Negotiating the successful close of a home sale begins with price and contract terms and doesn’t end until the deal closes. In this two-part blog, I’ll be looking at the home inspection process from the point of view of first the buyer and then the seller. Very few home inspections are “clean,” meaning there’s not a thing wrong with the home. And, many of the items mentioned in the reports are minor or boilerplate warnings common to almost every home inspection. After the home inspection, you should sit down with your real estate agent and look over the inspector’s report. The inspector’s job is to find every single thing wrong with the house so at first glance the issues might seem intimidating.
Identify, prioritize, and decide.
The home inspector should have alerted you to the home’s major issues during the inspection and that’s a good place to start. Home inspectors are knowledgeable and see a lot of houses so they generally know what is going to be an expensive fix and what won’t be. Go through the report with your real estate agent line by line. You’re not looking to have every single issue fixed for you but you are looking at issues that might cause you a financial or emotional toll later on. If you ask for too many items to be fixed the seller may react badly. If they have a backup offer or aren’t in a time crunch to sell the home they may simply not respond. The art of inspection negotiation is to know what are absolute deal breakers for you and which items would simply be nice to have repaired before moving in.
The 3 most common types of requests
When homebuyers find items in the home inspection report that they want fixed, their agents typically counsel them to submit one of the following requests:
- Ask the seller to make the fixes
This method is problematic for a number of reasons. Some repairs might take an unusually long time due to Denver’s contractor shortage and this can delay the transaction. A seller is trying to sell the home and is not as invested as you are in making sure the repairs are done to the highest standards. Ask for a door knob to be replaced and it’s difficult to word the inspection resolution in a way that doesn’t allow them to get the cheapest possible doorknob.
- Ask the seller for a credit of the funds required to make the fixes
While an adjustment to the closing date may have to be made (depending, again, on what’s required to get the home where the buyer wants it), this method is quicker than the first one. The risk here for a buyer is taking a credit, hiring the work done and then finding out that the repair is going to cost more, sometimes much more than the credit given by the seller. For this reason – and it’s not a hard and fast rule – I recommend major systems repairs like roof replacement or sewer line replacement be conducted before closing instead of credit to the buyer.
- Ask the seller to lower the price of the home
Buyer agents will suggest to their clients that they may want to request a price reduction to compensate for the cost of needed repairs. Unless you’re buying with all cash this option is normally the worst of the three. Lowering the price of the home will only lower your monthly payments by a small amount each month.