Once the new disclosure rules came into effect under TRESA, agents have had second thoughts about the pre-listing inspection.
In many cases, they were a very good idea. With an older home, there may be issues. If some concerns on the part of potential Buyers could be eliminated, then, we might generate a bidding war with Buyers having fewer reservations.
Here’s an outline of the new steps:
- Get a Listing signed,
- Secure the Seller’s informed consent about a pre-listing inspection,
- Identify a Home Inspector with a solid, reputable reputation,
- Ensure that the Home Inspector is covered by insurance,
- Ensure that the Home Inspector will permit its Report to be published,
- Ensure that the Home Inspector will write the Report in favour of the successful Buyer for a nominal fee,
- Have the Seller’s lawyer order the Report,
- Have the lawyer review the unsigned draft Report,
- If the draft Report is not acceptable in the opinion of the lawyer, simply proceed without any further involvement,
- Assuming the lawyer is satisfied with the Report, the lawyer should order the signed, completed Report,
- Proceed with respect to disclosure,
- Publish the Report as a schedule on MLS,
- Leave a copy of the Report on the dining room table,
- Forward a copy upon request to interested parties,
- Include a clause in the Agreement of Purchase and Sale which obligates the Buyer to purchase the Report for a nominal fee directly from the Home Inspection Company and include a limitations of the Seller’s responsibility for matters addressed in the Report provision,
- That clause should be specified in the Listing Brokerage’s Schedule “A”, drafted specifically for this transaction,
- Permit and encourage potential Buyers to arrange an inspection of the property by their own trusted home inspector at their own expense before “Offer considerations”.
If the above steps are followed, the Seller’s liability should be reduced, as well as the agent’s disclosure responsibility.
So, for those agents who have effectively used pre-listing inspections, this is a good option and works well under the new TRESA legislation.
Hopefully, it will generate higher Offers and ultimately a higher price for the property. Also, the Buyer should be in a position of “full knowledge”, meaning that the likelihood of any future lawsuits for holding back information will be substantially reduced.
Brian Madigan LL.B., Broker