Lorraine Ryall
As we head into the glorious spring weather in Arizona, we also head into our peak home selling season.
March through June are still the months with the highest sales in Mesa. Inventory is at its lowest since 2005 — Mesa active listings as of Feb. 15 was at 741 compared to 1,272 for the same time last year. That’s a significant 42 percent decrease just from last year.
With the low inventory and low interest rates, buyers are snapping up homes and we are seeing many more multiple offers. But don’t let that fool you. That certainly doesn’t mean you can sell your house for top price no matter the condition. We are seeing more contracts being cancelled during the inspection period than we do in a balanced market.
Two reasons this may be happening is:
- Buyers are rushing to put in an offer right away to beat the competition, and may have buyer’s remorse and cancel during the inspection period.
- Buyers are paying top price for the home in this sellers’ market, and are not prepared to pay top price and have a home that needs a lot of repairs.
Once Your House is Under Contract
As soon as you have a fully executed contract, the buyer will have a ten-day inspection period. This is when they will hire an inspector; probably a termite company; maybe a roof, HVAC and pool inspector; and perform any other inspections they choose. This is the buyers time to do their due diligence on the property before moving forward.
Pros of Doing a Home Inspection
Buyer Can Cancel and Get Their Earnest Back up to 20 Days
Once the buyer receives the inspection report, they will ask the seller to do any repairs they feel necessary. They have ten days (unless the contract states otherwise) to submit their request to the seller. The seller will then have five days to agree to the repairs or respond. If the seller agrees to all the repairs the buyer is asking for, they sign, and the inspection period is over. If the seller doesn’t agree to all repairs and responds in any way, the buyer has another five days to accept the response or cancel. Now you are on day 20 (ten days for the inspection period, five days for the seller to respond and five days for the buyer to accept the response or cancel) since the contract was fully executed. If the buyer cancels, their earnest deposit is returned. This means you have had the home off the market for 20 days and now have to re-list. Having a home inspection up front may have prevented this as both you and the buyer would have known the condition of the home from the start.
Doing a home inspection up front also gives you plenty of time to get bids on repairs you want to do, or even if you don’t intend to do the repairs you can get bids to know how much they would cost. You have time to find the best contractor at the best price instead of having to make the decision in five days after the buyer sends their repair request.
Your Home Warranty May Cover Repairs
If you have an inspection and repairs are needed, they may be covered by your home warranty. It can take time for a claim to be submitted, the repair company scheduled, and parts may need to be ordered. Doing this before you list the home allows you the time to get it done. You can still list the home while the repairs are being completed.
If You Don’t Have a Home Warranty You Can Get One While Your House Is Listed
If you don’t have a home warranty when you list your home, whether you do an inspection or not, you can get sellers’ coverage. Then, if anything that is covered such as major appliances, AC unit, etc. breaks while your home is on the market, it may be covered by the Sellers Home Warranty. The warranty company I use only charges one flat fee of $60, and only when the house closes, so make sure you check with your Realtor and have the warranty added when you sign the paperwork to list your home.
Cons of Doing a Home Inspection
No Two Inspectors Are the Same
Even though you have done a home inspection, the buyer will still do their own inspection. While most of the items on each report will be similar, every inspector will find something different. So even though you have had an inspection, and even if you fix everything on that report, the chances are there will still be some other items the buyers inspector will find.
No Two Buyers are the Same
What is important to one buyer may not be important to another. Even if the buyers are looking at exactly the same inspection report, one buyer may ask for ten major items to be repaired while the other only asks for two or three smaller items. You may have spent money on repairs that the buyer never would have asked you to fix.
Disclosing Items the Inspection Finds
When you list your home, you must fill out the Seller’s Property Disclosure Statement (SPDS). This form must be completed by all sellers and given to the buyer within three days of contract acceptance. The Seller’s Disclosure is information about the house and its condition. It’s a simple form with mostly yes and no questions but the seller must disclose any issues with the home even if they have been repaired. So, if you do an inspection and find out you have a roof leak that you didn’t know you had before, even if you have it repaired, this must now be disclosed on this form. But the buyer’s inspection would discover this anyway, so disclosing sooner and having time to take care of it is still an advantage.
If you have any questions on inspections or would like a referral to a home inspector, please feel free to contact me.