Real Estate Marketing & Beyond
Buyers and sellers often think negotiations are complete once both parties have signed the purchase agreement. Reality is that another round of negotiations is frequently needed after the house is professionally inspected. The inspector’s job is never to decide if the agreed price is correct or what it should be. Nor should the inspector be involved in a second round of negotiations after the inspection.
Following the inspection is a time that real estate agents typically play an important role. Emotions run high when the seller and buyer believe a deal has been struck but both learn there are more issues to be resolved. A good place to start is for both agents to go over the report separately with their clients. They should make clear that generally there are five options that could result from the report:
Although there will be professional opinions involved, the report can be prioritized into issues that must be corrected and issues that the buyer would like to have corrected. There are no hard and fast rules about what has to be corrected. The deal might fall apart but both parties are free to refuse the demands of the other. For instance, the seller should not be expected to make repairs or improvements of items that were clearly visible to the buyer when he or she viewed the house.
Items that are generally not negotiable after the inspection include anything that was accurately described in the Seller’s Property Disclosure Statement. Also nonnegotiable are cosmetic issues like worn carpets and peeling paint that was visible. Anything the buyer wanted corrected with these should have been part of the already signed purchase agreement.
Older homes can present unique challenges in this area. An inspection could report that an old but functioning furnace should be replaced within a year. If the furnace is functioning correctly, this is more opinion than fact. Either way, the condition of an older home and probability that future repairs will be needed should already be built into the sales agreement. It’s the surprises that are more negotiable.
It doesn’t happen often but there can be issues that the seller’s lender will make the loan contingent upon. This could be a damaged roof that was not detected by the buyer. The seller can’t be forced to make the repair but chances are they won’t be able to sell contingent on any loan until the repair is made.
There can be other major problems that only come to the buyer’s attention via the inspection report. This could be a roof nearing the end of its useful life, an old electrical system, foundation damage, crumbling chimney masonry, a poorly constructed deck, etc. These surprises can warrant a price reduction. In many cases, the seller will have to include this information in the Seller’s Property Disclosure Statement for a future sale.
Just because a problem needs repairing doesn’t mean the seller has to make the repair. Often it’s in the best interest of the buyer to get a price concession and arrange for the repairs themselves. The seller is still looking at the bottom line he or she will walk away with. The seller is likely to have a minimum repair made rather than consider the long term consequences.
Local code violations such as missing handrails almost always have to be repaired. However, upgrades to revised codes that were grandfathered are negotiable. The home inspection is not a code compliance inspection. While the inspector might make recommendations based on code changes, the buyer needs to look at the big picture. Rarely are houses that met code when built required to be upgraded at a later date. If the buyer wants a house complying with the new codes, he or she should probably be looking for a newer house.
The buyer must want to purchase the house if a purchase agreement has been signed. They should approach the house inspection as a relationship with the seller rather than a need to be right about everything. This is what makes a “must fix” and “nice to have” priority list good from the beginning. Final negotiations aren’t complete until the house inspection has been accepted. Please leave a comment on your thoughts about negotiating after house inspections. Also, our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions, inquiries, or article ideas to [email protected].
