The case for Move-In Certified pre-sale inspections

The Ontario Real Estate Association (OREA) has for many years, rightly recommended that to protect home buyers from many potential property issues, all home sales include a full disclosure of known problems with a property.

This does not protect just the home buyer, but the home seller too.  We are, depending on who you ask, either at the tail end, in the middle of or just at the start of recovery of a period of economical recession.  It has been proven historically that “Whenever there is economic turmoil, tempers flair and lawsuits fly”.  In multiple surveys, it has been shown that litigation has increased across the board since 2009.

Normal Perception

Many Home Sellers are led to believe that here in Ontario the rule of “Caveat Emptor” applies to the sale of a home.  They take this to mean “Buyer Beware”.   There are several problems with this attitude.  First of all, it is not completely accurate, and there are many things that the seller of a property is still liable for up to and after closing.  Second, when a seller shows this to be their position, the sensible buyer does take a defensive position, and is more likely to walk from an unsound investment for the slightest of reasons.

The Realtor Industry tries to help

In an attempt to assist vendors to make a full-disclosure OREA came up with the Seller Property Information Sheet (SPIS).  Filling in of this sheet is voluntary in all but a few locations in Ontario and it does go some way to showing that the Vendor is prepared to stand by the property they are selling.

The SPIS itself has a few problems.  One is that it is not easily understood, and can sometime raise more questions than it answers.  Another problem is that if the home seller needs to ask the Realtor how to fill the form in, the Realtor then may become liable for the answers given.  A third problem is that the SPIS itself doesn’t always protect the buyer, and given the recent increase in litigation doesn’t protect the Realtor working for the buyer either.

The obvious solution is for the seller of the property to engage a Certified Home Inspector independent to the sale professionals to perform a pre-sale inspection.  So why doesn’t this happen more often?

Investigations into the reasons why pre-sale inspections are not more prevalent have uncovered some interesting perceptions on the part o the property vendor.

home inspection niagara falls A pre-sale inspection costs too much.

The average price of a home inspection, irrespective of when it happens ranges between $325 and $650, depending upon where you live and the size of the property.  The average cost of a real-estate transaction is between 3.5% and 5% of the property price.  This can again vary anywhere between $8,750 and $32,500 for the average two storey family home, again depending on where it is and how big it is.  The costs of a home inspection on the price of your house is in the order of 1/10th of 1 percent.
The cost of a Lawsuit from issues that arise after a house sale closes can be monumental.  Even if you don’t lose a Lawsuit, shared costs can sometimes run into hundreds of thousands of dollars.

A pre-sale inspection will not help me sell my house.

Sell your home quicker and for more moneyThe average days on the market of single-family dwellings in Ontario are around 22 days.  This doesn’t mean that the house sells in 22 days.  Some homes sell very quickly, which means than many more don’t sell for more than 30 days. 

The number of days for the time before sale is not necessarily the same as those given by the Real Estate Boards for days on the market (DOM). DOM is based upon individual listings, NOT individual properties.  If your home is on the market for 30 days, and then the home is re-listed or the listing expires and is re-posted and you get a new MLS number, it is a NEW listing, even though it’s the same house, and the same sale process. 

Houses that have actually been on the market for 6 months can still fall within the “On the Market for less than 30 days” by virtue of the way in which it is listed. 

Why do houses stay on the market so long?  Sometimes the price is too high, either for the condition or type of property, or the location, or some surrounding outside influence. 

Very often though, sales fail because of an unexpected find by potential buyers, normally as part of a pre-purchase home inspection.  A Pre-sale inspection ensures that these issues are found BEFORE a potential buyer ever gets to see the property, and the seller can choose to fix the problem, or adjust the price accordingly.  Either way, this removes many negative reasons for a buyer from walking from a deal.

A pre-sale inspection is pointless if a buyer is going to have their own inspection.

A buyers inspection is a visual, non-invasive inspection of a property.  It can never have the depth of a Pre-sale inspection. Take for instance a home that has had obvious repairs to a structural beam in the basement or truss in the Attic.  A buyer’s inspection should say just that.  This leaves the buyers in a situation where they know that something went wrong in the past, and that it may have been fixed properly, or it may not. 

A Pre-sale inspection has the benefit of having the home owner present at the inspection.  The inspector can ask questions about any repairs, can ascertain for paperwork that could be included in the report that the repairs were carried out properly by a qualified person. 

Even when the buyers then come along with their inspection report, you then have qualified evidence to ease their concerns.

winter home inspection invisible niagara falls ontario

A pre-sale inspection might uncover problems that the seller was unaware of.

This is unfortunately true.  This, as I said earlier, allows the Seller to either adjust the price of the house accordingly or have the problem fixed, and a new report produced. (See the last point). 

If you are a seller and consider this to be something you don’t want to have happen, consider this, you are selling a house, but presumably are buying another one. 

If you had the choice to buy a home that was inspected before you looked at it, and had all and any issues either fixed or fully disclosed, or a home that relied on a visual, non-invasive inspection of your own that might miss some salient points, which home would you choose to buy? 

Potential buyers of your home have the same choice.

Trending towards pre-sale inspections

Across the world home buyers, and companies that finance them are looking at property more as an investment, and want to ensure that the resale value is as high as possible. 

In the U.S., Europe, Australia and New Zealand pre-sale inspections are becoming more and more prevalent, because they provide the confidence to home buyers that the vendors have looked after the property, and the prices are based upon realistic, objective appraisals. 

Move-In Certified

Pre-Sales inspections are coming here in Canada, it is only a matter of time before homes on the market will be overlooked completely if they are not pre-sale inspected.

At Purple Martin Property Inspections we offer inspections that are part of the “Move-In Certified™” program.  Move In Certified Homes have been pre-inspected and the seller can honestly confirm that they are aware no major systems in need of repair or replacement and no known safety hazards.

A summary of the advantages of selling a home that has been Move-In Certified:

Ethical and less potential for liability

  • A seller inspection is the ultimate gesture in forthrightness on the part of the seller.
  • The report provides a third-party, unbiased opinion to offer to potential buyers.
  • The report can alert the seller to any immediate safety issues found, before agents and visitors tour the home.
  • Move-In Certified homes have been pre-inspected and the sellers confirm that there are no major systems in need of immediate repair or replacement and no known safety hazards.
  • The seller can schedule the inspections at the seller’s convenience.
  • The seller can assist the inspector during the inspection, something normally not
    done during a buyer’s inspection.
  • The seller can have the inspector correct any misstatements in the inspection report before it is generated.
  • It might alert “the seller” of any items of immediate personal concern.

Convenient and more accurate

  • A seller inspection reveals problems ahead of time which

o   can help to make the home show better.

o   gives the seller time to make repairs and shop for competitive contractors.

o   permits the seller to attach repair estimates or paid invoices to the inspection report.

o   removes over-inflated buyer procured estimates from the negotiation table.

Market potential and Market value

  • The report can help the seller substantiate a higher asking price where problems don’t exist or have been corrected.
  • A seller inspection permits a clean home inspection report hosted on to be used as a marketing tool.
  • Move-In Certified yard signs attract potential buyers.
  • The report can help allay a prospective buyer’s unfounded suspicions, before they walk away.
  • Stops 11th hour renegotiation of a contract which is a major cause of failed deals.