Should A Home Seller in Richmond Virginia Do A Pre-Listing Home Inspection?

When preparing to sell a home, one of the key considerations for homeowners is whether to invest in a pre-listing home inspection.  It is something that I have recommended but few sellers are willing to do one, especially given the real estate market we are in.  This proactive step involves hiring a professional inspector to examine the property before putting it on the market.  While it's an additional expense, it can offer several benefits that might outweigh the costs. 

SIGNS OF CHANGE IN RICHMOND'S REAL ESTATE MARKET!

Despite the Richmond area continuing to be a strong seller's market, I'm beginning to notice subtle shifts.  Last year, finding an offer that included appraisal and inspection contingencies was almost impossible.  Sellers often received multiple offers, driving the price well above the asking price, with homes being snapped up within a few days.

However, this year tells a different story.  Increasingly, contracts are now including appraisal and inspection contingencies.  Homes are spending more time on the market.  More sellers are reducing their prices before receiving an acceptable offer.  Additionally, sellers are frequently offering buyer concessions, and a noticeable percentage of homes are selling for less than the asking price.

For example, I looked at the homes sold in Area 62 in our MLS, which covers the Midlothian area.  In the first four months of 2024, there were 345 resale homes sold:

• Price Reductions:  56 homes (about 16%) had their prices reduced before the seller accepted an offer!
• Closing Cost Contributions: In 117 sales (nearly 34%), sellers paid some of the buyers closing costs!
• Selling Below Asking Price:  109 homes (almost 32%) sold for less than the asking price!

These statistics indicate that, even in a still strong seller's market, not all homes are selling immediately, and buyers are less likely to waive inspections or appraisals.  To me, this suggests that the market is starting to shift.

Because of this shift in the market, I am beginning to suggest sellers consider doing a pre-listing home inspection before they put their home on the market.  

BENEFITS OF A PRE-LISTING HOME INSPECTION

There are several benefits to the owner ---

1. Helps Identify Issues Early - a pre-listing inspection allows you to uncover potential problems that could be deal breakers for buyers.  By identifying these issues early, you have the opportunity to address them on your own terms, rather than scrambling to fix them before closing!
2. Increases Buyer Confidence - providing a pre-listing inspection report to prospective buyers can build trust and transparency.  It shows that you have nothing to hide and are committed to full disclosure, which can make buyers more comfortable when making an offer.
3. Potentially Higher Sale Price - when buyers are confident in the condition of a home, they are less likely to make low-ball offers.  Addressing these issues before listing can eliminate many of the negotiation points that buyers might use to drive down the price.
4. Faster Sale Process - a pre-listing inspection can streamline the sale process by reducing the likelihood of surprises during the buyer's inspection.  This can lead to quicker closings and fewer chances of deals falling through at the last minute.
5. Competitive Edge - in a competitive market, having a pre-listing inspection can set your property apart from others.  Buyers may prefer a home that has already been inspected, especially if they are on a tight timeline or want to avoid the uncertainty of potential repairs.

DRAWBACKS OF A PRE-LISTING HOME INSPECTION

Just as there are several benefits to the owner, there are also some drawbacks to consider ---

1. Cost - this is the most immediate drawback for many sellers, which can run somewhere around $600 or more, depending on the inspector, the size of the house and what exactly they will be inspecting.  With most listings, this cost is normally incurred by the buyer.
2. Disclosure Obligations - once you've done the pre-listing inspection, there may be some issues that you or your agent may need to disclose to buyers.  Although Virginia is a Buyer Beware state, and you, as the seller, may not need to disclose defects, your agent will be legally obligated to disclose.  
3. Buyers Can Still Do Their Own Inspection - it is important to remember, however, that a pre-listing inspection is not a substitute for a buyer's home inspection with the inspector of their choice, should they choose to put that contingency in their contract.  The buyer's home inspection could reveal other issues that were not uncovered during your pre-listing inspection, which may mean you will have new issues to address.
4. You May Feel Overwhelmed - sometimes inspections can reveal a lot of little things - and you may think you have to fix every little thing!  This may end up being costly and time-consuming!

ARE YOU REQUIRED TO DISCLOSE EVERYTHING FOUND ON THE INSPECTION?

Since Virginia is a "Caveat Emptor" state (meaning that it is a Buyer Beware state), the seller is not required by law to reveal everything found on the pre-listing home inspection.  There are some things they are required to disclose:

• Septic Waiver Disclosure
• Disclosure Statement For Pending Building Code Violations
• Privately Owned Storm water Disclosure Statement
• Disclosure Statement For Certain New Dwellings
• Residential Property Previously Used For Methamphetamine Manufacture
• Properties Located in a Military Air Installation
• Building Code Enforcement Action/Zoning Ordinance Violations
• Repetitive Risk Loss Disclosure
• Disclosure Statement for Lis Pendens

In a state where it is "Buyer Beware", it is up to the buyer to do their own due diligence on the condition of the house they will be buying.  If issues come up, you, the seller, are not required to disclose them unless they fall into one of the required disclosures listed above.  Even if you do find things wrong with the house, such as roof issues, HVAC issues, plumbing issues - you are not required by law to disclose these to the buyer.  And you are not obligated to fix them!  

Many sellers may not choose to do a pre-listing home inspection, but keep in mind that this can be a strategic tool that can influence the sale of your home.  It equips sellers with a clear understanding of their property's condition, which helps in preparing for negotiations and streamlines the sale process by reducing the likelihood of unexpected issues that could delay or jeopardize a deal.  While this type of inspection involves certain considerations - such as costs - it represents a proactive approach to selling that can lead to a smoother, more efficient and potentially more profitable transaction.

By gaining insight into the details of a pre-listing inspection, sellers can navigate the real estate market, ensuring their home stands out.  Whether you are selling for the first time, or are a seasoned real estate investor, a pre listing inspection can be the key to maximizing the potential of your property sale.