Active: These are homes available on the NWMLS.
Pending Inspection: These are homes that are under contract, but contingent upon a buyer’s subjective satisfaction of a home inspection. A buyer can walk for any reason during this phase of the contract.
Pending: The home is under contract and in the process of closing.
Last month we talked about the benefits of having a home professionally inspected prior to listing it on the open market. The other day, Steve and I were talking about the cost to home sellers of going Pending Inspection and then back Active on the MLS—meaning the house failed inspection, or at least that is the perception from buyers and agents. We did a little research to see what the ratio of list price to sold price was for homes that went Pending Inspection at least twice, versus homes that went Pending Inspection or Pending just once. We’ve always suspected that homes that “failed” inspection most likely will not receive as high of offer the second time around. Our research shows that assumption is correct. Homes that went Pending Inspection at least twice, sold on average of 94.6% of the original list price. Homes that went under contract once sold for an average of 96.32 of the last sales price. That is a 1.71% difference, which doesn’t sound like a lot, but it adds up. We looked at homes that sold in the last 6 months in Mill Creek. The average selling price in Mill Creek in that time period was $460K. If the average home went under contract and failed the inspection, that home owner potentially lost $7,866! However going under contract twice also added an additional 34 days of market time. Basically they spent an additional month on the market—an extra month of keeping the house “show ready” at anytime. That is not fun!
The typical process in a house purchase is an offer contract with an inspection contingency. During that inspection period the buyer will typically ask for some repairs, try to re-negotiate the purchase price, or worst case scenario exit the contract. For about the last 18 months Steve and I have changed our process so that we can avoid going Pending Inspection for our sellers. In the past we’ve been successful about 60% of the time. The addition of the pre-listing inspection is an evolution of that original goal to go straight to Pending. We believe this extra step will help our sellers avoid the pitfalls of a failed inspection on the MLS.
Steve Hill and Sandra Brenner
Windermere Real Estate