June 29, 2017

Hatteras Island Real Estate:
The Value Of Pre-Inspections


In a sales transaction between the time that a contract is signed and the closing, the buyer will almost always order a home inspection as a part of their due diligence evaluations of the property they are purchasing. This is an important milestone because the home inspection report usually introduces a second round of negotiations into the sale. This year, we have seen an increase in the number of contracts that have failed to close because of home inspection discoveries. What could be causing this trend, and what can sellers do to minimize potentially negative impacts from a home inspection?

After giving this issue considerable thought, I believe there are three basic factors that are responsible for the troublesome reports – the aging of our residential inventory, construction deficiencies, and owner reluctance to make repairs.
  • Looking at the current inventory of homes for sale, over half are anywhere from 20 to 50 or more years old. Given the age of these homes and the coastal climate that characterizes a barrier island located 30 miles from the North Carolina mainland, a progressive deterioration of homes is to be expected.
  • Building codes have evolved over time. Houses today are built to different standards than they were 20 or more years ago. In addition, some homes have construction deficiencies relative to the Hatteras Island environment. (The absence or inadequacy of flashing around windows and doors which allows moisture intrusion is an example.) These shortcomings are not just limited to older homes, either. Inspectors are finding issues with cottages built during the last building boom.
  • Even when repairs or upgrades are known or recommended, some sellers choose to defer needed maintenance.

To identify ways that sellers can improve the odds for a positive outcome from a home inspection, I contacted members of a professional real estate organization to which I belong, and I researched published articles on the subject. I was somewhat surprised that the recommendation was almost universally the same regardless of the source – sellers should consider getting a pre-inspection of their home before they list their properties for sale. This will uncover necessary repairs that might scare buyers and cause them to back out of the sale or to renegotiate the terms of the contract. Once repair issues are identified through a pre-inspection, sellers are advised to make necessary significant repairs.

Here are some of the benefits of a pre-inspection.
  • Identifies major or unanticipated problems that could potentially derail a future sale.
  • Helps sellers to adjust their asking prices if they are not willing to make certain repairs or to negotiate a higher price if no major problems are found.
  • Gives sellers time to compare prices and repair costs from a variety of contractors as well as time to fix problems without the stress of time constraints associated with contracts.
  • Reassures potential buyers that there are no major surprises ahead of them.
  • Demonstrates good faith on the part of a seller which may encourage a buyer to more readily make an offer.
There are also some reasons that sellers may decide not to order a pre-inspection.
  • Home inspections are an expense to the seller. Home inspection costs can begin around $400 for smaller cottages, and the cost increases based on the size of the house.
  • Once a home inspection report is received by a real estate agent, it becomes a material fact which must be disclosed to all future buyers and their agents. This can be turned into an advantage if the report is annotated with repairs that the seller has already made.

When all is said and done, there is no right or wrong answer about whether or not a seller should order a pre-inspection. It all boils down to whether a seller wants to understand and address issues affecting the condition of their home before marketing it, or whether they prefer to take a “wait and see” attitude relative to buyer concerns that develop after a contract is finalized.

Local real estate agents can recommend a variety of licensed home inspectors to sellers who would like to order a pre-inspection. This is an option that is well-worth considering when planning to list your Hatteras Island cottage for sale.

(Tom Hranicka is a broker with Outer Beaches Realty. Questions, comments, or suggestions for future articles may be sent to Hranicka at P.O. Box 280, Avon, NC  27915 or emailed to [email protected]. Copyright 2017 Tom & Louise Hranicka.  All rights reserved.
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