As a buyer’s agent, it’s your job to get the best deal for your clients. One possible tactic is negotiating repairs after a home inspection. It’s up to you to teach your clients how to read the inspection report and guide them on what to ask for during negotiations. Here are some tips on that process.
Before we provide tips for requesting repairs after a home inspection, read Demystifying the Home Inspection Process to learn about inspections, how long they take, and problems an inspection may NOT uncover.
How to Request Repairs After a Home Inspection
One of the most common contingencies is an inspection contingency, which gives the buyer the right to have the home professionally inspected. Typically, the buyer is given a specific amount of time (usually 7 to 10 days) for a professional inspection, after which they may negotiate repairs or cancel the contract if a significant problem is uncovered.
Buyers in hot markets may choose to waive the home inspection. According to the most recent report from the National Association of REALTORS®, 20% of buyers waived inspection.
If your client insists on inspections, you may recommend that they request a reasonable inspection contingency period – with the expectation that the sellers will NOT pay for the repairs.
Here are tips for requesting repairs after a home inspection.
Tip 1: Help your clients understand the inspection report.
Sometimes, buyers may look at a home through rose-colored glasses. They may fall in love with the perfect location, a beautiful garden, or unique features and ignore the important structural features of the home.
Encourage clients to be present during the inspection so they can ask questions, gain a better understanding of the property’s condition, and discuss any concerns directly with the inspector. Then, emphasize the importance of reviewing the inspection report in detail. Explain how the report’s findings can protect their interests by providing insights into the property’s condition.
Tip 2: Encourage your clients to prioritize major issues over minor ones.
If the inspection uncovers issues, encourage your buyer to prioritize significant issues over minor ones during the negotiation process. After all, major issues like roof damage, electrical problems, or foundation cracks affect the structural integrity and safety of your home – and can be expensive to fix.
Asking for minor repairs may irritate the seller and make them less willing to negotiate on other important contract terms.
Tip 3: Get repair estimates.
Advise your clients to get estimates from contractors for the repairs to understand the cost implications. Use these estimates during negotiations.
Pro Tip: Have a network of tradespeople to call on for repair estimates.
Related Article: Real Estate Networking: How to Build a Strong Network and Why It Matters
Tip 4: Help your client choose between asking for repairs or a credit.
Encourage your client to consider the pros and cons of asking the seller to complete the repairs or to negotiate a price reduction on the property.
Benefits of asking for repairs
- The repairs will be completed before closing, ensuring that the issues (and underlying problems that may be uncovered) are resolved.
- The buyer doesn’t have to manage the repair process, saving time and effort.
- The buyer avoids the immediate out-of-pocket expenses for repairs.
Drawbacks of asking for repairs
- The seller may choose the cheapest option or do a quick fix, which might not meet the buyer’s standards.
- Repairs could delay the closing process.
Benefits of asking for a credit
- The buyer can choose their own contractor and ensure the work is done to their satisfaction.
- The buyer can schedule the repairs at their convenience, perhaps after moving in.
- Requesting a credit can prevent delays in closing.
Drawbacks of asking for a credit
- The repair costs could exceed the credit amount, leading to additional expenses.
- Additional repair needs might be uncovered while addressing the original problem.
- If the repairs are urgent, the buyer may need to address them immediately after closing, which could be stressful during the move-in process.
Tip 5: Consider market conditions when advising your buyer client
Explain to your buyer client that including an inspection contingency may reduce the likelihood of their offer being accepted during a hot market.
During a buyer’s market, you are responsible for advising your client on the best negotiation approach based on what you know about the seller.
Tip 6: Tell your buyer that they need to be ready to compromise
Discuss the importance of compromise during negotiations following an inspection. For example, suggest alternatives like splitting repair costs or agreeing on partial repairs.
Tip 7: Document everything
When negotiating, document all communication and agreements regarding repairs. You may need proof to protect your client and avoid future disputes.
How to Handle a Seller’s Refusal to Fix Problems or Offer Credit
If a seller accepts an offer contingent on inspections but later decides they don’t want to fix any of the problems or give the buyer credit, several outcomes are possible, depending on the terms of the contract. Here are three common scenarios.
1. The buyer accepts the property as-is
The buyer can proceed with the purchase without any repairs or credits, accepting the property in its current condition. In this case, the transaction proceeds as initially planned, but the buyer assumes responsibility for addressing any issues identified in the inspection.
2. The buyer withdraws the offer
If the buyer is not satisfied with the seller’s refusal to address the issues, they can withdraw their offer, which will result in the cancellation of the contract.
Depending on the contract terms, the buyer is typically entitled to the return of their earnest money.
3. The buyer and seller continue to negotiate
The buyer and seller might enter into further negotiations. To reach a compromise, you might advise your buyer to propose a reduced purchase price or offer to split the repair costs.
Sometimes, a seller might reconsider their refusal if the buyer makes a reasonable counteroffer or threatens to walk away from the deal.
One of the most critical skills you’ll need as a real estate agent is how to negotiate. Become a better negotiator with RENI – the Real Estate Negotiation Institute. RENI offers two certifications: Certified Negotiation Expert (CNE) and Certified Buyer Agent Expert (CBAE). Learn more about these helpful certifications by visiting our website.
Key Takeaways
- Encourage your clients to focus on significant issues, such as structural or safety concerns, rather than minor cosmetic fixes to strengthen their negotiation position.
- Help your clients thoroughly review and understand the inspection report, which can guide them in making informed negotiation decisions.
- Discuss the pros and cons of asking the seller for repairs versus requesting a credit, helping your clients choose the best option for their needs and situation.
- Tailor your negotiation strategy based on current market conditions, advising your clients when it may be necessary to compromise or stand firm on their requests.
