Pre-marketing inspection reports are reports that have been paid for by the owner of a property, prior to putting the property on the active market for sale. If it’s been a long time since you’ve bought a home, this may sound unusual. For those who have bought and sold in the Bay Area over the past 15-20 years, it’s become fairly standard.
In the past, if a buyer wanted to use caution and have a property checked out, prior to purchase, they would most often make an offer with inspection contingencies and then proceed to hire and pay inspectors of their choice, to check out the property and any specific concerns. If inspections came back satisfactory to the buyer, the buyer would remove their contingencies and close the sale. If problems were found, the buyer could either renegotiate the terms of the sale, walk away, or choose to accept the condition as-is, Most of the Bay Area real estate market has been very strong, for the better part of the past 4 decades. Strong markets that favor home sellers have sometimes led to bidding wars. When buyers compete against each other, not only do we see the price offered go up – we also see more favorable terms in the contract for the seller, as buyers try to beat out their competition. Over the years, we’ve seen more buyers willing to make offers that have no contingency for inspections.
Legal advisors will be quick to point out that a purchase agreement without inspection contingencies is risky for both sides, even though most sellers feel fantastic about accepting a “non-contingent” as-is offer. For a buyer, the risk comes with the possibility of making a huge investment and discovering later that there are major concerns with the property. If a home buyer feels that the seller knew about issues with the property and did not disclose them, they may seek legal recourse.
Over the years (in our local market), we’ve seen a marked shift from most buyers hiring inspectors during escrow, to most sellers hiring home inspectors, prior to putting the home on the market. The pre-marketing inspections may or may not lead to repairs completed by the seller, in advance. Most often, the inspection reports are bundled together with the seller’s required disclosure forms and then provided to any potentially interested buyers who request to see the documents. This strategy usually leads to buyers feeling more comfortable with making an offer that is not contingent on inspections. In addition, it reduces the likelihood of big (unpleasant) surprises during the escrow, which are not good for anyone.
Buyers beware. It’s important to note that not all home inspectors are equal. Some are incredibly knowledgeable and diligent; others are not. It’s also important to know that a home inspection report rarely covers the entire home. A general home inspector will likely make notes in the report about areas that are “outside the scope of this report,” and recommend further inspection by a specialist in that area (for example the roof, furnace, foundation or chimney). In addition, when a home seller (or someone on their behalf) is making decisions about what to include in the inspection, they may choose to leave things out that would have been important to a home buyer. For example, way too often I’ve been given disclosure/report packages for a townhome buyer I’m representing, delivered with the message that the reports are very clean. When I read the inspections, I see that only the interior of the home was inspected (per the seller’s request). In most townhomes, the owner is responsible for the maintenance of their part of the structure, including the attic, the crawl space, the foundation, decks and other exterior areas. A home inspector who only looked around inside and tested the appliances, isn’t providing much value to a buyer.
Every home sale is unique. Please feel free to reach out to me at 925-964-5010 or via email at Lisa.Hopkins@Compass.com with questions or for a custom analysis. Even if you’re not planning to move, I’m happy to help by providing you with relevant data, enabling you to make a well informed decision. It’s never too early to start planning for success.
