We are looking at a different home. Is there any advantage to utilizing a pre-offer inspection?

April 3, 2016

There are a number of advantages with a pre-offer inspection. They make many agents uncomfortable, but should be considered. Read More.

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Reader Question: We are looking at a 60-year-old home. It seems to have good bones, but I see several red flags. Is there any advantage to having a pre-offer inspection completed before we make an offer? Jerry and Judi T.

Monty’s Answer: A home inspection is a necessary component in the purchase of any home. Although less likely, flaws or errors can and do occur even in brand new homes. Even quality contractors make mistakes. Whether a home is 100 years old or brand-new, a home inspection is a valuable service.

There are multiple circumstances in every transaction that could impact the direction one takes in making a decision on a pre-offer inspection. Here are the primary advantages and disadvantages of having a home inspection before making an offer:

Advantages:

  • You may discover issues that will cause you not to move forward.
  • If you do make an offer, it does not have to contain an inspection contingency.
  • You have better factual information before you decide an offering price.
  • If you do not make an offer, you may avoid other costs triggered by the contract.

Disadvantages:

  • With no contract, there is a chance the seller may sell to another buyer.
  • You still may not be able to come to terms with the seller.

A pre-offer inspection is not a factor to introduce in every circumstance. It should be considered only after reviewing certain data, and only after you have determined you want the house.

Considerations in this decision

Can you find a good home inspector? Just as not all homebuilders and real estate agents are equal, so goes the home inspector. Regardless of the timing of the inspection, when you order a home inspection, consider researching the options and making a judgment on which inspector to engage based on your research. If you take a recommendation from an agent, make certain they provide at least three options.

Consider interviewing three inspectors. Just as one would interview multiple agents, contractors, and other service providers. Review their website, call a couple of their references, review their qualifications and experience, review their contract and deliverables (a sample inspection) and ask them questions about promises in their offering or promotion. A good way to ask your questions is by email. Good inspectors are busy during daylight hours (never hire a home inspector that does inspections at night) and they will respond after inspection time. Make certain they understand the situation.

Inspection companies have different offerings. Does the inspection company re-inspect at a pre-closing walk through for a smaller fee? Many inspectors offer some guarantee. One company guarantees they will buy the house from you for what you paid if they make a mistake. See that their promotions line up with your needs.

The right-to-cure provision. Most states have some statute regarding home inspections, which may be baked into a pre-printed offer to purchase form. If the law provides the seller the right-to-cure any defects discovered in a home inspection, that is a reason to inspect before an offer. The buyer should control the repairs or replacements because when the seller has the right, there is often dissatisfaction.

Understand the market conditions in the neighborhood. If homes are going pending in a very short period, the pre-offer inspection may not be appealing to the seller, or they may find another buyer before you can act on the results. Time on market is useful to determine, along with how long it will take the inspector to deliver the report. If the statistics suggest the home may be on the market a month or two, or it has been on the market for some time, the odds to use the pre-inspection to make better decisions increase.

Will the seller agree to order the inspection? Dear Monty recommends most sellers have their home pre-inspected and fix any issues before they list their home. A property owner that takes this step is wise. It matters not who purchases the inspection. What is important is the report’s accuracy. Maybe all they need is a nudge; the seller can use the inspection as a marketing tool.

Why few buyer order pre-purchase inspections

Many real estate agents will discourage the idea of seller pre-inspections or a buyer asking for a pre-offer inspection. This pushback could come from either agent. The agent fears blame if a contract never materializes. Also, the agent may fear it will “kill the deal,” and see the pre-offer inspection as more potentially unpaid work.