buyer to the punch by completing (or at least acknowledging) these repairs ahead of time. Bypassing the usual inspection negotiations (often lasting one to three days), you can get to closing faster.

As Smeltzer puts it:

“Whether we fix those issues or we don’t, at least we know that they are there. Knowing this can help us determine a price point and stand confidently with that price during negotiations with buyers.”

Determine an effective price point

Whether you tend to all, some, or none of the pre-listing home inspection findings, knowing your property’s condition can help set a strategic price. For instance, you might disclose that the roof needs a repair and share that the listing price reflects this discount. On the flip side, if you know your property is in perfect condition, you can price and market it as a turnkey home to encourage higher offers.

Encourage stronger offers

If you’ve conducted a pre-listing home inspection, you can market your home as “pre-inspected” and show buyers the inspection report along with relevant repair invoices. This documentation gives potential buyers the confidence to put in a higher offer because they know that there won’t be any surprise repair costs down the line.

“In my market, a pre-listing home inspection isn’t done a whole lot of the time, but it’s an added value … It’s definitely something that a buyer would want to see,” notes Smeltzer.

If a buyer is torn between offering on your home or another, the pre-inspection bonus may just serve as the tiebreaker they need.

Prepare for an FHA appraisal

If a buyer is backed by a Federal Housing Administration (FHA) loan, your home will need to pass an FHA home appraisal. This intensive appraisal process functions similarly to a home inspection as the FHA appraiser assesses the property’s overall condition.

For the buyer’s loan to close, the seller must attend to any repairs “necessary to maintain the safety, security, and soundness of the Property, preserve the continued marketability of the property, and protect the health and safety of the occupants.”

The entire list of necessary repairs is extensive and includes the following issues:

  • Cracked window glass
  • Missing handrails
  • Poor workmanship
  • Trip hazards
  • Lack of an all-weather driveway surface
Cash used to pay for a pre-listing home inspection.
Source: (Thomas BreherPixabay)

Prepare to pay $279 to $400 for a pre-listing home inspection

In general, an inspection for an average-sized residential property takes just a few hours to complete and costs on average between $279 and $400. According to HomeAdvisor, many home inspectors charge a flat fee for homes up to 2,000 square feet and charge per square foot thereafter.

Note that even with a pre-listing home inspection completed, your buyer may still order their own inspection before purchasing the property. In this case, it’s customary for the buyer to pay for the inspection.

Determine if a pre-listing inspection is right for your home sale

While a pre-listing home inspection can certainly speed things up, it isn’t always the right choice. Smeltzer tells us that she recommends pre-listing home inspections on a case-by-case basis. “A lot of times, a seller may not want to pay for the additional expense when they know the buyer is going to go ahead and do their own inspection, as well.”

To help you figure out whether or not a pre-listing home inspection is right for you, consider the following:

You should seriously consider a pre-listing home inspection if:

  • You have deferred maintenance: If you’re aware of maintenance issues and haven’t tended to them properly, it’s a good idea to inspect your home before listing.
  • A quick sale is your top priority: If you need to sell your home ASAP, a pre-listing home inspection might be worth it, so you know you’ve done everything in your power to speed up the process.
  • You’re marketing your home as a “fixer-upper”: Buyers looking for a fixer-upper need to estimate total repair costs. Without conducting a pre-listing inspection, buyers may low-ball you to get a deal on a home that needs an undetermined amount of work.
  • You’re selling the home remotely: If you live far away from the property you’re selling and haven’t kept tabs on its condition, a pre-listing home inspection can help you get up to speed and set an accurate listing price.

You may want to skip the pre-listing home inspection if:

  • Your local market is hot: If the housing market in your area favors sellers and homes are selling left and right, you won’t need a pre-listing home inspection to entice buyers.
  • You plan on selling your house to a direct buyer: If you plan to sell your home for cash to a direct buyer like an iBuyer or local cash buyer operation, there’s no advantage to conducting a pre-listing home inspection. Direct buyers follow specific property evaluation criteria; if they inspect homes, they’ll want to conduct their own inspection rather than accept yours for face value.
  • You’re selling a new build: If your home was built within the last few years, buyers may be more confident in its condition. In this case, a pre-listing home inspection is unlikely to influence offers or negotiations.
  • You’re absolutely sure nothing is wrong with your property: Maybe you’re a contractor who has kept your home in mint condition. If you intimately know your property, you may not want to pay for information you’re already aware of.

If you are still unsure of whether or not you want to pay for a pre-listing home inspection, consult your real estate agent. An experienced real estate agent intimately knows the local market and can advise if a pre-listing home inspection can benefit your sale.

Header Image Source: (Nick Wright / Unsplash)

Beat buyers to the punch with a pre-listing home inspection. Tackling this task upfront can help you market your home and sell it faster.HomeLight Blog

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