Buying a home can be an exciting and stressful time for the buyer, especially if it’s your first home purchase. One of the most stressful parts of the home buying process can be the inspection. What do you do if the home inspector comes back with findings? Below are 3 tips on how to handle issues in the home inspection report.
1) Get the Money Instead of a Fix
If your home inspection report comes back with a lot of findings on it, don’t get too stressed out; it’s normal. The job of the inspector is to list out anything and everything he sees so that the future purchaser knows exactly what he or she is buying. The key is not to worry about the small stuff (e.g. decks need to be re-stained, the tile in the bathroom floor is cracked, etc.) and to focus on the major repairs that are identified. These are things like mold, a roof replacement, a damaged structural wall, termites, etc. These larger finding will require a significant amount of money to fix and normally need to be fixed sooner rather than later.
So, if these things are returned in your home inspection report, the first tip is to ask for money, rather than have the seller fix the issues himself. The easiest way to do this is to ask the seller to lower the price of the home in consideration of the number of repairs needed. For example, if the roof needs to be replaced and you received an estimate for $10,000 for it, you can ask the seller to lower the asking price by $10,000. Getting the money is more effective than asking the seller to fix the issues themselves as they are less likely to invest the time and money to fix the problem the right way. Instead, they will try to find the quickest and cheapest fix to solve the problem in order for them to sell the house without investing more money.
2) Be Willing to Negotiate
Buyers usually try to get as low a price as possible from the seller which can cause the buyer to fight for every last dollar they can get. Buyers often don’t think about the sellers’ circumstances or situations, though. For example, the seller may not have extra cash laying around to fix issues identified in the home inspection report and they may not be able to lower the home price due to outstanding mortgages and liens on the property.
If that’s the case, you are still able to negotiate; however, you just need to go about it a different way. One option may be to let seller pay for the repairs with escrow money after closing rather than asking for the seller to pay for the repairs before the closing. If you take this approach, make sure you get this in the contract or at the very least in writing from the seller so you can legally enforce it if you need to.
Another option may be to negotiate the closing costs with the seller. Rather than fight over the cost of the repair and who’s going to fix it, you can ask the seller to pay the closing costs and the buyer can take the extra money saved and put that towards the repairs needed. As stated on Zillow, the average closing costs home buyers will pay is between 2 and 5 percent of the purchase price. If that amount is close to the costs of the repairs needed that may be a good way to get the money you need to fix the issues identified in the inspection report.
3) Don’t Settle
This is usually the hardest part for buyers. You find the perfect house; you get your offer accepted; but they won’t negotiate on repairs.
Buyers should remember that it’s okay to walk away from a deal if the numbers don’t make sense. As a buyer, if you are at the top of your price range already and the seller is not willing to fix a major repair on the home or offer money, and you don’t have the cash to do it yourself, walking away from the deal is often the best choice. Even if this is the perfect home, if you can’t afford the home and its repairs, stretching yourself or your family too thin will only cause you more issues down the road. As with any home, one issue today will usually turn into 2 or 3 a few years later, so you need to have some extra cash set aside to handle those repairs when they need to be fixed.
