Handling The Buyer's Home Inspection: Fix the Problem or Negotiate the Price?
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Handling The Buyer's Home Inspection: Fix the Problem or Negotiate the Price?

Often a professional inspection report will list a series of defects in the property. Typically, soon after receiving the report they will send a notice that they will approve it providing the following items are fixed. What they are saying is that their purchase now hinges on your making the corrections.
               negotiating home prices

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Should I agree to fix the problem?

Maybe... and maybe not. Often a professional inspection report will list a series of defects in the property. For example, there might be mold growing on the bathroom floor as a result of water splashed from a shower. A wall plug in the living room might be inoperative or sparking. A portion of a fence might be falling down, and so on. Of course, there could be more serious problems as well. For example, the report may indicate your roof has worn out and needs to be replaced. As soon as you get the report, should you go out and fix things? If there's something involving health and safety, for example, a broken electric plug, then I would have it fixed at once. (Have it done professionally to avoid liability issues.) After all, whoever's living in the house may be at risk and that could include you and your family. On the other hand, as for the other defects noted, I would wait for the buyer to make a demand. Typically, soon after receiving the report they will send a notice that they will approve it providing the following items are fixed. What they are saying is that their purchase now hinges on your making the corrections. To save the sale, you may want to go ahead and do the fixes. This is usually the case if they are minor and inexpensive. On the other hand, if we're talking about fixes at the level of a roof, which can easily cost $10,000 to $20,000 to replace, it's probably negotiation time. You may offer to fix, but not replace the roof. The buyers may counter that they want a roof. You may counter that since they will get the benefit of a new roof, they should pay at least half the cost. And so on. It's like going through the selling process all over again. But don't get discouraged. Most buyers still want the house and will bend to get it, including sometimes paying for at least some of the fixes.

Should I renegotiate the price?

This is an alternative when the professional inspection report comes in with problems. The report says the house needs a new roof and the buyers demand you replace it. You counter offer to take $7,000 off the price and then they can go out and get their own new roof. This has certain advantage to buyers, particularly if they are cash short. Your credit can be toward their closing costs, helping them to get into the house. And later they can get a roof of their choosing, not yours. Further, with cash settlement there won't be a time lapse while a contractor is found and the work completed. On the other hand, buyers (and sometimes lenders) will insist the actual work be done and no cash compromise may be possible. Further, sometimes difficult buyers will use a problem found in the inspection report as a wedge to get a much more significant price reduction from you. For example, they may point to some cracks noted at the periphery of the house and say that it indicates a new foundation is needed. They figure the cost to be $50,000 and they want you to reduce the price by that amount. Do cracks indicate a broken foundation? Maybe. Will it cost $50,000 to fix? Maybe. Or perhaps they'll take your money and then just live in the house as it is. You have to decide whether you're so desperate to sell that you're willing to cut the price, or whether you'll simply cut loose the buyers and hope that some future buyers will be more reasonable. By the way, you will most likely have to show the old buyers' professional inspection report to new buyers.

 

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