Pre-Listing Inspection Reports | Truths and Myths

If you have either purchased or thought about purchasing a home in the past five or so years, there is a good chance you have heard about sellers providing buyers with a pre-listing inspection report and home buyers waiving an inspection contingency. While some often-repeated “facts” are true regarding a seller’s pre-listing inspection report, there are several myths surrounding a seller’s pre-listing inspection report. This article highlights some of the truths and myths.

Truth #1 – Sellers have agreed to provide buyers with a pre-listing inspection report in exchange for buyers waiving an inspection contingency

Prior to the early 2020s, a “typical” sale of a home would start with the seller putting the home on the market and fielding offers from prospective buyers. Often, a buyer’s offer would be contingent on a home inspection. An inspection contingency allows a buyer to hire a home inspector to go look at the property within a set amount of time to determine whether any issues exist and, if so, help determine what kind of repairs are needed. Depending on the results of the inspection, a buyer can either move forward with the transaction, back-out of the purchase without penalty, or negotiate repairs and/or the sale price with the seller. 

In the early 2020s—a time when the residential real estate market experienced a unique combination of extremely low interest rates, low inventory, and high demand—some sellers started obtaining a home inspection before they put their home on the market and voluntarily provided the inspection report to prospective buyers. Sellers did so for several reasons. First, obtaining a pre-listing inspection report can help identify issues with a home that sellers can either fix before selling or adjust the sale price accordingly. Second, a pre-listing inspection report can effectively eliminate the possibility that other home inspectors will inspect the property and provide inconsistent findings. Third, and perhaps most importantly, providing prospective buyers with a pre-listing inspection report prompted many buyers to agree to waive an inspection contingency.

Though not as common in today’s less-seller-friendly environment, sellers procuring pre-listing inspection reports in exchange for buyers waiving an inspection contingency is not something we expect to see go away completely anytime soon.

Truth # 2 – Sellers obtaining a pre-listing inspection report in exchange for buyers waiving an inspection contingency does provide some benefits to both sides of the transaction

For many, the “new normal” has worked out well. Buyers have been able to save at least a few hundred dollars on a home inspector while still being able to review a home inspector’s report regarding the condition of the property. Sellers have been able to create bidding wars and increase the chances of a sale closing. Realtors have experienced shorter time periods from executing a purchase and sale agreement to closing. In short, most have found the “new normal” at least palatable, if not more efficient than the “old way.”  

Myth #1 – An inspection report will disclose all issues related to a property

While buyers accepting a seller’s pre-listing inspection in lieu of having their own inspection done can work well for both parties, assuming that a seller’s pre-listing inspection report will disclose every issue with a home is a poor assumption to make. For starters, home inspectors are not required to look for every potential issue with a property. In fact, home inspectors are only required to perform a visual and noninvasive inspection of some readily accessible systems and components of a home, including the roof, foundation, exterior, heating system, air conditioning system, structure, and plumbing and electrical systems. And even for what home inspectors are required to do, numerous exceptions exist. Therefore, assuming an inspector will find every potential issue with a home in a manner of a few hours is misguided.

In addition to the limited nature of the inspection, some buyers overlook the fact that home inspectors have substantial control in terms of how a report reads. Home inspection reports can sometimes disclose a significant potential issue with a home and yet downplay the same in the same sentence. Let’s face it, most home buyers do not think they are staring down tens of thousands of dollars when reading a sentence in a report that says something like, “recommend licensed contractor evaluate and repair if necessary.” Experienced home inspectors are good at disclosing potential issues yet delivering the information in a palatable manner such that their client, the seller, stands a good chance of the home selling. Therefore, buyers should not assume that the inspection report will deliver potentially bad news in a straightforward manner.   

Myth #2 – A buyer has legal recourse against a seller’s home inspector

In addition to the fact that inspection reports may not disclose every issue with a home, buyers likely have no legal recourse against a seller’s home inspector. In a 2024 unpublished decision from Division 1 of the Washington Court of Appeals, the court rejected a homebuyer’s claim against a seller’s home inspector. Apgood v. Plautz, 2024 Wash. App. LEXIS 499 (Ct. App. Mar. 18, 2024). According to the plaintiff/home buyer, the seller’s home inspector was negligent by failing to perform a thorough and complete inspection, and in turn was liable for damages caused by a leaking roof. The court analyzed whether the home inspector even owed a duty to the plaintiff/home buyer in the first place. Because the home inspector’s client was the seller, and no facts existed to establish any type of obligation running from the home inspector to the buyer, the court dismissed the home buyer’s claim against the home inspector.

While a different set of facts may result in a different conclusion, the decision in Apgood serves as a cautionary tale for home buyers who choose to rely on a seller’s pre-listing inspection report and in turn waive an inspection contingency. Indeed, in Apgood, the Court of Appeals affirmed dismissal of the plaintiff/homebuyer’s claims against both the home inspector and the seller based on the plaintiff’s inspection waiver. Therefore, buyers should carefully consider whether it is worthwhile to waive an inspection contingency and instead rely on a seller’s pre-listing inspection report. 

The lawyers at Beresford Booth have great experience of advising and representing parties to real estate transactions. If you have an issue you would like to discuss, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100.