The negotiation process of a Southern Maryland home sale begins with price and contract terms … and doesn’t end until the deal is closed.
After price and terms, one of the most frequently negotiated items has to do with the results of the home inspection. These can also be among the most contentious negotiations.
Few home inspections are “clean,” meaning that there isn’t anything wrong with the home. And, many of the items mentioned in inspection reports are minor.
Your Southern Maryland real estate agent will counsel you on how best to deal with buyer requests for repairs, but it is helpful for you to know why he or she is making certain suggestions. When you know how to choose your battles – and why – you’ll get this negotiating process.
The 3 most common types of requests
When the buyer finds something in a home inspection report that they want fixed, their agent will recommend to submit one of the following requests:
- Ask the seller to make the fixes
This method can delay the transaction, and depending on the extent of the repairs and the deal the buyer made for the price of the home, the buyer runs the risk of the request being denied. As the seller, you should know that the buyer’s lender may require certain repairs before approving the loan. These include home safety issues, structural soundness, and to remedy building code violations. Expect to make all of these types of repairs.
- Ask the seller for a credit of the funds required to make the fixes
This method is quicker than No. 1, even if an adjustment to the closing date has to be made. A good buyers’ agent will ask her clients whether they can trust themselves to make the repairs using the cash back they get at the close of escrow.
Again, as the seller, know that certain fixes are required by the VA and by FHA before the close of escrow. Also, some lenders and some types of loans forbid a cash credit at closing.
- Ask the seller to lower the price of the home
The buyers’ agent suggests that his clients request a price reduction to compensate for the cost of the needed repairs.
What you should never agree to fix
It’s amazing to me how old, ugly, and scary a home inspector’s photo of an electrical wall outlet can look. Each smudge, every crack, and that itty-bitty-chipped-corner, when resized to enormous proportions, makes it look like it’s ready to eat the house.
A buyer who insists that the seller replace that plastic cover – or that the seller buy and install a globe lightbulb on the porch – should be reminded by their agent that the inspection report is not a repair list for the seller.
Repairs to fix cosmetic issues can be safely ignored. Lender-required fixes, on the other hand, should always be performed. Even if this buyer walks away, these fixes are now a disclosure item, and other lenders will most likely demand them.
During a fiery sellers’ market, you are in the driver’s seat and can safely ignore most of the more trivial requests. In a buyers’ market, however, you may have to take a deep breath and carefully consider caving to the buyer’s wishes.
You don’t have to follow the buyer’s agent’s script
If the items on the buyer’s fix-list aren’t related to safety, structural soundness, or building code violation, you are under no obligation to respond to the buyer’s preferred remediation method. In other words, you don’t have to offer a credit, make the fixes or lower the price of the home. You have options, too. Some of these include:
Hold back personal property
If you won’t be taking your appliances with you, don’t automatically include them in the sale. Hold them back to use as bargaining chips during the negotiating periods, such as over price and repairs, suggests Realtor.com. Instead of lowering the price of the home or making non-essential repairs, offer to throw in the appliances.
Offering a home warranty
Offering a home warranty is a win-win way to address those requests for replacement of an item that, although it may be nearing the end of its functional life, still works. For example, an aging water heater may concern the buyer. A home warranty might ease their anxiety and save you money in the process.
As always, consult with your real estate agent about all possible responses to a buyer’s request for repairs.
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