The Power of Providing a Building and Pest Report Beforehand
I've got to share this one. I think a lot of people are catching onto this wave and I think it's a great movement that we're doing so I wanted to talk to you about the power of having and providing a building and pest report prior to your buyer being involved and signing a contract.
There was a situation with a particular home and It's had a few buyers humming in and around it and there were two buyers in particular that are really interested in the property. Both buyers knew they were actually in competition, but one buyer wanted to go and conduct their own building and pest inspection and one buyer was willing to go and look at the one that was recently just done.
So what happened in this negotiation from a seller's perspective, is that we're trying to do get the seller into a really clean position, unconditionally, as quick as possible. There are only a few standard terms within the contract itself so obviously, you've got your deposits, the initial deposit, your balance deposit, then you've got the price before that as well.
Create as much transparency as possible.
Then you've got the building, the pest and the finance. And finally, the settlements and any other special conditions in there. And each one of those conditions represents a certain level of risk when you're selling a home because a buyer has to meet that requirement. What I’ve found is that if we can eliminate and create as much transparency as possible behind the home and put that buyer into a very clear position, then the progress becomes easier. You must find a building inspector that's willing to talk to the buyers afterwards as well.
So after we gave them the report, the negotiation went smoothly. We got to talking about the price, about the terms of the offer, the finance and the building and pest. We asked them “do you know that we've got a current and clean building and pest report in the property?” They said, "We'd love to go and see that because we’ve read the report and we're happy with it and we would be comfortable in moving in."
Provide a clear understanding of the properties overall situation.
The buyer that are more ready to buy will be educated on how building and pest reports work as opposed to a buyer that's probably never read one before and might freak out. So anyway, we gave the buyer the building and pest report, then the buyer came back to us within a day and basically turned around and said, "Well, I'm happy with the report. I'm going to remove that from my actual conditions of the offer and I'm now only subject to the finance and the other standard terms, which are the price, deposit, and settlement." And what you've done from a seller's perspective is you've provided a clear understanding behind where your home is at. By the way, everything's regulated these days. Every building inspector has got a licence number and it's quite serious now.
Get a stronger negotiation position.
Another thing that's happened during the event itself is the buyer has put themselves in a much stronger negotiation position. It's worked way well for the buyer. And from our perspective, it's another thing that we don't have to deal with other problematic things that happen after the contract is signed. Oftentimes, when you get a property under contract subject to building and pest inspection, there’s a real looming period.
We don't know which buildings the inspector will go and get, you don't know what type of buyers you're going to have. Now, if a buyer wants to go and get their own building and pest report, by all means, go ahead and do it. That's not a concern for us. But with respect of how this contract work goes, we eliminated the significant part of the terms of the contract. The buyer, in turn, put themselves in the position to own the home and fundamentally secured that house.
So the power of actually getting a building and pest report prior to your campaign is significant. I highly recommend that you guys go out there and get one done or take in all the things that might come up inside the report fixed, get the report redone. Hope that works for you guys. I look forward to seeing you guys at the open and have a great day.