Any buyer who goes to an open house can see a big binder on a table somewhere, containing the property disclosures. When the buyer gets half-way serious about the house, their agent then requests a copy of the “packet” from the seller’s agent. Some packets are better than others. Here’s how.

A good packet will contain a current pest control inspection from a locally known and reputable company. Next will be a general home inspection report, written in narrative form, also from a locally known and reputable inspector. If the general inspection revealed specific and serious defects, i.e. a suspect foundation or an exceedingly old furnace, these findings would be followed through with specialty inspections, i.e. engineering or heating contractor. Next up would be a video inspection report of the sewer lateral. Lastly, you would find disclosure forms completed by the seller with their specific declaration of defects, malfunctions, hazardous materials, work done with/without permits, natural hazards, earthquake retrofitting and lead based paint.

A “not-so-good” packet can come in two forms. The first would be a very “skinny” packet, perhaps with just a pest report from an unknown, out of area inspector. Or the seller just replies “don’t know” to just about every question.

The second is the exceedingly “fat” packet. A fat packet might have all the good stuff included but it is buried amongst a ream of only marginally relevant, and often, very old information. The seller’s agent might even include all the disclosures from the previous sale, even after a house has been completely renovated. Some of these fat packets have been 150 pages, or more!

Whenever you see a fat packet, you can be sure that at some point in the past, the listing agency (not necessarily the agent him/herself) has been sued for failing to disclose something. The fat packet is strictly a lawyerly response to the question “what is important to disclose?” Answer: “Don’t try to figure this out. Give them everything!”

Now, I’m certainly not advocating that a seller shouldn’t disclose something from a previous sale, or distant history. But the listing agent should take the time to cull the packet for the most relevant and timely info and place this first. The rest of the stuff can be given to the buyers after their offer is accepted, assuming the buyer has an inspection contingency.

Needless to say, unnecessarily fat packets are a pet peeve of mine. On my listings, I spend a lot of time thinking through what does, and doesn’t belong, in the packet. I make sure the info is presented in a logical sequence, and that most, if not all questions about the condition of the property are easily answered. This way, the buyer can feel comfortable making their offer “as-is” subject to their own inspections. If I’ve done my job right, then the buyer’s inspectors won’t come up with anything that I didn’t already cover in my packet.

Brett Weinstein

While the current home sale market is considerably cooler than in the recent past, there still remain many pockets of under-supply and over-demand. North Berkeley is a good example, where homes are still receiving multiple offers and large overbids. When a house for sale is vacant, one of the ways buyers make their offers more competitive, aside from price, is to have the property “pre-inspected” by a professional home inspector, with the idea to make an offer without an inspection contingency. While it can seem very attractive to a seller to receive a non-inspection contingent offer, there are larger issues at stake that make me recommend to my sellers that I expressly prohibit a buyer from pre-inspecting.

What’s wrong with allowing pre-inspections? It’s not really fair, for one thing. In effect, the seller is asking buyers to spend somewhere $500-$700 for an inspection on the speculation that their offer will be accepted. Well, only one offer will be accepted, leaving every other buyer with a useless report and a lighter pocket. Now repeat this process several times with several properties and you can see how a buyer might get more than a bit annoyed. So even when the buyer finally does get into contract, he is predisposed to being unhappy. This is usually not a good recipe for living happily ever after.

For another thing, allowing pre-inspections creates a logistical pain-in-the-ass. There have been many occasions where several groups of buyers, their agents, and their inspectors are all at the house at the same time. I can assure you, the only people happy with this scenario are the inspectors.

The remedy of all this is simple: allowing for a few possible exceptions (major fixer uppers, for instance), listing agents should prohibit buyer pre-inspections. Assure buyer’s agents that a reasonable inspection contingency period in an offer will not be held against them. This way, buyers can compete strictly on price and other terms.

This isn’t just touchy-feely stuff. It is my experience that when a buyer feels fairly treated, they will offer more.

The listing practice of not allowing buyer pre-inspections should go hand-in-hand with the seller providing a very good disclosure package. I’ll discuss this in my next posting.

Written by Brett Weinstein