As a Certified Master Inspector, I’ve performed several thousand home inspections. I can tell you first hand that no two houses are alike, and no two home inspection reports are alike. Buyers trying to negotiate home inspection repairs can be tricky at times.
Home buyers trying to negotiate home inspection repairs can improve their results by understanding some simple negotiation tactics. Here we we discuss:
- Understanding your inspection report
- What are reasonable and unreasonable repairs
- Keeping your plans to yourself
- Requesting repairs be made by a licensed contractor
- Should you accept a repair credit or price reduction
- Knowing when to stop negotiating
- Knowing when it’s time to walk away
Despite what many may believe, home inspectors take no joy in delivering bad news to a buyer who’s had their heart set on a particular house to purchase. Unfortunately, there are times where we have to do just that.
It’s our job to provide our clients with a professional examination of the house they desire to purchase, and occasionally that means delivering the news that repairs are needed. I do my best to try and help my clients understand what is important and what is just a natural part of owning a home.
It’s crucial for buyers to understand that they are purchasing a pre-owned home. Yes, it is new to them, but it is still a pre-owned home. It’s unrealistic to expect a house built in 1990 to meet 2019 building codes, yet many buyers do. See our article on why home inspectors are not building code inspectors.
Requesting Repairs after a Home Inspection
The best piece of advice I can offer you is don’t overreact once you read the home inspection report. Once you’ve read the home inspection report, take time to evaluate the inspection findings. You need to remember that no house is perfect. The majority of items found in a home inspection report can be repaired for less than $100 and a trip to a local hardware store on a Saturday morning. However, there are times when significant problems are discovered.
Real estate agents will frequently place repairs into two categories; reasonable or unreasonable. This is sometimes subjective, depending on the real estate agents experience. Determining what repairs to ask for from a home inspection can change transaction to transaction.
Unreasonable Repair Requests after a Home Inspection
We will look at what items are often considered unreasonable. Since many of these items are in plain sight, they should be negotiated before the initial offer takes place. The problem is, so many buyers aren’t told this and therefore never ask. Let’s look at some repairs that are considered unreasonable.
- Items listed by the seller on the property disclosure.
- Items that are in plain sight including stained carpeting, damage to floor coverings, peeling paint, minor damage to interior walls and ceilings,
- Windows that are old with visible peeling paint
- Old appliances and mechanical equipment that is in working order such as furnaces, air conditioners, and water heaters.
- Old plumbing fixtures that are in proper working order and free of leaks
When it comes to negotiating repairs from the home inspection, it’s often a matter of known and unknown items. You see when making a purchase offer on the house, any of the above items are considered known and are considered to be accepted as presented when the offer was extended. It’s when unknown repairs are discovered that the waters become muddy.
Buyers need to understand that all real estate transactions are different. Sometimes you just have to pick your battles. Ask yourself, are those missing outlet cover plates or asking for the carpet to be cleaned really worth haggling over? Maybe yes or maybe no, only you can decide that. Consult with your real estate agent before making any decisions. Local laws and lender requirements may also affect home purchase stipulations.
Reasonable Repair Requests to Negotiate after a Home Inspection
I consider these items to be reasonable to negotiate. However, buyers need to be fully aware that a seller is not required to fix anything. A seller can always refuse a repair request, although it could cost the seller the sale in the process. The home inspection is for the buyer’s information only and should not be solely purchased to be used as a negotiation tool.
These are a list of common repairs that are negotiated after a home inspection:
- Roof issues such as roof leaks, observed damage to roof coverings, flashings, chimneys, or plumbing vent penetrations.
- Electrical issues such as Federal Pacific Stab-Lok breaker panels, double tapped breakers, unsafe or faulty wiring, and amateur wiring work such as unprotected wire connections, abandoned live wiring, open junction boxes, and improperly wired receptacles.
- Exterior issues such as broken windows, damaged doors, wood rot, water intrusion/damage, major siding defects, improperly built decks, and fascia and soffit damage.
- Plumbing issues such as active gas or water leaks, galvanized piping that doesn’t flow water properly, and clogged drain pipes.
- Heating and cooling problems such as inoperative systems and damage ductwork.
- Foundation and structural problems such as foundation cracks, damaged foundation piers, wood destroying organism damage, dry rot in wood framing, and other structural damage that need further evaluation by a structural engineer or licensed contractor.
- Water intrusion in basements or crawl spaces
- Environmental concerns like apparent mold, buried oil tanks, lead paint, friable loose asbestos, and high levels of radon
- Any item that requires a specialty license for correction
Prepare Yourself to Negotiate Home Inspection Repairs
It’s important to remember the seller is not your enemy. They want to sell the home, and you would like to buy it. It’s highly likely that the seller may not know the items on the home inspection report even exist.
As they say, knowing is half the battle. It’s impossible to negotiate from a position of ignorance. As a home buyer, you only know what the sellers are willing to disclose to you. Sellers know the history of the house, including all the little nuisances about the house and its hidden issues.
Things like how the floor creaks when you walk on it in a particular direction or how the plumbing pipes gurgle during heavy rains may no longer seem relevant to the sellers because they’ve grown accustomed to it. However, you may not experience these things until you’ve lived in the house a while.
The home inspection is your best attempt to even the playing field to provide you with a more complete unbiased picture of what you are purchasing.
Wouldn’t it be nice to know that the “new” heating and cooling system listed on the property disclosure isn’t actually “new” only repaired or that the water heater that was replaced 3 years ago on the property disclosure is actually 6 years old?
You see peoples memories fade over time. Many people don’t keep proper documentation, and when it’s time to fill out the property disclosures, many sellers are going off their memory and not necessarily accurate facts.
Good Negotiation Tactics After a Home Inspection
Before you sit down with your agent to discuss the repairs listed in the home inspection report, sit down and put things in perspective. Make a list of all the things you love about the house and a list of the repairs needed. Then assign a value of 1-10 to each item in both columns, with 1 being the lowest priority and 10 being the highest priority. These values are entirely subjective, meaning what you value as a 1 someone else may value as a 10 and vice versa.
For example, the house may have a fireplace you absolutely love which you love, and you’ve not seen it in any other home. You may assign a high value, such as an 8 because it means a lot to you where another buyer may value that same fireplace as a 3.
This exercise will help you keep the repairs in the inspection report in perspective. There’s an old saying “Don’t throw the baby out with the bath water,” meaning don’t lose something precious focusing on something that isn’t.
If you focus so much on the repairs, the house needs you may wind up forfeiting something else you wanted much more. You see problems in a home can be corrected. Repairs can be made. However, some things just can’t be replaced.
Only you can decide what’s important to you. Neither your home inspector or your real estate agent can do that for you. Buyers often ask me, “would you buy this house?” and my answer is always the same. “I’m not in the market to purchase right now, and I can’t speak for your finances. If you’re comfortable making the repairs I’ve listed here and can afford to do them, then buy the house, if you can’t then don’t by it.” It’s really that simple.
Keep Your Plans for the House to Yourself
I’m sure when you visited the home before making a formal offer to purchase that your wheels were already turning with ideas for what you can do with the house. You’ve likely already started to envision how you are going to make this space your own.
Maybe you plan to renovate the kitchen or bathrooms, rip out the carpet, or build a new deck. That’s all well and good, but keep that information to yourself. If the home inspection reveals problems in these areas, you may be able to negotiate a repair credit that you can use later to help offset some of those costs.
Request for Repairs to be Made by a Licensed Contractor
In my inspection reports, I always note that repairs need to be completed by a licensed contractor. Licensed contractors are held to a higher standard and are insured and bonded. I’ve yet to meet an unlicensed contractor that is insured and guarantees their work.
If a problem arises with the work provided, a licensed contractor is more likely to want to make the repair right or risk a complaint to the licensing board or an insurance claim. Licensed contractors just have more to lose.
For example, let’s assume your home inspection report notes: wood rot damage to the rear French door unit, wood rot in the decking boards on the deck outside the French door unit, and some visible mold on the interior drywall beside the French door unit.
The seller is trying to get by as inexpensive as possible, so they hire an unlicensed contractor. The unlicensed contractor accepts the job and replaces the decking boards, splice repairs the wood rot around the French door and paints the interior drywall. The total cost of the repair to the homeowner is $1750 for the repair.
Had a licensed contractor performed the work, you’d discovered that the actual scope of the work included:
The visible mold on the drywall was caused by a leak at the top of the French door unit. When the licensed contractor cut out the damaged drywall, he determined that the insulation was wet and the exterior wall sheathing behind the siding had rotted out. Termites were attracted to the damaged area and caused additional concealed damage to the wood framing inside the wall.
Solution: The French door had to be completely torn out, the drywall removed to have the wood framing repaired, exterior wall insulation had the be replaced, drywall repaired with interior painting to match the existing paint and a French door unit installed.
The total cost of repair $7500.
Accepting a Price Reduction or a Repair Credit Instead of Repairs
To avoid the above scenario, most listing agents will advise their seller clients to offer a price reduction or a repair credit instead of making the repairs themselves. This is not necessarily a bad thing, but you need to be fully aware of what the repairs will cost before accepting either of these options.
In the above-stated example, the seller decides they don’t want to be bothered with the hassle of making the repairs and instructs their agent to counter offer a $4000 repair credit to accept the home as is. You take the offer and go to closing.
After your closing, you have three licensed contractors provide you with repair bids to correct the problems only to discover the licensed contractor bids come in at $7500, $9500, and $8250; however, you only negotiated a $4000repair credit to make the necessary repairs.
While this example is entirely hypothetical, it is certainly realistic. I see it happen several times each year. I’ve learned over the years that the general public just don’t know what construction costs genuinely are.
I want to be clear, there is nothing wrong with accepting a price reduction or a repair credit instead of the work being completed. You just need to make sure you obtain at least one licensed contractor bid before accepting any offer. It will provide you a more accurate repair cost than just taking a number that is not based on facts.
You may be perfectly content with the $4000 price reduction or repair credit, provided you have the remaining funds on hand to make the necessary repairs.
However, being blindsided 2 weeks after closing with a $7500 repair bill when you were on expecting a $4000 just hurts. Not having the available funds on hand to pay the repair cost can cause a financial strain on your family during what should be an exciting time for you and your family.
Knowing When to Stop Negotiating Home Inspection Repairs
As previously stated, information is the most valuable commodity you can have. The information allows you to set the terms for what you can and can not accept. If you have a set of terms in mind and the seller agrees to those terms, don’t try to squeeze out more concessions.
This can lead to negotiations turning sour between you and the seller. Remember, the goal is to purchase the house for your family. You’ve come this far. Don’t let greed cause you to lose the home you otherwise love by pushing too hard. Count your victories and move on.
Seller is not Willing to Negotiate: Be Willing to Walk Away
So, you’ve done your homework. You have your licensed contractor’s bid, and you have a firm number in mind you can live with. To give you some room to maneuver you ask for slightly more with hopes that the seller will counter offer and eventually you’ll land close to your number. Unfortunately, the seller negotiations just aren’t going as well as you’d hoped and you fear you may lose the house if you can’t make a deal.
Part of being an excellent negotiator and getting what you want is being able to take all the emotion out of your decision making. You need to be willing to walk away if needed. Frequently, if a seller senses you’re about to walk away from the deal, and they risk losing the contract, their willingness to meet your request may change.
Then again, they may not. Sure it’s a risk, but if you can’t make the numbers work you need to stand your ground. It may mean finding another house. I know it’s a short term inconvenience, but we’re talking about a long term commitment that will affect your family for years to come. There’s just no reason to purchase a home that will bring you more stress than happiness.
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