Are you wondering how to negotiate after a home inspection? Negotiating after a home inspection is a skill and an art.
The cost of a home inspection is relatively mild compared to the purchase price. A buyer can easily walk away when negotiations after a home inspection fail.
A house is never bought or sold until the money exchanges hands.
You may have received an offer on your house and be reasonably sure you have a buyer, but there are several other steps you must go through before the sale is final – one of which is the home inspection.
Unless your home is flawless – which few ever are – you are probably in for some negotiations with the buyer before you see the end of your sale.
The last thing you, as a seller, want to go through is protracted home inspection negotiations!
As a Realtor, one of my least favorite parts of a real estate transaction is negotiating any necessary home inspection problems that have surfaced.
Unfortunately, however, it is an inevitable part of our job when the buyer has a home inspection contingency in their offer.
So, what is the best way to negotiate home inspection repairs?
In this article, you will learn the following:
- Knowing whether negotiating is possible after an inspection (understanding market conditions.)
- Steps to negotiate after a home inspection.
- Understanding what is a reasonable request.
- Whether to negotiate the price or accept repair requests after an inspection.
- Knowing when to walk away from the sale.
Facts Worth Knowing
1. Negotiating after a home inspection is a common step in home-buying.
2. A home inspection aims to identify any issues or concerns with the property.
3. After receiving the inspection report, buyers can negotiate with sellers for repairs, a concession, or a price reduction.
4. It is crucial for both parties to communicate openly and work towards a mutually beneficial agreement.
5. Professional guidance from a real estate agent or lawyer can be valuable during the negotiation process.
6. Compromise is often the best method for negotiations after inspections.
7. With home inspection negotiating, both parties will have peace of mind when negotiations end amicably.
Understand No House Is Perfect
First, you should be clear on the realities of selling a home. No home is perfect, and an honest house inspector will likely find some issues with your home. An inspector finding problems is typical.
How you handle the negotiations that follow, though, can make a big difference in how much you give on your end and the level of stress you experience from the process.
This is one of the reasons I like to counsel all of my clients on how to prepare for a home inspection. Taking care of the issues you know about will go a long way in making sure your transaction stays on track.
When you do this, you don’t need to know how to negotiate after a home inspection, as the issues will be minimal. Trust me, most buyers will have a home inspection checklist to ensure they have covered their basis.
The Home Inspection’s Purpose Isn’t to Intentionally Renegotiate
Working as a Realtor for the past two decades, one of my biggest pet peeves is dealing with those buyers who intentionally use a home inspection as an opportunity to renegotiate the transaction.
Don’t get me wrong; there are plenty of times when a buyer is justified in asking a seller to make repairs for unsatisfactory conditions to significant systems like the electrical, plumbing, roof, and foundation.
However, a buyer who expects a home to be delivered like new construction is not getting proper guidance from their buyer’s agent. You would not believe how often I get a punch list after a home inspection for some of the most benign things.
Understanding what is a reasonable home inspection request and what is not is essential for a buyer’s agent.
A home inspection aims to find significant defects that would cause a buyer not to want to move forward with the transaction or, at the very least, have these items repaired.
Trying to Negotiate Problems You Already Know About is Dumb
A Buyer who is under the pretense that a home inspection is to create a long punch list that the seller will remedy sets themselves up for a contentious sale.
Most sellers are smart enough to realize that a home inspection is not the buyer’s opportunity to change the agreed-upon contract term if they have been through this before.
If significant problems are discovered that should be fixed, that is a different story. That is the real purpose of a home inspection.
When buyers start to overstep their bounds, real estate transactions often go sour.
Buying and selling a home is all about being reasonable. Sometimes, buyers will ask for repairs of clearly visible items before an offer has even been made.
When I represent a buyer, I always advise them not to ask for repairs of items they knew about before writing a contract.
If they feel something needs to be addressed monetarily, they should do it in the offer and be upfront about it.
A perfect example would be seeing a crack in a tile or even a seller pointing it out in a disclosure statement and then asking the seller to fix it after a home inspection.
If you want to create unnecessary tension in a real estate transaction, this is the perfect way.
Negotiating repairs after a home inspection should be kept to what is vital.
Now that we’ve got that squared away let’s review what you need to know about the home inspection negotiation process.
Steps For Negotiating After a Home Inspection
After the home inspection, it is not unusual to negotiate when significant problems are discovered. These steps should be taken whether you are a buyer or a seller.
Review The Home Inspection Report With Your Real Estate Agent
Typically, within 24-48 hours after the in place, home buyers should receive the inspection report from the inspector they hired. The home inspection will review the major issues that are typically highlighted.
There will be a particular emphasis on safety issues and structural issues. An inspector will often mark these in red as significant repairs are needed.
The report will also contain a list of minor issues as well. A good inspector will provide a copy of the inspection report, including photos of significant problems and necessary repairs.
If you are a home seller, discussing the next steps with your listing agent will be a good idea. An experienced Realtor should be able to give sound advice based on standard negotiation practices, considering the current real estate environment.
Negotiating a home inspection is a significant part of a real estate agent’s job description.
Take The Current Real Estate Market Into Consideration
The type of real estate market can have a significant impact on negotiating after a home inspection. Is it a seller’s market or a buyer’s market?
If it is a buyer’s market, negotiating repairs will be in your best interest. The focus should be on big-ticket items, safety hazards, and structural or mechanical problems.
If subsequent buyers would also insist on remedying these problems, it makes little sense not to address them. Your requests should include something that is a big deal, damage, or an issue that could be considered a deal breaker.
You may not have to do anything in a strong seller’s market, even if more problems are discovered. The negotiation process could be minimal.
Focus on Repairs By The Size of The Issue and Cost to Remedy
Older homes will typically be ripe for having more significant issues than a new home. If you are a buyer, you should focus on necessary repair requests and don’t sweat the small stuff.
First-time homebuyers often get caught up in the minutia found in a home inspection report rather than focusing on what’s critical.
If there is a safety concern, push the seller to fix it or provide a repair credit. When there is a significant unplanned expense like a leaky roof, water damage, plumbing issues, or electrical system problems, that’s where your focus should be.
However, keep in mind there are no mandatory home inspection fixes.
Get Quotes From Local Contractors
For the large ticket items, getting some estimates to remedy whether you are the buyer or the seller will be prudent. Due diligence is essential in this situation to get at least a rough idea of the cost of repairs.
It is more challenging to negotiate potential problems into the purchase agreement when you don’t have a handle on pricing.
Sellers Should Push For Inspection Credits Instead of Repairs
When selling your home and negotiating home inspection items, you should always push for a closing cost credit or a price reduction whenever possible.
These are referred to as a seller’s concession.
Negotiating home inspection issues is sometimes not that easy, but this is what you should be shooting for as a seller.
There is just too much stress and uncertainty in putting yourself on the line for repair work if you can avoid it.
The buyer is likely to be extremely picky about the quality of the work, and you could be asked for even more work if they are unhappy.
This is why most Realtors will recommend you offer the cash value of the repairs – negotiated down as much as possible – instead of contributing to do the repairs yourself.
Understanding how to negotiate the house price after inspection will become crucial in the transaction.
A Buyer Should Want a Cash Credit For Home Repairs Too
It is easy to see how you can get into trouble here as a home seller. Say the roof over your garage has hail damage that the buyer demands to be fixed. You agree that repairs must be made and offer them to be done before closing.
Two things happen: First, the repairs take longer than you thought and potentially delay the closing if the buyer or their attorney does not agree to an escrow holdback.
Second, the roof shingles are newer, so they do not look the same as the old shingles.
The buyer should understand this but chooses not to and demands you do something about it. Again, in the second example, the buyer could delay the closing, creating stress for you, especially if you have bought another home and need to close on your home to purchase.
You probably would not be liable for further costs in this situation. Still, you also just put yourself through weeks of anxiety and ended up with an angry buyer, all of which could have been avoided by just handing over the estimated repair cost in cash in the form of a seller’s concession.
The buyer picks his contractor and deals with the consequences while you move on. As a buyer, you get to choose the contractor and control the quality of the work—a win-win for you.
Consider Asking For or Offering a Home Warranty
Depending on whether you are a buyer or seller, you may want to suggest the purchase of a home warranty.
A home warranty is a type of insurance that provides coverage for repairing or replacing appliances and basic home systems within a specific timeframe. In instances where the seller is unwilling to cover repair costs, reduce the price of the home, or provide seller credits, they can purchase one of these policies on your behalf.
A warranty can reassure you that you won’t have to bear a significant financial burden during the initial years of owning a home. It can be particularly beneficial if certain items in the house are considerably old or worn yet do not require immediate repairs.
From three decades of experience as a Realtor, on many occassions I’ve suggested a home warranty to either a buyer or seller as a means of negotiation. A warranty is an excellent tool in cases where the parties are digging in their heals during the home purchase.
Offer the warranty often achieves the goal of making everyone feel good enough to move forward.
Negotiating Significant Repairs is Expected
In most states, you are not obligated to repair your home before you sell it as long as you are upfront and honest throughout the sale. Some sellers may even choose to market their home as selling as-is. However, you also want to sell the house to someone willing to pay what you want.
Most of the time, marketing your property as an “as-is sale” is a mistake. Read the article to find out why.
You must be willing to negotiate in almost any market, and repairs are one area where this is necessary. The buyer can back out in various ways, leaving you searching for another buyer to take the home off your hands.
Depending on the market, this can be a severe headache.
Knowing When to Move on From The Transaction
The question that many buyers and sellers ask themselves is when to walk away after a home inspection.
One of the difficulties with going through the home inspection process and then not coming to terms with a buyer is that you and your Realtor may have to make real estate disclosures of everything discovered at the inspection.
In many states, there is a disclosure requirement moving forward. Disclosure of problems, of course, can make your home more challenging to sell.
Additionally, every prospective buyer’s agent will ask why the sale fell through.
That said, because you must negotiate and maybe spend a little money to sell ultimately, you do not need to give in to every demand.
Haggling is an art anyone can learn, and you should also have a Realtor with you to help in the process.
Giving the buyer back their earnest money deposit sitting in escrow and starting from scratch is never fun.
Remember that the home inspection contingency allows the buyer to terminate if you can’t agree.
Look Over The List of Repairs Carefully
Know the value of what you are trading and look out for your bottom line. This is another one of those times where having an exceptional real estate agent in your corner comes in handy.
In practical terms, this means focusing on what is best for you. There may be 20 things that could need repairing, some big, some small. You do not have to take care of all of them, but you may need to take care of some.
For instance, the buyer may come to you with a list like this:
- Cracked tiles in the bathroom
- Replace the leaky water heater
- Sod replacement in the corner of the yard
- Fence repair in the backyard
- Fix some faulty wiring
- Leaking pipe in the basement
- Remove an area of mold found in the attic
- Fix the three windows with the broken seals
- HVAC system replacement
- Roof replacement
- Old above-ground swimming pool removal
Having a Strategy When Negotiating After a Home Inspection
A contractor or two could accomplish Most of these problems for small amounts of money, except for the HVAC and roof replacement. This is where you have to decide your strategy. Which will cost you less? Which things are you willing to do?
You may want to avoid replacing the HVAC system or roof in this situation. These items will be expensive. The heating system and roof have a few more years left. You do not feel like you should be responsible for replacement.
If this is the case, offer to do all the other minor repairs on the list. Make it understood that you are willing to do a lot, but there is only so much they can reasonably ask.
You might also consider paying for a home warranty to address some issues.
Being Reasonable Usually Wins in Negotiations
Appearing reasonable and acting in good faith can ease your way through these negotiations.
The same is true for the actual repair costs. Make relatively low offers based on your estimates. You can always give a little to come nearer the middle, but you cannot return after making an offer. This is like haggling for a car or even a piece of fruit at the farmer’s market.
One of the best ways to avoid your home sale going sour is to know the most common home inspection issues and deal with them before you even put the home up for sale.
Over the years, I have realized that many homeowners get so comfortable with their environment that they never stop to look around to see if they have any problems that are sure to crop up.
Doing a once-over of your property before putting it on the market makes a difference!
Do Your Best And Trust Your Realtor
Depending on the state of your home, you may not be able to get every last penny you hoped for. However, selling for a reasonable price is worth spending a little money on.
Trust your Realtor to guide your choices and do your best to negotiate the home inspection issues with skill, and you should be able to sell without spending more than is reasonable.
Remember that navigating your way through the home inspection process is essential. Don’t become stubborn and refuse to take care of issues that will come up again with a different set of buyers.
It is crucial to recognize problems that will be problematic for every buyer and deal with them.
Unless it is a robust seller’s market where you can get away with telling a buyer they need to take the home as is, ensure you are reasonable. Doing so will make you smile when you shake hands with a buyer at the closing table.
Part of knowing how to negotiate after a home inspection is putting your trust in the agent you hired.
FAQs
Here are some common questions about home inspection negotiations and their answers.
How Long Should I Wait to Negotiate After a Home Inspection?
When it comes to negotiating after a home inspection, timing is crucial. It is generally recommended to wait approximately 24 to 48 hours before initiating negotiations. This allows both parties to thoroughly review the inspection report and gather any necessary additional information.
Waiting for this period also gives the buyer time to consider their desired outcomes and potential concessions carefully they may be willing to make.
Additionally, it allows the seller to assess the seriousness of any identified issues and strategize their response accordingly.
By allowing this brief waiting period, both parties can approach the negotiation process with a clear understanding of the inspection findings and a more focused mindset, leading to a more productive and effective negotiation outcome.
How Can I Use The Home Inspector’s Report to Negotiate Effectively?
When using the home inspection report to negotiate effectively, it is crucial to approach the situation with a strategic mindset. Thoroughly review the report and identify any significant issues that require immediate attention or costly repairs.
Prioritize these concerns as leverage during negotiations. Gather estimates from reputable contractors for addressing these issues. Armed with this information, propose a fair reduction in the home price or request that the seller cover the repair costs directly.
Also, consider negotiating for a home warranty. You can confidently navigate negotiations after a home inspection by presenting well-researched evidence and offering reasonable solutions. Doing so will increase your chances of reaching a favorable outcome.
How Should I Present My Request For Repairs?
When presenting your requests for repairs after a home inspection, it is crucial to approach the situation with clarity and professionalism. Begin by compiling a comprehensive list of the necessary repairs, ensuring that each item is clearly described and supported by evidence from the inspection report.
Ask all your questions to the home inspector so you are clear on the issues.
Prioritize the repairs based on their urgency and impact on the property’s overall condition. Craft a well-written and concise document summarizing your requests, highlighting the potential consequences if they are not addressed.
It is recommended to include estimates from reputable contractors to provide a realistic assessment of the costs involved.
Finally, ask your buyer’s agent to discuss your requests with the listing agent, emphasizing your commitment to reaching a fair resolution that benefits both parties.
How Much Money Should I Request For Needed Repairs?
When determining how much money to ask for in repairs after a home inspection, it is essential to consider several factors. Carefully review the home inspection report and prioritize the repairs based on their urgency and potential impact on the property’s value.
Next, consult with reputable contractors or professionals to obtain accurate cost estimates for each repair. Research local market trends and comparable properties to ensure your repair request meets fair market standards. Your buyer’s agent can be invaluable in this circumstance.
Finally, consider any negotiations you may have had with the seller regarding the home’s purchase price. By considering these factors comprehensively, you can confidently determine an appropriate amount to ask for in repairs after a home inspection.
Final Thoughts on Negotiating
Understanding how to negotiate after a home inspection is critical to moving from this phase of your transaction to the next. Whether you are a buyer or seller, it is essential to be reasonable. The best negotiations occur where there is a little give and take.
Don’t lose your cool when discussing the inspection results. Remain level-headed and consider whether it makes sense to have a concession.
Hopefully, you have found this guide to negotiating home inspections valuable.
About the Author: Bill Gassett, a nationally recognized leader in his field, provided information on negotiating after a home inspection. He is an expert in mortgages, financing, moving, home improvement, and general real estate.
Learn more about Bill Gassett and the publications he has been featured in. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of Metrowest towns for the last 38+ years.
Are you thinking of selling your home? I am passionate about real estate and love sharing my marketing expertise!
I service Real Estate Sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
