let’s talk: HOME INSPECTION – THE NEGOTIATION
Last week we discussed HOME INSPECTIONS and who should attend?! Let’s spend this week talking about HOME INSPECTION NEGOTIATIONS.
So, as we do, let’s talk Real Estate, let’s talk HOME INSPECTIONS – NEGOTIATIONS…
It is important to note that every deal is different, every buyer is different, every seller is different and every market is different. And ALL of these differences can greatly impact how to negotiate “repairs” and “credits” after a home inspection. So today we are talking general rules of thumb.
I am going to break today’s talk down into two sections:
(1) What repairs to ask for.
(2) How to negotiate them.
WHAT REPAIRS SHOULD BE CONSIDERED IN THE NEGOTIATIONS?
#1 Home Inspection Rule of Thumb: You want to negotiate on any “issues” that affect the value, safety or function of the home.
So what does this really mean? Any items that the inspector deems a “safety concern”, items that require “immediate action” , and any high priced repairs can and should be considered in negotiations. If a high priced item needs work, or needs to be replaced this can affect the value of the home. If an item is flagged as a “safety concern”, this can affect the value of the home. If the mechanicals of the home are not working, this can affect the value of the home.
#2 Home Inspection Rule of Thumb: Try NOT to negotiate or fixate on items that you were already planning to renovate or replace.
For example, in our inspection report it was brought to our attention that the washer / dryer were nearing the end of life. While replacing a washer and dryer can be expensive, this was not a note that we brought up in negotiations because we had already planned to replace these anyway. We are currently in a seller’s market and we did not want to sit there and ask for items that we had budgeted for going into the deal. This is not the market for nit picking. If you are in a buyer’s market, you can talk to your realtor about how to approach items like this.
SHOULD I ASK THE SELLER TO MAKE REPAIRS OR PROVIDE A CREDIT?
#3 Home Inspection Rule of Thumb: Request a credit for the repairs that affect the value, safety or function of the home. Do not request that the seller repair them on their own prior to closing.
This is the best situation for all parties involved. The seller does not need to spend their time making repairs. The buyer does not need to worry if the repairs were done legitimately.
The best way to figure out just how much you should ask for, is to seek estimates from professional contractors. You want to go into the negotiation with fact based figures instead of repair guesstimates.
ITEMS TO KEEP IN MIND WHEN NEGOTIATING
#4 Home Inspection Rule of Thumb:It is important to remember that the Home Inspector’s job is to find any and every potential “issue” with the home.
Just because an issue is flagged on the home inspection report, it does not mean that the house is going to burn down tomorrow or that the home is no longer worth what you offered to buy it for. More often than not, many of the items listed on an inspection report are very easily fixable and can often be repaired by the buyer as soon as they move in.
#5 Home Inspection Rule of Thumb: Go into the the process graciously.
As a buyer, I think it is important to be gracious in your ask to the seller when it comes to credits. You have to remember, when you are buying someone’s primary residence, this was their home. The place their family lived and gathered and it has some sentimental value to them. When you go in there and tell them that there are 100 things wrong with the home (because that’s what your inspection report says), you often end up offending or angering them. If you go into negotiations graciously, lay out the repair estimates and write a letter as to why you are asking for a credit for those things, you may (not always), but you may get a better reaction out of them, which can lead to a more succesful negotiation. Remember, the seller does not have any obligation to repair anything or give you a credit. It is up to them if the risk of losing the deal is worth it or not.
In our journey of buying this home now, we knew that we were buying an older home, and that repairs to the house would be inevitable, so we went into the repair negotiations with that mindset and only focused on the big ticket items. I would say, in a seller’s market, only focus on negotiating over items that would cause you to walk away from the home if you did not receive that repair credit. In a buyer’s market, there is a lot more room for negotiation.
While I won’t get into the details of our home inspection negotiations, I will say that we settled on a fair seller’s assist credit towards our closing costs to help offset the repairs and renovations we will be taking on over the next couple of years. I think we were lucky in this transaction that neither party was trying to take advantage of the other, and that both groups were extremely transparent throughout the entire process. In every step of this transaction thus far, PK and I have made it a point to communicate with the owner via letters we give to their realtor. This is a special sale for the owner and a special buy for us and I believe that maintaining that open communication has made this whole transaction a more “human” process and furthermore, has allowed the negotiations to be all the more succesful for both parties.
That is all for today! Let us know if you have any tips or tricks for home inspection negotiations!
Happy Wednesday! & Stay Healthy!
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1 thought on “let’s talk: HOME INSPECTION – THE NEGOTIATION”
Great information on inspection. I totally had no clue on what was and what wasn’t good to make mention!