It’s easy to get excited about a new house at many times during the buying process. You’ve done the walkthrough with your real estate agent and the seller, you’ve put up money for the seller and you have a contract ready to go. But there’s one very important hurdle to clear before you should be ready to start calling the home your own: the home inspection.
Often times, the home inspection won’t turn up anything that you didn’t notice during your walkthrough with the seller, but it can sometimes show things that even the seller didn’t know. After the inspection, buyers have three options – move ahead with the sale, walk away from the house or renegotiate. Depending on the kind of offer you’ve made, the inspection is your chance to re-open negotiations with the seller. If you’re preparing for a home inspection, here are a few things to know before you try to renegotiate a contract.
Know Your Protections – A good real estate agent will suggest a number of contingencies in your purchase contract to protect you during the sale. One of the most common is the condition for a home inspection, which allows a buyer a period of time to perform the inspection and allow you to renegotiate or back out of a deal depending on the inspection report. If you haven’t put an offer on a house, here are a few common contingencies to include.
Include the Seller in the Process – It’s never a good idea to allow the seller to be present during the home inspection, but allowing the seller’s agent to join you during the inspection can be valuable to both parties. A good agent will help the seller react appropriately to problems, but only if they are engaged in the process.
Know Your Options – Once you have the inspection report, you have a few options, though the seller has every right to reject your proposals. When negotiating, here’s where to start:
· Ask for a reduced price – The worst that can happen is the seller says, “No,” so it’s worth asking. Try to avoid asking to reduce the price by the full cost of repairs, since most sellers will assume that buyers know potential problems are built into the asking price.
· Ask seller to pay closing costs – This is a concession similar to reducing the price, but many sellers are willing to work with buyers even if they’re attached to their asking price.
· Seller pays for repairs – You can ask for the work to be done before the sale, or for the seller to put the money for repairs into escrow to be paid once the sale is complete.
You Can’t Fix It All – It can be easy to let little things like loose floorboards or the occasional nail pop in the drywall fly, since you’ll fix them later, but it’s important to be realistic about your time. Even if you can fix an issue on the house, it doesn’t mean you should. And if you’re set on fixing things yourself to expedite the sale, consider asking for a credit from the seller to cover the cost of your personal repairs.
Make Reasonable Requests – Don’t get carried away with your requests. If the roof has a small leak, don’t expect for the seller to pay for a new roof. The seller can say no, and typically sellers will agree to deals if you don’t get carried away. If you’re worried about a potential repair in the near future, consider asking the seller to pay for a warranty, rather than asking to replace the potential problem. This protects you at a fraction of the cost.
Walk Away – If you determine the house isn’t up to snuff, you can walk away and have your earnest money returned. Not the best, but if you find a serious defect and the seller isn’t willing to offer credits or repair cost, don’t be afraid to back away from the sale.