Is there an inspection needed to list my home on the market?

Did you know that a large portion of the cities in the Metro Area now require that an inspection be performed on their home prior to transferring ownership? Quite a few of these cities even require the inspection be performed prior to listing on the MLS, so that the report is available to all interested parties prior to offer submission.

Nowadays, more and more cities are joining the ‘inspection train’ where a seller must have a property inspection be performed prior to the transfer of ownership. The inspection is very different than that of the buyer’s inspection performed in that it only goes over the specific city's code requirements.  All cities that require these inspections have a detailed form, specialized by each city, that an inspector must go through when evaluating the structure. Most cities allow for qualified home inspectors perform this inspection, so long as they’re approved by the city to perform said inspections. Some cities require a city employed inspector perform the inspection. No matter who does this inspection, the inspector must go over a specific list of items to test or evaluate and disclose the findings on a report. Each city has their own way of ‘checking the list’ but they do have similar levels of notating whether or not the item is up to city code. For the most part; an item can either meet the minimum requirement, be below the minimum requirement or considered hazardous if not repaired.

Once you have the report, you may need to complete some of the items ‘flagged’ prior to transfer of ownership. Which items need to be taken care of will depend on each city. For example, in the City of St Paul, all homes must have at least one hardwired smoke detector in the home. If the home does not contain one of these detectors, then this item is marked Hazardous and requires the installation of the detector prior to the sale of the home. This is the only item on the St Paul report that is required to be addressed before transferring ownership. Almost all cities will allow the transfer of ownership on the required repairs to a buyer, so long as they repair and have the items re-inspected within a specified timeframe. A buyer must submit a signed form to the city and include a copy in their closing paperwork in order to move forward with the sale. Some cities even require an escrow agreement be put in place for the required repairs notated on the report.

Now you ask yourself, should I complete all the repairs notated on my report? While most buyers are agreeable to assuming repairs, if you are in a financial position to complete them, I highly suggest that you do so. In this real estate market, most of the homes being sold are now ‘As-Is’ sales. This means that the seller will not be doing any repairs to the property, unless required by the city to do so, prior to closing and the buyer must accept the property condition as is. Banks and servicers are already taking a large financial hit on these assets as it is and have little intention of spending any more money to sell the home than is necessary. The sellers who sell their home as a short sale have experienced great financial difficulty and do not have the means to fix every item flagged on their report. Lenders who approve these short sales also require these particular sales to be As-Is anyways. A home that has an inspection report that is ‘clean, where there are no repairs required to sell, is much more appealing than a home that has required repairs already notated before even viewing the home.  Every buyer will have built in expenses with the purchase of a new home, furniture, paint or even fixture updates.  No need to pass along the additional expense of fixing the required repairs and hiring an inspector to re-inspect the completion of the repairs if it isn't absolutely necessary.

If you have any questions regarding the different city required inspections, or are in need of a quality, certified inspector, please feel free to ask me.