The answer to this question depends on the market in which you’re buying or selling, but you are reading this on the Toronto Realty Group website, so suffice it to say, a seller should always be providing a pre-listing home inspection in the Greater Toronto Area.
We’re asked this question all the time by sellers:
“Why in the world would I point out everything that’s wrong with my house?”
Well, I believe the proverb, “You catch more flies with honey than vinegar,” is highly appropriate here.
Providing a pre-inspection is not done to put the seller at risk, but rather as a marketing tool to attract buyers and ultimately help them to get comfortable submitting an offer on the property.
Looking for more real estate real-talk? Check out our podcast, The Last Honest Realtor.
Pre-Listing Home Inspections From the Buyer’s Perspective
Let’s say that you’re a prospective buyer and you’re going to two open houses on a Saturday afternoon.
You walk into the first house and on the dining room table is a stack of floor plans, a literature holder with eight-page glossy feature sheets, a pamphlet with a list of upgrades and improvements, and a spiral binder with a pre-listing home inspection.
You walk into the second house and there’s nothing on the dining room table but a sheet that says
“WELCOME TO MY OPEN HOUSE: PLEASE SIGN IN.”
Which house do you feel more comfortable in?
Many buyers want to think that they won’t be influenced by marketing, but if it were so easy, then marketing wouldn’t be a trillion-dollar, worldwide industry.
More than anything else, the pre-listing home inspection provides “peace of mind” to the buyer.
Whether the buyer is reading the inspection at the open house on a Saturday, or whether they have a PDF copy that was emailed to them by their buyer agent, the buyer can feel free to read through at their convenience, and be introduced to all the pros and cons of the home.
Learn more about home inspections and the selling process with these posts next:
- Things that Fail a Home Inspection
- Best ROI Renovations When Selling Your House
- How Many Showings Does it Take to Sell a House?
Why Sellers Shouldn’t Be Afraid of Pre-Listing Home Inspections
Now, back to the seller who says, “I don’t want to point out everything that’s wrong with my house.”
A buyer is extremely likely read an inspection at some point, whether it’s reading the pre-listing inspection, or whether it’s doing their own inspection, at their own cost, in lieu of a pre-inspection being provided.
So if you’re a seller, why wouldn’t you provide the pre-inspection and help the buyer along their way?
A home inspection can cost anywhere from $400 to $1,000 (as with everything, you get what you pay for), so whether the Toronto home in question is $900,000 or $5,000,000, there are buyers out there who scoff at the idea of paying this as an “up front” cost, when there’s no guarantee that they end up buying the house.
This is especially true when a property is listed with an “offer date,” often in tandem with being priced below fair market value to solicit competitive bids.
If this is the listing and pricing strategy that the seller and listing agent have undertaken, they’re far less likely to see unconditional offers if they don’t have a pre-listing home inspection.
I’m shocked when I see this happen in today’s Toronto market. It’s like the listing agent and seller are missing a huge piece of the strategic “puzzle.”
Strategy is everything when selling your home. Read these posts next for more insights:
- Why Your Home Isn’t Selling
- What is the Worst Time to Sell a House?
- What Not to Fix When Selling a House
How Does this Look in the Real World?
Consider that, if there’s a property sitting on the market for 75 days, a buyer has no problem submitting an offer that’s conditional on a satisfactory home inspection for five days, and the seller simply has no leverage to take issue with it.
But if the typical $1.3 Million house in Toronto is listed for $999,000, with an offer date, how does the listing agent expect buyers to show up in droves on the scheduled “offer night” without being able to read through a pre-listing home inspection provided by the seller?
As simple as this concept is to grasp, I see this happening all the time in our market. These sellers and listing agents who don’t provide a pre-listing home inspection either see fewer offers submitted, or conditional offers, or both.
What if You Don’t Want a Pre-Listing Home Inspection?
Now, what is the liability on behalf of the seller for providing a pre-listing home inspection? Theoretically, nothing.
When we list a property for sale, we upload a standard “Schedule” of clauses to our Agreement of Purchase & Sale, and one of the clauses reads as follows:
If a home inspection report is provided by the Seller or the Seller’s agent, the listing brokerage and seller make no representations or warranties regarding such report and its contents. Any reliance on this report is at the Buyer’s risk. The Buyer agrees to indemnify and hold harmless the Seller, listing brokerage, and Sales Representative or Broker for any errors, omissions, and representations, express or implied, contained in the above.
This clause indemnifies the seller and listing agent if anything found in the inspection is incorrect, incomplete, or in dispute in any way.
And how could we not have this clause?
A home inspection could note “roof looks to be in first-half of its life expectancy,” but what if the buyer finds out that the roof is actually in its second-half? What then – a lawsuit?
Learn some of the most important home-selling definitions with these posts next:
- Home Appraisal Vs. Market Value
- What Does it Mean to Be a Self-Represented Party in Real Estate?
- What Does ‘SC Escape Clause’ (SCE) Mean?
The Truth About Home Inspections
While a home inspection is conducted by an expert in his or her field, so much of what’s contained in the report is subjective in nature. It’s estimated. It’s opined. It’s worst-and-best cased. Thus, it is all grey, and grey areas are what keep civil litigation alive.
Having said that, sellers can likely rest easy knowing that when it comes to the laws of disclosure, the courts have always held caveat emptor, or “buyer beware.”
There are all kinds of misconceptions about what “needs” to be disclosed when selling a home, but if there’s a scratch on the hardwood floor under the area rug in the living room, and the buyer takes issue once the sale closes, the courts would hold “buyer beware” and rule that it’s up to the buyer to satisfy themselves, and not the seller’s responsibility to point out anything and everything that could come into question.
It simply can’t work the other way around.
How Toronto Realty Group Handles Pre-Listing Home Inspections
So if you’re a seller, I understand the concern around “being sued” for providing a pre-listing home inspection, but so long as you have the appropriate clause in your Agreement, you’re covered.
Now, as for the cost, this is where I’m going to call out many listing agents in the city who do their clients a major disservice because they’re cheap.
At Toronto Realty Group, we always include a pre-listing home inspection as part of our comprehensive marketing package, and we don’t hire the fly-by-night inspection companies either. We work with top-notch firms and inspectors we’ve used for years.
But what do other real estate agents do?
They tell their seller-clients, “You don’t need a pre-listing home inspection,” or “You’re making yourself liable,” simply because they don’t want to pay for the darn thing!
You get what you pay for, and if your listing agent claims that a pre-listing inspection is a “waste of time,” then far be it for me to say, but you’ve got more than just one decision as to how to move forward.
In today’s market, a pre-listing home inspection is a crucial piece of marketing for any house.
Proceed without one at your (financial) peril…
Thinking about selling your Toronto home? Toronto Realty Group is here to make things easier. Get in touch with us today to learn about our custom listing strategies. Fill out the form on this page, give us a call, or send us an email directly to reach out.
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