Negotiating the Inspection Report
After reviewing last week’s segment, I thought expanding on the structural inspection was worth doing. It’s the most involved of the three I mentioned and, as noted, one of the more stressful parts of the settlement process. So let’s go a little deeper in to that topic this week.
The home inspector will go through the house stem to stern and note condition and function of just about every component of the house. Inspection reports are lengthy and detailed including photos, sometimes with circles and arrows (nod to the AG fans out there), a brief description and any recommended action. They break down section by section so it makes logical sense as you review, and they also include a summary that is a bullet point list broken down into level of concern from minor issues to major. This is what I pay attention to most.
You and your agent can go through the details to discuss the findings and how you would like to proceed. It’s important to note that some items mentioned will be considered cosmetic in nature, such as torn screens or worn flooring, which is not what you should be focusing on. Items that affect the functionality of the home or the ability to live in it safely is what should be addressed. I often hear people use the words ‘pass/fail’ when talking about a home inspection and that’s not how it works. It is simply an evaluation of current condition. It is unreasonable to expect a house built in 1964 to meet building code standards of today, so be realistic in your expectations.
Once the report has been reviewed you have a few options with moving forward. One is not to move forward. If you are genuinely uncomfortable with the condition and feel it would be too costly or risky to make the house your home, move on instead of in. If you are within the requirements of the contingency you have that right. Most often this is not the case, however, so let’s focus on the other scenarios. Buyers can ask the sellers to take care of items of highest concern and should outline how those are to be addressed, such as by a licensed professional or in a workman like manner. Your agent will submit the repair requests you’ve decided on and negotiations will begin. Have an idea of the items you are firm about and those you could handle later so they go smoothly and quickly. If you prefer to be the one addressing the repairs, you can either negotiate a nominal amount as a credit at closing or reduction in sales price to keep more money in your pocket for addressing them later. If going this route, it’s a good idea to get a bid on the repairs from a contractor in order to defend the amount you’re asking of the seller.
I hope this helped shed some light on a rather mysterious topic. And if you have a topic in mind I’m just an email away.