Ask Brian is a weekly column by Real Estate Expert Brian Kline. If you have questions on real estate investing, DIY, home buying/selling, or other housing inquiries please email your questions to [email protected].
Question from Marie in Boston: Hello Brian. Three weeks ago, my full price offer on a 22-year-old house was accepted with a contingency for a home inspection. I’m pleased that the deal is moving quickly, and I receive the inspection report a couple of days ago. However, the inspection identified 28 issues that might need attention. Most were minor such as normal wear and tear to the interior walls. However, a few sound like more serious issues. For instance, one item says, “The kitchen sink was leaking at the left sink/drain connection. Have a licensed plumber repair as needed.” I’m spending a lot of money on the house, and I don’t want to buy a bunch of problems. My agent recommends that I let almost all the issues go without asking for repairs. He says it would be reasonable to ask for one or two repairs such as a small ceiling leak around the wood burner’s chimney. What should I do to be sure I’m not getting sucked into a house with problems that I don’t want to deal with?
Answer: Hello Marie. At least you now know the issues so that you can make informed decisions. In this strong sellers’ market, it can be tempting for buyers to waive the home inspection altogether. In my humble opinion, waiving the inspection is never a good idea. Also, this is one area where I would be hesitant to take your agent’s advice at face value. After all, he does want to see the sale close with a minimum of fuss.
I know everyone doesn’t have a friend or relative that understands home repairs but someone that can help you prioritize the defects is a good place to start. If you don’t have a friend to help, hiring a general contractor for a minimal fee to work with you prioritizing the list can be a choice. But before you do that, there is one way your agent can help you prioritize the most critical issues on the list. That would be to identify any issues that could prevent your lender from approving the mortgage or your insurance company from issuing a homeowner’s policy. Those issues would be deal killers for the seller and need to be addressed before the seller can complete the sale to anyone other than an all-cash buyer.
The less urgent issues are going to require some judgment calls on your part. Every house, even a brand-new house, has a few minor defects. Its’ probably wise to let some of these go if you think it will jeopardize closing the deal and you really want this house. You generally have five options after seeing the inspection report:
- Do nothing by completing the sales as already agreed to.
- Cancel the sale based on major problems revealed by the report.
- Negotiate a new price.
- Negotiate repairs.
- Negotiate a combination of repairs and a price revision.
Number 4 can be tricky to negotiate. I’m reluctant to simply have the seller make repairs out of concern that a cheap fix will be made. A better approach when negotiating repairs is to ask for credit from the seller and you arrange for the repairs. For instance, if a new roof is needed, the seller might go with a low bid of $4,000 when $6,000 is the going price. Instead, you can ask for a $4,000 credit from the seller, and you pay the added $2,000 to get the better $6,000 roof.
Marie, there are no hard and fast rules about what must 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 to items that were visible when you viewed the house and made the offer without repair contingencies.
Likewise, items that are generally not negotiable after the inspection include anything that was accurately described in the Seller’s Property Disclosure Statement. Also non-negotiable are cosmetic issues like worn carpets and peeling paint that was visible. Anything visible that the buyer wanted to be corrected should be part of the signed purchase agreement.
Older homes can present unique challenges. 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 the probability that future repairs will be needed should be in the sales agreement. It’s the surprises from the inspection that are more negotiable.
It’s good to have options and another possibility with number 3 can be non-financial concessions. Number 3 can include horse-trading for things like:
- Including some of the furniture.
- Delaying or accelerating the closing.
- Including major appliances.
- Including yard tools like the lawnmower (especially if this is your first house).
Local code violations such as missing handrails almost always have to be repaired. However, upgrades to meet 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.
Marie, I think that you want to purchase this house because a purchase agreement has been signed. You 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. You may have thought the negotiations were done when the seller accepted your offer, but final negotiations aren’t complete until you accept the house inspection and any repairs that you and the seller agree to.
Please comment with your thoughts about negotiating after the house inspection.
Our weekly Ask Brian column welcomes questions from readers of all experience levels with residential real estate. Please email your questions or inquiries to [email protected].