Do Home Inspections Really Affect Property Value?

Do Home Inspections Really Affect Property Value? 

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Every homeowner who sells their home wants the best price for it. If it was left to them, due to the attachment most owners have to their homes, they would set an outrageous price for the property. But since they cannot do this, homeowners who choose to sell their homes must look at several factors to decide their list price.


Once an owner decides to sell, one of the first things they do is enter their property's details in a home value estimator to get an idea of how much they can sell for. Later they may sit with their estate agent to compare the prices of similar houses which have sold in the area over the last 90 days. Finally, even when they have a firm idea of the home's value, owners will often adjust the price downwards to get an edge in the market.


After doing these, it is natural for sellers to assume their list price is fair, and they have control over the home's eventual sales price. But this is not always so because there is one part of the selling process that can upend everything a homeowner has done to price their property. The home inspection plays a huge role in how much the homeowner eventually gets for their home.


What is a home inspection?

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A home inspection is a thorough investigation of the structures and systems of a property that is on sale. It is carried out by certified home inspectors who examine all aspects of the building to determine its true condition. 


The home inspection is usually ordered by a buyer after they have drawn up a purchase agreement with the homeowner. The result of the home inspection can determine if the contract is fulfilled or terminated. Why do buyers need home inspections?


A buyer orders a home inspection to uncover underlying issues with a property which have not been disclosed or are unknown to the owner. They do it to ascertain the exact condition of the home and ensure they will not be saddled with expensive repairs after they have paid for the house. Based on the outcome of the inspection, a seller will decide if the home is worth the price they have agreed with the owner or not. 

Probable outcomes of a home inspection

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If the result of the home inspection is positive and there are no serious problems with the home, the buyer can confidently go ahead with the purchase. But as explains, if the result uncovers major problems, there are three possible scenarios that can play out.


  1. The seller can agree to fix the problems before the sale is completed

  2. The buyer can use the problems to push for a reduction in the agreed price for the house

  3. The buyer can walk away from the deal, without losing their earnest money


In a case where the buyer uses the second option and demands a reduction in the owner's sales price, the home inspection has affected the value of the property. 


So back to the question: do home inspections really affect property value? The answer is yes, a home inspection can affect the value of a property if the result is negative and the seller leverages on it to negotiate a lower price. But what can homeowners do to prevent this?


How to ensure the home inspection doesn’t affect the home's value


  1. Order a pre-listing home inspection

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A pre-listing home inspection is the same as a home inspection. The difference is that it is ordered by the seller instead of the buyer. The reason sellers need a pre-listing home inspection is so they can know the true state of their home and what a home inspection will eventually find. This information can help the owner price their home accordingly. Or, at the very least, it can help them be more prepared.


  1. Fix detected issues

The seller can also use the results of the pre-listing home inspection to determine the critical repairs that need to be done in the home. Instead of doing cosmetic repairs, as most homeowners who are about to list their homes do, sellers can focus on problems that have the potential to terminate a purchase agreement.


By dealing with structural issues, roof damage, mold growth, plumbing problems, and electrical issues, they can protect their list price. Owners who make their home more move-in ready, have an upper hand during negotiations.


  1. Be open about the problems

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If a seller is upfront with buyers about the problems with a property, the buyer will factor those issues into their offer. That way there is almost no risk of the buyer turning around to demand a lower sales price. Additionally, being honest creates trust and enables the transaction to go through much more smoothly.

In closing, even if a home inspection can affect a property's value, homeowners still hold most of the power to determine how much they can sell their homes for.