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Speeding Up Your Sale: Prelisting Home Inspections Do the Trick
A prelisting home inspection—one that is paid for by the seller plays a large part in a buyer’s decision to buy. It signals openness about the shape of the house and omits the possibility of unpleasant surprises that could potentially slow the sales transactions and bring the price down. In addition, Realtors who require or recommend prelisting home inspections give their client’s homes a marketing edge.
These inspections also give the discriminating buyer upfront information on the condition of the home, and in some cases, a preemptive seller’s inspection means that repairs, such as a dripping faucet or roof leaks, will likely be fixed.
The report also signifies to buyers that the sellers made all efforts to sell the house and cared about selling to somebody who was going to be satisfied with the condition of the home and the repairs made to it. With their own report, sellers can choose, for example, to spend a few hundred dollars fixing a faulty electrical problem that might otherwise result in a claim for thousands off the home price.
Some of the multiple benefits of recommending that a seller conduct a prelisting home inspection include the financial advantage for home sellers to make important repairs. Should a buyer request a specific repair as part of the sale agreement, the seller could easily be placed in the position of having that repair done at the last minute at a higher cost.
Alternatively, if that buyer opted to negotiate the price downward due to a repair left undone, they may face typical decreases such as for every $1 of identified repairs, buyers ask at least double or triple that in a price reduction.
Savvy home sellers who, for example, learn through home inspection that portions of the roof need repair may opt to repair that section immediately. Paying $5,000 for the repair is far more enticing than reducing the asking price by $10,000 or more. Buyers typically expect a $2 to $3 price discount for every $1 worth of defects turned up by their inspector.
Most buyers think that buying a home is going to be a lengthy, complicated, and stressful process potentially lasting for months. The prelisting home inspection reduces the stress inherent in such a major transaction as all parties quickly gain a thorough knowledge of the home through a full written home inspection report.
It also reduces time spent on the negotiation process, as all information on the home is given upfront to the buyer. This limits the potential of any surprises and tells to the buyer that problems may have been found and were repaired so the house is in the best condition possible.
Prelisting home inspections are no longer a rarity; instead, they’re becoming a valuable part of any seller’s marketing. It’s estimated that the number of homeowners choosing to conduct a Prelisting home inspection has increased to 85% in the last one to two years.
Sellers or realtors who pay for a prelisting home inspection know it’s a small price to pay—average cost is $400—for a checklist covering over 1,500 items in a home. The result is that they’re more prepared to sell the home quickly for the highest valuation and that home buyers are more receptive to enter into a sale because they feel comfortable with all the information on the home’s condition being disclosed upfront.
How to Select a Home Inspector
No home inspector can ever find every defect in a home without spending days living in it, and without some destructive and very costly tests. Neither is practical or possible.
Yet, the home inspector your choose can make a difference in what is found, and in your understanding of the true condition and ultimate cost of buying and owning a home.
So, first thing first, decide to have your home inspected as a condition of purchase – do not skimp on money and skip this step!
Your next step is to select a home inspector who can do the best job for you and who will be totally objective. How do you do this? The answer is the same as how you should select a Realtor as your Buyer’s Agent: COMPARE.
The purpose of a home inspector is to discover and report defects. The ability to do this effectively involves skills that take many years to develop and refine. Some inspectors are far better at this than others. Unfortunately, most people don’t realize this when they hire a home inspector, and spend little, if any, time selecting one.
OK, so what should I compare?
Start by comparing experience, knowledge, and forensic skills. Designations may be important, too, but more often than not, they are the result of a one or two day class which was completed, along with the payment of an annual fee to allow the inspector to use the designation in his or her advertising.
In most cases, people hire the inspector who is recommended by their Realtor. Those recommendations are sometimes good ones, but sometimes they are not. If you chose a good Realtor, your chance of his or her recommendation for a home inspector will probably be more reliable than otherwise.
Also keep in mind that some real estate companies have ownership and/or financial interests (also known as “affiliated business arrangements”) with home inspection and other companies, and they promote and recommend those companies for added profits. Does this make their recommendation or referral objective? Does this place your interests in first priority?
There is always the potential for a Realtor to not want to risk their sale on a thorough inspection and thus you may wonder if there is a possibility that he or she would recommend an inspector who is less prone to critically and thoroughly review a home. So, while you may and probably should rely on your Realtor for a recommendation, do not place over-reliance on him or her for this; you should be involved in comparing home inspectors.
Should you compare cost? This is a low priority compared to other points of comparison. Some homebuyers do simply call a list of inspectors to see who charges the least, but I wouldn’t advise this as the best point of comparison.
Instead of asking for a price quote, buyers should inquire about experience and qualifications.
Some questions to ask include:
”How long have you been a home inspector?”
“How many homes have you inspected?”
“How many hours will you spend inspecting my future home?”
“What are your guidelines for determining a defect versus a concern in a home, and what factors go into this determination?
“May I see a sample report that you will use to evaluate and report your findings?”
“What are the top two or three reasons I should hire you instead of another home inspector?”
“Mom-and-Pop” Real Estate Shops are a SmarterChoice™
During 2009 and continuing into 2010 several top agents left large real estate brokerages to start or join smaller companies. That trend is expected to continue. Why?
Many were asked by their managers: “Why would you leave a big company to go to a new and small ‘Mom-and-Pop’ shop?”
Smaller, independent, lesser known – are how some see the small brokerage companies – the “Mom-and-Pop” shops. Selectivity, quality, veterans – these are other characteristics of the smaller brokerage companies.
In real estate we are all really Mom-and-Pop enterprises, regardless how big or small. It’s the agents who are front-facing. It’s our image, our talents and our visibility in the neighborhood that the customer sees and hires. We are the “Moms” and “Pops”.
Wal-Mart changed the retail landscape by dealing in volume that, in turn, allowed for lower pricing of its products. This, in concert with greater efficiencies, gave Wal-Mart an advantage over smaller retailers.
It was thought that the same rules would apply to real estate – that big would be better, and that consumers would save. In real estate, though, a case could be made that the reverse is true.
Larger brokerages deal in volume — of agents and therefore transactions – but that tends to have no effect on fee structures. Large brokerages actually lack the efficiencies of a right-sized shop.
OK, take the advantage of volume out of the analysis; what’s left. Is there a compelling appeal or advantage of the big broker over the Mom-and-Pop?
Would a consumer find greater quality when shopping at the big box?
The last time I checked, brokers large and small belong to the same associations; we use the same multiple listing services, the same Code of Ethics, subject to the same Nebraska license law.
Small brokers also recruit less and can spend more time on selectivity. The small broker (Mom-and-Pop) is less immune to the financial pressure of vacant desks and the onus of maintaining market share dominance.
So we are back to the individual agent, and the quality of the agent has virtually nothing to do with the size of their franchise fee. Quality control, in fact, is much harder to achieve on a grand scale.
Real estate brokers are again becoming fragmented, no question, and it will continue to happen at a faster pace.
But Mom-and-Pops are not by their very nature evil-doers who pose a threat to the industry, nor do they threaten the quality of the customer experience or the services they receive.
I suppose the only real threat is to the big brokers, and that is really the issue.
Given that the overwhelming majority of customers do not care about their agent’s brokerage affiliation. As a result the broker (company) has two choices:
- The broker can try to change the reality by powering home a brand, or
- The broker can focus on improving the quality of all the little guys on the front line — the real Mom-and-Pops.
I like the second choice, because with that one, the other just may be a pleasant side effect. As a broker, I know it is the agents who matter.
If I were selling towels and toasters, the numbers of offices or the number of agents I have could put me at a competitive advantage. But I don’t sell towels and toasters, and I am not subject to the market rules of Wal-Mart.
As long as we are selling our services and our abilities — ourselves — the customer has little interest in company size, sales volume, or any other quantity or quality index that doesn’t apply.
So, call me a “Mom-and-Pop” if you must; it is a better world, and I’m glad to be there.
Re-Inventing Real Estate: The Changing Real Estate Industry
For decades, the job of real estate agents and the real estate transaction followed a predictable path of yard signs, newspaper ads, open houses and miles of paperwork.
Real estate professionals now face issues similar to the ones that have transformed the retail, personal finance and travel planning industries, as online sources and empowered consumers have changed the game.
The real estate industry has begun to transform itself from providing traditional, carefully controlled “agent-centric” transactions to new “consumer-centric” practices.
Here are five trends which are driving change in real estate:
1. Intermediation and Disruption – The Internet has matured into a powerful platform for delivering real estate information, forever changing the mode of interaction between real estate professionals and their clients and prospects.
2. Displacement – The demand for self-service and consumer-direct business models is being felt by real estate professionals who are striving to develop attractive new offerings for Web-savvy consumers.
3. Web-Enabled Consumers – You now have more real estate knowledge, tools and resources at your fingertips than ever before. More savvy consumers tend to be more independent and demanding. Their challenge is to convert raw information into best-actionable knowledge without professional assistance.
4. Downward Pressure on Fees – Traditional real estate commissions based on a local norm and a percent of a property’s sales price are facing downward pressure.
5. Developing Alternatives – The real estate industry is transforming itself to provide targeted services and exciting new options that add value for consumers. Innovative, and usually smaller, brokers have responded with new service packaging based on “smarter and better” marketing with flexible fees.
Intermediation and Disruption:
“We are going to see our industry go through dramatic transformation via the Internet and consolidation of agents and companies,”
- Dirk Zeller, eRealty Times Columnist
Harvard Business School professor Clayton Christensen’s coined the term “disruptive technology” to explain recent developments in real estate. The World Wide Web and advancing technology is only part of what’s shaking things up. Essentially, the real cause of disruption is not just technology, but technology-enabled real estate consumers, and a new consumer ethic.
Intermediation is the entry of non-traditional providers to capture market share or remodel the existing business model. Banks? Insurance companies? Google?
Displacement:
Currently, about 2.4 million real estate licensees operate nationally, according to the Association of Real Estate License Law officials. The National Association of Realtors (NAR) has more than one million members, up from about 760,000 members five years ago.
Many real estate professionals and industry observers expect a significant decline in this number because some tasks traditionally performed by agents and brokers can now be done more quickly and easily by Web-enabled consumers.
“Simply put, the traditional model is too inflexible. Consumers are seriously questioning the value of a real estate agent. They frequently feel that many of the traditional tasks undertaken by the agents are now either no longer required or can be done by the consumer themselves.”
– Swanepoel & Tuccillo, Real Estate Confronts Profitability
The quotes above, from a popular report on emerging real estate business models and dwindling profit margins, highlight a number of issues traditional real estate professionals are now facing.
Most real estate industry experts and economists are laying their bets that the number of traditional real estate agents will decline, while new real estate [models] will be created to deliver value more efficiently and more cost effectively to Web-savvy customers.
Web-Enabled Consumers:
According to the National Association of Realtors (NAR), more than 72 percent of homebuyers now begin their home search online. The popularity (not to mention the effectiveness) of online real estate ads surpassed newspaper property listings back in 2001, and the gap is widening. The majority of homebuyers identify the home they ultimately purchase through an online source.
Home Search: Web-enabled homebuyers like you are taking a more active role in researching homes and neighborhoods. You also now spend less time with real estate professionals once you have completed your research. Internet homebuyers also used the Web effectively to filter out properties that did not interest them, visiting 6.1 homes on average versus 15.4 for traditional buyers.
Visualization: Today, you can view photos and detailed information for hundreds of properties in the time it used to take to visit a single one. And the Web provides much more opportunity than simply moving print listings online through powerful and flexible visual search tools.
Valuation: In addition to making home searches easier, automated valuation model (AVM) software is beginning to make a big impact (still in its infancy as to accuracy) in how property list prices are reviewed. AVMs generate valuation estimates by analyzing and comparing property information data. AVMs are quick but it’s the familiar story: “Garbage in; garbage out”. What is “comparable”? Is a nearby property that is in a lesser or greater neighborhood relevantly proximate? A Realtor CMA may be more accurate, but it depends on the experience of the Realtor who provides this service. The “Garbage in; garbage out” rule applies here, too.
Developing Alternatives: The MLS “Goes Public”:
“In real estate, MLS data sits at the apex of the change, specifically the MLS information that is pushed to the Internet every minute of the day.”
– Bradley Inman, Publisher of Inman News
Once an exclusive tool for real estate professionals, in many communities the multiple listing service (MLS) has in recent years become a very public platform for real estate listings. That is not yet the case here in Lincoln, although pioneering and progressive new brokers are trying to change the model imposed and maintained by the large and established brokers to control and “brand restrict” (limit) web-based information about real estate listed by brokers sale.
Public Access to MLS Information: In Lincoln, Nebraska, all local MLS published listings are viewable at www.SmarterChoice™RealEstate.com by the public. As of the 2010, this is one of two local brokers who have taken this bold and innovative step to give real estate consumers a better way to buy or sell their homes.
These websites have been dubbed “Virtual Office Websites” (VOWs) since in some communities they also replace the traditional brick and mortar buildings otherwise known as traditional real estate offices.
With Realtors working remotely 90%(+) of the time, the cost, expense, and hassle of offices for real estate is becoming a thing of the past, and the elimination of that expense is helping the new breed of brokers offer savings to their selling clients.
As an interesting footnote about VOWs, the “real estate establishment” inserted a public registration condition, as a condition to settle an anti-trust lawsuit brought by the U.S. Department of Justice against the National Association of Realtors (N.A.R.) a few years ago.
N.A.R. brokers defend their requirement for public registration as a condition to see listings as a way to monitor who is viewing “their” listings that are displayed by this new breed of public MLS look-alike websites. (But how can anyone validate anyone’s online registration identity? You have to be a super-geek to do this; few are.)
In reality, the more plausible reason for a registration requirement (and other option local requirements) to use VOWs to view all listings in one convenient stop was anti-competitiveness – a way to discourage and slow the use and proliferation of this new generation of public access MLS information which threatens the business model and the eventual survival of the traditional real estate brokerage model and the companies which comprise it. User-friendly?
Developing Alternatives: Listing “Syndication” to Achieve Wider Awareness:
Some real estate brokers also have wisely decided that it is in the best interest of their selling clients (and therefore their long term interests, too) to share or syndicate their listings across many local, state, national, and even international websites, versus holding their listing “captive” and only publishing them on their own branded (in-house) websites where fewer eyes can see them, but potentially lead to more double-sided sales to enhance their gross and net revenue streams and reinforce their brand.
Some of these mega-sites used by the more progressive brokers to syndication their listings include : Realtor.com; Homes.com; Yahoo.com; GoogleBase.com; Zillow.com; RealEstae.com; WSJ.com; Excite.com; AOL.com; and MSN.com.
Some MLS listings also appear on local, regional and national brokerage Websites through Internet Data Exchange (IDX) agreements that allow participating Realtors to reciprocally share listings and display them to consumers.
But a more costly VOW agreement is currently required to display all published MLS listings online, and thus, few brokers have yet taken this larger step.
Developing Alternatives: Remodeling the Brokerage Model and Cost to Sell:
When you go to most restaurants you can order and consume what you wish. In some restaurants this model is extended to “a la carte” dining, which means that if you only want to order steak, you don’t have to buy the potato, vegetable, and salad.
So, what is wrong with this choice in real estate brokerage services, and why do few offer it? And why do some brokers also try to sell you loans and escrow closing services (appetizers and desserts)? It’s called the ‘double-dip’ and ‘triple-dip’ . . . more profit.
One size and one price does not fit everyone, and no one give up choices or be forced into a “take it or leave it” offering. Also, the broker may be the best point of purchaser for real estate sales services, but not so for loans or other services.
True “a la carte” is one solution. An even better solution may be keep the service menu strong (no deletes), but not pre-set the price of that menu based on what is served. Rather the service can be priced on how the home is sold and/or how soon the home sells. There are choices galore out there; one will be best for you.
Stay tuned –much more change is expected in real estate brokerage and other service-based industries, and it is likely that the new brokers will offer what consumers demand, at prices that work for both – and that in the process the traditional model of real estate brokerage will be changed forever.
Speeding Up Your Sale: Prelisting Home Inspections Do the Trick
A prelisting home inspection—one that is paid for by the seller plays a large part in a buyer’s decision to buy. It signals openness about the shape of the house and omits the possibility of unpleasant surprises that could potentially slow the sales transactions and bring the price down. In addition, Realtors who require or recommend prelisting home inspections give their client’s homes a marketing edge.
These inspections also give the discriminating buyer upfront information on the condition of the home, and in some cases, a preemptive seller’s inspection means that repairs, such as a dripping faucet or roof leaks, will likely be fixed.
The report also signifies to buyers that the sellers made all efforts to sell the house and cared about selling to somebody who was going to be satisfied with the condition of the home and the repairs made to it. With their own report, sellers can choose, for example, to spend a few hundred dollars fixing a faulty electrical problem that might otherwise result in a claim for thousands off the home price.
Some of the multiple benefits of recommending that a seller conduct a prelisting home inspection include the financial advantage for home sellers to make important repairs. Should a buyer request a specific repair as part of the sale agreement, the seller could easily be placed in the position of having that repair done at the last minute at a higher cost.
Alternatively, if that buyer opted to negotiate the price downward due to a repair left undone, they may face typical decreases such as for every $1 of identified repairs, buyers ask at least double or triple that in a price reduction.
Savvy home sellers who, for example, learn through home inspection that portions of the roof need repair may opt to repair that section immediately. Paying $5,000 for the repair is far more enticing than reducing the asking price by $10,000 or more. Buyers typically expect a $2 to $3 price discount for every $1 worth of defects turned up by their inspector.
Most buyers think that buying a home is going to be a lengthy, complicated, and stressful process potentially lasting for months. The prelisting home inspection reduces the stress inherent in such a major transaction as all parties quickly gain a thorough knowledge of the home through a full written home inspection report.
It also reduces time spent on the negotiation process, as all information on the home is given upfront to the buyer. This limits the potential of any surprises and tells to the buyer that problems may have been found and were repaired so the house is in the best condition possible.
Prelisting home inspections are no longer a rarity; instead, they’re becoming a valuable part of any seller’s marketing. It’s estimated that the number of homeowners choosing to conduct a Prelisting home inspection has increased to 85% in the last one to two years.
Sellers or realtors who pay for a prelisting home inspection know it’s a small price to pay—average cost is $400—for a checklist covering over 1,500 items in a home. The result is that they’re more prepared to sell the home quickly for the highest valuation and that home buyers are more receptive to enter into a sale because they feel comfortable with all the information on the home’s condition being disclosed upfront.
Ten Things to Do Before Your Home Inspection
1. Confirm that water, electric, gas service are on, with gas pilot light burning.
2. Ensure pets won’t hinder the inspection. Ideally, they should be removed from premises or secured outside. Tell your agent about any pets at home.
3. Replace burned out bulbs to avoid a “light is inoperable” report that may suggest an electrical problem.
4. Test smoke and carbon monoxide detectors, and replace dead batteries.
5. Clean or replace dirty HVAC air filters. They should fit securely.
6. Remove stored items, debris and wood from foundation. These may be cited as “conducive conditions” for termites.
7. Remove items blocking access to HVAC equipment, electrical service panels, closets, fence gates and crawl spaces.
8. Unlock areas the inspector must access – attic doors or hatches, electric service panels, closets, fence gates and crawl spaces.
9. Trim tree limbs to 10′ from the roof and shrubs from the house to allow access.
10. Attend to broken or missing items like doorknobs, locks and latches; windowpanes, screens and locks; gutters, downspouts and chimney caps.
Checking these areas before your home inspection is an
investment in selling your property.
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