You have taken the time to find the perfect home, submitted an offer, made your down payment and now it is time to do your home inspection.
Tensions certainly run high when you are buying a new home, and a home inspection can certainly add anxiety to the process. Sometimes home inspections go very well with little to no issues that need to be repaired.
Other times there may be some serious repair issues that show up that a seller wasn’t even aware of. When that happens, you may be faced with negotiating repairs after the home inspection.
Before we get into talking about negotiating home inspection repairs, let’s look at what to expect from a home inspection
What Is a Home Inspection?
Whether you decide to buy a condo, a single-family home or a multi-family home, a home inspection is an assessment of the condition of that property. It covers the general structure such as foundation, roof and framing, as well as systems like plumbing, electrical, HVAC, etc.
Your home inspector will comment not only about the soundness and condition of the home, but also any health or safety concerns. In their report, they will point out repairs that are a priority which should be performed in the very short term and repairs that should be considered over the course of their homeownership.
Things To Know About Your Home Inspection
- A home inspector is not allowed to give pricing on recommended repairs.
- Your inspector can only comment on what they can see; they can’t see through walls and can’t get comment on inaccessible areas.
- An inspector will not tell you whether you should or should not ask the sellers for a repair.
- Inspectors will not tell you whether you should buy the house or not.
- An inspection is not a pass or fail, it is an overview of the home’s condition.
What Repairs Are Mandatory After A Home Inspection?
None! The seller is not obligated to perform any repairs after a home inspection. While often it may be prudent for them to do so, there is no obligation for a home seller to do any repairs at all.
If there are items of concern in your home inspection it is time to negotiate terms of the repairs. Basically you have agreed on a price with the seller, however in your contract, you should have a home inspection contingency. After your home inspection if there are items you want repaired, you are technically renegotiating or counter-offering after the home inspection.
Remember a seller can engage in negotiating or they can just shut down any negotiations and say take it or leave it.
Negotiating After A Home Inspection
Asking the seller for repairs upon reviewing your home inspection report is never easy. But there are several points to consider when you decide to ask your sellers for repairs or concessions after your home inspection.
What Are Reasonable Repair Requests After A Home Inspection?
Unless the listing states upfront there are issues, you should expect a home to be reasonably safe and healthy, with the systems and structures of the home to be working and have some serviceable life left in them. The issues that can be negotiated should be ones that weren’t readily apparent , ones you were unaware of when you did your showing, or were issues disclosed on the seller's statement of property condition after you made your offer.
What do I mean? Here are a few examples:
- A roof that is old yet serviceable, but not leaking. A roof that is leaking, however, is indeed a failure.
- A 100-amp electric panel that is maxed out but is adequate and services the home safely. However, a panel that has water leaking into it from the weatherhead is dangerous.
- A deck that is not built to current building codes may be perfectly safe and met code when it was built. A deck missing hand rails is unsafe.
- A furnace with a dirty filter may need cleaning on its annual checkup. A cracked heat exchanger presents a big safety issue.
Buying a home that has been sold several times over is like buying a used car. There are going to be some dings and small repairs that are probably to be expected. No home will be perfect. But you don’t want to buy a car with a head gasket that’s shot unless it is priced accordingly.
And the same goes for a house.
If you were aware of issues with the home before making an offer, your offer should have been submitted taking into account those issues.
You should not try to renegotiate based on issues you already knew about before submitting an offer.
Breaking Down The Home Inspection Report Before Renegotiating After The Home Inspection
While reviewing your home inspection report, write down issues that concern you
Classify them into:
- Issues that present a serious safety issue: no railings on a deck, a rusted main bar on the electric panel, a furnace with a cracked heat exchanger, etc.
- Issues that present a serious health issue: high levels of radon, mold in the attic, arsenic in the water, etc.
- Issues that seriously affect the structural integrity of the house: leaking roof, termites in the sill, cracked joists, etc.
- Issue where systems are not working properly: appliance not working, clogged drain, gutters clogged, etc.
- Nuisance issues that you are willing to take on yourself: Switching outlets in the kitchen to GFI, fixing a loose railing, replacing a faucet, painting some peeling trim, etc.
Now take that list and put the issues on top of the list that are serious enough to make you walk away from the house if a seller is not willing to repair or provide concession.
Second on your list should be the issues you feel should be rectified but if push comes to shove, you will accept as is should.
Then finally the issues you would be willing to take on yourself.
Other Factors to Consider Before Negotiating Repairs After A Home Inspection
Before negotiating repair requests with the home seller there are some factors to consider before you start negotiating.
The Real Estate Market
Buyer’s market, seller’s market, balanced market…. Will dictate how aggressive you can be in negotiating inspection repairs. A hot seller’s market will leave the seller telling you to step aside and move on to the next person.
A buyer’s market gives you more leverage. The seller is afraid to lose the offer, not knowing if there are other buyers behind you.
Knowing the current market conditions will give you some indication of how hard to negotiate.
The Price Point Of The House
In my neck of the woods, if you buy a house for 300- 350K you aren’t going to get a home in good shape. You can buy that same home in great shape for upwards of 450k.
Pay attention to the competition and be mindful of your price point before negotiating. Often a house has already been discounted knowing it needs work. Have reasonable expectations.
How The House Is Presented
Go back and see how the house is presented in the MLS list sheet and the seller's statement of property condition. Is it presented as turnkey or was it listed as needing work and updates? If the home is presented as being perfect, then be more aggressive in your requests.
The Cost Of The Repair
Know the cost of the repairs you are asking for the seller to make. Being informed about the cost of a home inspection repair will help you prioritize the repairs. Some repairs can be done for very little cost.
Often a buyer will assume a repair is more than its actual costs. The more informed you are the better negotiations will go.
Now It Is Time To Negotiate Any Issues
There are a couple of ways to present repairs. And there are pros and cons to each.
Seller to Make Inspection Repairs Item Before Closing
You can ask the seller to repair any home inspection issues before closing. For you, it won’t cost you any additional money that you may not have and the work is done. On the downside, you lose control over who does the work and how it is done. For the seller, they have to take time to get the work done and they may not want to go through the hassle.
Ask For A Price Reduction
If you ask for a price reduction so you can do the work after closing and it allows you to have complete control over the work. For the seller, they don’t have to spend hours getting the repair done.
The downside is you have to fund the repair yourself. Even though you are paying less for the house, you will be out of pocket for the repair.
A good way to structure that is to ask the seller to pay some or all of your closing costs that would normally be paid for by you. That is a way to put money in your pocket for the repairs.
Escrow Money for Repairs After Your Close Out Of The Sellers Proceeds
Sometimes on large projects like septic systems or roof replacement, neither party has the money to do the replacement and some of the seller's proceeds are held in escrow to fund those repairs.
The downside is it makes financing difficult. Many lenders will balk on having money for repairs held in escrow. Only use this if neither party has funds to complete the repair before closing.
Presenting What You Want
How you present the information can be critical to helping you get what you want during home inspection negotiating.
Be specific about what you want. For example, take a roof that needs to be replaced.
A poor example would be “fix roof prior to closing,” as it is very vague.
A better example would be: “The roof is leaking in several spots (see home inspection report) and appears to need replacement. Have the roof evaluated and replaced before closing. The work is to be completed by a licensed roofing professional with all necessary permits pulled. All paperwork including invoice, completed permit and warranty to be provided before closing.”
Provide Supporting Documents
Provide any supporting documents you may have. The pages of the home inspection report or other reports from another professional you had further investigate a situation, will validate the repair that is being asked for.
A leaking roof the issue and its ramifications are obvious. But take an FPE Stablock Electric Panel, it is known to have a high failure rate. If you are asking for the seller to replace the faulty panel than provide supporting documents showing that the panel has a high rate of failure and replacement is recommended. Google is a wonderful thing!
Focus On What Is Important
Don’t use the home inspection as a reason to renegotiate and nickel and dime the seller. It will only anger them, and you won’t get any of the repairs or concessions you want. Don’t try to make the house perfect with every little issue that was called out on the home inspection report.
Focus on getting the big-ticket and serious issues rectified. The ones you will walk away from if a seller is not willing to correct them.
If you don’t have a huge laundry list throw in some items that you may be willing to take on yourself to do a little give and take during the negotiations.
Be specific in your requests, be reasonable and state why the issue is a problem if it is not obvious.
The “Do Not Do’s” Of Negotiating
- Do not be emotional. Do consider everything carefully, so you don’t act impulsively.
- Do not be adversarial. Be matter of fact and concise.
- Do not be uninformed. Do your homework, know what implications there may be to an issue and a rough idea of what it costs to rectify.
- Do not think you need to “win”. Do work towards a compromise where everyone will be happy.
- Do not be unreasonable. Do focus on important items that should be fixed and not little nuisance issues that cost little or no money to fix
- Do not lose sight of your home inspection contingency date. Do protect your earnest money deposit by completing and submitting your repair request promptly.
If you are working with an ASHI agent representing you as a buyer’s agent they can provide you with tons of experience and insight, but ultimately it is your decision. Don’t lose a good house over a few minor issues you can easily correct yourself.
But don’t accept costly repairs or issues that can be a safety or health concern. Often sellers don’t realize they have mold in the attic or termites damaging a sell, and they will often be quite reasonable if you do the same.
Remember, you want to buy a house and the seller wants to sell a house. Work towards a win-win situation when negotiating home inspection repairs.