Ever since the real estate market exploded, home buyers have been looking for ways to make their offer stand out.
While some have blown the competition away with out-of-this-world cash offers, others have taken a more subdued approach. This can include foregoing a number of inspections that have typically played a large part in the buying and selling process.
Waiving inspections may make an offer more appealing to the seller, but can come at a huge cost to the buyer.
“A home can have anything go wrong with it, from a dishwasher not working to a foundation issue,” said East Bay real estate agent Liz Venema of Venema Homes Real Estate Team. “There is no way to tell without the inspections.”
Foundation issues and pests, said Venema, are two of the larger problems found during inspections, with the former being the more costly repair. Smaller, less costly issues include leaky faucets, loose toilets, locks that need repair, dry rot, missing roof tiles and gutter debris. These, said Venema, are completely normal and easy repairs.
Foregoing inspections to provide an offer that stands out places the responsibility to have the home examined and the repairs for any issues onto the buyer.
However, in the current market, Venema said, there are a number of cash buyers who have disposable income and don’t mind making repairs or paying for the costs associated with an issue. Additionally, many of the homes are being sold “as is,” meaning the buyer is unable to ask for repairs or credits during closing. This can make it more difficult for a buyer to get their foot in the door without including an inspection contingency in their offer. However, according to Venema, many sellers have started incurring the cost of inspections to speed up the sales process.
“Since the pandemic and in the more recent hyped real estate market, sellers pay to have the inspections completed prior to the home going on the market,” said Venema. “These are added to the market package called disclosures. In the past, inspections used to be a buyer’s fee and they would complete them only after they were in contract. The buyer would have an inspection contingency usually requiring the inspections to be completed in seven to 10 days. During that time, the buyer could change their mind based on the inspection reports and ask the sellers to make the repairs or offer the buyers a dollar credit.
“Now, in this market, to receive offers with zero contingencies,” she continued, “the seller pays for all inspections needed to sell the property. This is the wise thing for a seller to do and we encourage all of our sellers to do so. This way there is full transparency between the seller and the buyer.”
Venema said if the home for sale is a condo, the complex’s homeowner’s association (HOA) often takes care of the exterior and roof conditions, relieving the buyer and seller of the added cost. In the absence of an HOA, sellers pay per square footage and can expect to pay approximately $650 for the home, $350 for pest, $275 for the roof and $550 for a pool inspection, if necessary. Depending on the age of the home, septic or drainage inspections may also be necessary. If there are any known issues recorded from previous home sales, the sellers should supply documentation on previous repairs. Most repair fees fall into the $2,000 range, but can soar to over $10,000 depending on the repairs needed.
Despite the need for proper inspections to disclose any health and safety issues, there are some sellers choosing to skip pre-market inspections, hoping to obtain an offer without contingencies, a practice Venema said she would never suggest to her clients unless the buyer is a contractor or hires one to preview the home before placing an offer.
“Sellers should always get inspections from a well-established inspection company,” she said. “Inspections are normally completed during the ‘coming soon’ phase. Having the inspections done allows for full transparency and allows the buyer to write their offer with zero contingencies.
“Buyers also like to see the home is well-maintained and there won’t be any surprises,” Venema continued. “The seller should be willing to say, ‘Here is my home. Here are the issues, if any, and I have hired a professional to give you this information.’”
Instead of foregoing inspections, Venema suggests buyers include inspection reimbursement into their offer, or include the cost - up to a certain dollar amount - of any of the repairs the seller would pay for into their offer, but this usually only works if the property doesn’t have multiple offers.
“When it comes to buying a home, don’t judge a book by its cover,” said Venema. “Just because a homeowner has made everything pretty with new paint, new carpet and staging doesn’t mean there aren’t problems underneath.”
She said if there is a health or safety issue, the seller should take care of it before the home is sold.
“I always suggest sellers put themselves in the buyer’s position - what information and inspections would they like to have before buying?” Venema said. “The inspection expenses should just be part of their mindset in today’s real estate market.”
To learn more, connect with the team at Venema Homes online.