Negotiating Repairs After a Home Inspection
Negotiating repairs after a home inspection doesn't have to be difficult, especially when you follow these 7 tips! When an offer is accepted on a home, it can be easy for both buyers and sellers to feel that they’re at the end of the finish line. Accepting an offer brings the deal much closer to the closing table, but there are several other important steps the transaction must go through before closing day. One of those steps is the home inspection and with the home inspection, major issues can arise.
A home inspection provides the buyer with a detailed report of the home’s structure, plumbing, electrical, foundation, roof etc. It helps the buyer know if certain repairs are needed so that they do not encounter costly problems after purchasing the home. Working through repairs on the home inspection shouldn't be a battle, there should be a mutual understanding from both sides why a buyer is requesting certain repairs and why the seller may decline those repairs. In Raleigh, the seller is not required to make any home repairs on a home so you may have a tougher time negotiating after the home inspection though most sellers do offer to help whether it's in the form of actual repairs or financial compensation.
Here are 7 tips that will help you negotiate repairs after your home inspection
1. Determine What You'd Like the Seller to Repair
While every situation is different, the buyer or seller may split some – or all – of the repairs that appear on the inspection report. Other times, the buyer will be solely responsible, or the seller will be responsible. When reviewing the inspection report, determine which items you would prefer the seller repair. As a buyer, always try to come to the seller from a kind, courteous place. Hefty negotiations will most likely take place – which your realtor will handle for you. Your realtor should also help determine which repairs the seller should handle and which will be your responsibility.
2. Discuss What Repairs Are Most Important
Bear in mind that nearly all homes will have issues – no house is perfect. When reviewing the list, break it down into three sections: 1) major, glaring defects that will be extremely expensive to repair 2) issues that are not overly costly but also not cheap, and 3) small, minuscule items that are not of immediate importance.
Try to focus on the major defects as opposed to the issues that aren’t as important. When buyers become focused on the smaller, less pressing items on the list, they may lose sight of significant issues that will be the most expensive to fix.
3. Get a Quote for Repairs from a General Contractor
After receiving the inspection report, the buyer may feel inclined to ask the inspector for pricing estimates on how much the repairs will cost. In almost every situation, the inspector will be unable to provide an estimate. A contractor, on the other hand, can give some ballpark numbers. Your realtor may also be able to provide some estimates. Additionally, your realtor may be able to put you in contact with recommended contractors. Chances are if your Realtor has been in the real estate industry long enough, he/she has a general understanding of standard repair costs. After your realtor has put you in contact with a contractor, provide a list of the items you want them to complete and they should have an estimate on approximately how much everything will cost.
4. Would you Prefer Money or Repairs?
If you are a seller, it is advised that you offer repair money (typically referred to as a ‘credit’) to the buyer instead of handling the repairs yourself. A credit brings down the buyer’s closing costs to help offset repair costs. In doing so, the buyer can then handle the repairs on their own without getting the seller involved.
As a seller, you won’t run the risk of the buyer continually checking in to ensure the repairs were completed. They may also demand that additional work is completed if they are unhappy with the initial repairs. Serving as the middleman between a contractor and a buyer also puts more items on your to-do list when you’re in the process of moving. It is always best to let the buyer find the contractor and oversee the work on their own. Providing the buyer with a credit typically provides the funds necessary for the buyer to pay for repairs.
If you are a buyer, it is advised to take a credit rather than let the seller oversee the work. Your expectations are most likely very different than the seller’s, so it is best to negotiate a credit so that you have extra funds to put towards the work. That way, you can oversee everything from start to finish and will not have to discuss repairs through a middleman (the seller).
5. Understand the Seller is Not Obligated to Make Repairs
Buying a home brings out many emotions. There is the initial excitement of finding a home, and then some stress and tension may arise if the seller refuses to pay for repairs. Take a moment to take a step back and assess how much you want this home. Is this the house of your dreams? Are the repair costs outrageous or manageable? If the repair costs are manageable, you may kick yourself later if you choose to walk away simply because the seller wasn’t willing to throw in a little extra cash.
6. Approach the Request for Repairs with Gratitude vs. an Attack
The worst way to communicate with a seller is by demanding that they pay for repair costs. The repairs are typically just as much of a surprise to the seller as they are to the buyer, especially considering most repairs that appear in an inspection report are hidden beneath the surface of the home, tucked away out of sight. The sellers may have been living in a home with a faulty foundation for years and had no idea until they viewed the inspection report.
7. Try to Understand the Seller’s Point of View
Although it is easy to feel anger or resentment toward the seller, understand where they are coming from as well. Sellers have tons of costs and fees that they must consider, and repair costs are unfortunately not always their top priority. They may want to help the buyer with repair costs to expedite the deal, but may be strapped for funds and simply cannot afford to put money into repairs.
Common Questions on Negotiating Repairs and Home Inspections:
Who Pays for the Home Inspection?
In North Carolina, home inspections are typically paid for by the buyer. This applies to many other states across the U.S. as well. The home inspection can range anywhere from $300 to about $500. If the buyer is using a VA loan, the buyer is prohibited from paying for the termite inspection.
How Long Does a Home Inspection Take?
A home inspection usually takes about 2 – 3 hours, on average. It is strongly advised to have children and pets out of the house so that there aren’t any distractions during the home inspection process. Buyers and their realtor may also accompany the home inspector and ask questions during the process.
What fixes are mandatory after a home inspection?
Assuming a standard purchase agreement is in effect, the seller is usually not legally obligated to fix any of the defects that come back in the home inspection report. However, there is typically a contingency in the purchase agreement that states the buyer can walk away from the deal if issues are found in the inspection. So, although a seller is typically not legally required to cover the cost of problems, sellers who refuse to pay for anything run the risk of losing a buyer.
Beyond that, if there are major structural issues with the home or safety problems, mortgage lenders may require that those defects are resolved before agreeing to lend the buyer a loan. So, even if the buyer is prepared to buy your home with the defects, they may not be able to obtain financing.
Does the seller pay for repairs after the inspection?
The seller is not legally obligated to pay for repairs. However, if they do not want to risk losing the buyer, it is in their best interest to at least consider paying for some repairs, if not all. This is typically contingent on the real estate market, as well. If the seller is selling their house in a hot buyer’s market where there are a lot of buyers and low housing inventory, the seller may be at an advantage. On the flip side, if there are tons of houses for sale and very few buyers looking for homes, it may be advantageous to pay for all or some of the repairs so that the seller doesn’t risk losing the buyer altogether.
How to negotiate the house price after a home inspection
When negotiating the home price, always think big picture. Do you anticipate renovating any aspects of the home in the future? Will the defects that appeared in the inspection report be obsolete after the renovations?
It is also important to weigh the gravity of the repairs. If the repairs are fairly minimal, such as replacing some cracked bathroom tiles, etc., the buyer can request that the seller make the repairs themselves. If the repairs are significant, will a credit toward closing costs suffice or is a reduced price necessary? Unless the sellers are desperate and the changes are substantial, it may be far more difficult to get the seller to agree to a price reduction vs. credits.
How to request repairs after a home inspection?
Understandably, a seller wants to spend as little money as they can on repairs and sell their home in the shortest timeframe possible (which makes sense). Knowing that, if the inspection report reveals significant issues, the buyer is typically better off asking for a credit instead of asking the seller to take care of the repairs themselves. A credit would help bring down closing costs for the buyer at closing, alleviating the cost of making major repairs to the home.
It is advised that buyers take credits rather than let the seller take care of the repairs. Because the seller is understandably in the midst of moving and wants to expedite the process as much as possible, they may not do careful due diligence in selecting a contractor to perform the work. Or, if they choose the contractor the buyer requests, they may not oversee the work and will be unaware if the contractor failed to repair certain defects. The buyer will have to live in the home, not the seller, so the seller may be less invested in ensuring the work is completed properly. If the buyer has additional funds to spend on repairs, they can hire the contractor they want to work with and oversee the work.
What are the common repairs typically needed after a home inspection?
- Electrical: Frayed wiring, wiring that’s not up to code, or improperly wired electrical panels are some of the most common electrical issues found during a home inspection.
- Plumbing: Water damage, leaking pipes, sewer system problems, and failing water heaters are some of the common plumbing issues found on home inspection reports.
- Foundation: For the few homes with basements in North Carolina, basement water damage is common. Cracked foundations are also common in home inspections.
- Mold: Given North Carolina’s humid weather, mold tends to be a common problem
- Roofing: When it comes to the roof, problems can range from missing shingles to major leaks, which may require a full roof replacement.
- Termites and pests: While some pests are impossible to keep at bay, even in the cleanest houses, termites and vermin are a major red flag for buyers.
- Windows and doors: Doors that don’t open and close properly or windows with broken panes and failing window seals are common – particularly in older homes.
- Asbestos: Asbestos or lead paint can be extremely hazardous and should be taken very seriously if it is found in an inspection report.
- Chimneys: Older chimneys that are defective may need to be removed if they present a significant safety hazard.
Who pays for repairs after the home inspection?
Repairs can either be paid by the buyer, seller or both – every transaction is unique. Depending on the circumstances, the buyer may ask that the seller take care of significant safety hazards and other costly fixes. If the seller refuses, the buyer may step away from the deal altogether.
Hi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!