The Buyer Has Received The Home Inspection Report. Now What?

Joe Dickerson
Joe Dickerson
Published on January 8, 2018
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Negotiating the successful close of a home sale begins with price and contract terms and doesn’t end until the deal closes.

One of the most frequently negotiated items, after the aforementioned price and terms, has to do with the home inspection results. They’re also among the most contentious negotiations.

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.

Because of this, buyers will almost always either make requests for repairs or request a credit or price reduction to account for the repairs needed. When navigating these negotiations, there are many things to consider, both on the seller side and on the buyer side. 

When you know how to choose your battles, and why, you’ll understand this negotiating process.

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:

1. Ask the seller to make the fixes

This method may delay the transaction and, depending on the extent of repairs or replacements required, and the deal the buyer made over the price, the buyer runs the risk of the request being denied.

One thing you, as the seller, should know,  is that the buyer’s lender may require certain fixes before final approval of the loan. These include issues regarding the home’s safety, structural soundness and to remedy building code violations. Expect to make all of these types of repairs.

2. 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.

A good buyer agent, however, will ask the buyers if they can trust themselves to make the repairs with the cash-back at the close of escrow.

Again, as the seller, be aware that certain fixes are required by the VA and by FHA, before the close of escrow.

Also, some lenders and some types of loans forbid a cash credit at closing.

3. Ask the seller to lower the price of the home

Buyer agents may suggest to their clients that they may want to request a price reduction to compensate for the cost of needed repairs.

What You Should Never Agree To Fix

It’s amazing to me how old, ugly, and scary a home inspection photo of an electrical outlet wall plate can look. Each smudge, every crack, and that itty-bitty chipped corner, when resized to enormous proportions, makes it look like it’s ready to eat the house.

The real estate agent for the buyer that insists that the seller replace that piece of plastic or that the seller buy and install a globe lightbulb in the outlet over the front porch, should counsel her client that

the inspection report is not a repair list for the seller

Typically, repairs to rectify cosmetic issues can be safely ignored. Lender-required fixes, on the other hand, should always be performed.

Even if this particular buyer walks away, these fixes are now a disclosure item and other lenders will most likely demand them.

During a fiery sellers’ market, you are in the driver’s seat and can safely ignore most of the more trivial requests. In a buyers’ market, however, you may have to take a deep breath and carefully consider caving to the buyer’s wishes.

You Don’t Have To Follow The Buyer Agent’s Script

If the items on the buyer’s fix-list aren’t of a safety, structural soundness, or building code violation nature, you are under no obligation to respond to the buyer’s preferred remediation method.

In other words, you don’t have to offer a credit, make the fixes, or lower the price of the home. You have options, too. Some of these include:

Hold Back Personal Property

If you won’t be taking your appliances with you when you move, don’t automatically include them in the sale. Hold them back to use as bargaining chips during the negotiating periods, such as over price and repairs.

Instead of lowering the price of the home or making non-essential repairs, offer to throw in the appliances.

Offering A Home Warranty

Offering a home warranty is a win-win way to address those requests for replacement of an item that, although it may be nearing the end of its functional life, still works.

An aging water heater, for instance, may concern the buyer. A home warranty might ease their anxiety and save you money in the process.

As always, I’m here for you if you want to discuss possible responses to a buyer’s request for repairs.

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