The question: Should a Seller should incur the cost of supplying property inspection reports -- such as structural pest control inspections and the more general contractor’s inspection performed by a home-inspection specialist – to buyers prior to soliciting offers, part of what is typically called a buyer disclosure package? Though it is true that this cost is usually borne by a buyer subsequent to their offer being accepted, there are large advantages for the seller to do so for buyer’s review before any offers are made. Advantages that we believe far outweigh the additional costs.
Getting pre-sale inspections up front helps preclude due-diligence renegotiations (after the offer has been accepted), which are almost always for amounts (far) greater than the cost of the reports – and makes it much less likely that the transaction will fall out of escrow (most often due to new issues being discovered, post-offer-acceptance).
If material issues are uncovered by these inspections, it gives the seller time to remediate them appropriately or the listing agent to quantify them with professional estimates – which may be very important to prospective buyers – prior to going on market.
It allows for buyers to make no-inspection-contingency offers without the dangerous liability a listing agent and seller should be concerned about when there are no recent pest and contractor inspections. Any transaction allowed to close without recent inspection reports is asking for post-closing trouble - which almost always takes the form of buyer claims that the seller didn't disclose a negative material fact about the condition of the property. When this occurs after close of escrow, it will typically embroil all the parties and will always cost more in time, energy, aggravation and money than the cost of having the inspections proactively.
Remember that buyers will often accept property issues and conditions disclosed up front before they make an offer, but if the same issues are revealed later, after close of escrow, buyers often claim that they have been defrauded, that their quiet enjoyment of their new home has been ruined, and that substantial financial compensation is warranted. California is the most litigious state in the country.
Pre-marketing inspection reports may help price the property properly to begin with, and may even help substantiate a higher asking price. It’s always good to make prospective buyers as comfortable as possible regarding the condition of the property, because that comfortableness helps generate higher sales prices, especially in competitive bidding situations.
Remember: Always use the most widely respected inspectors in the area and have them do complete and comprehensive inspections.