A Scary Home Inspection Report Doesn’t Have to Be a Deal Breaker

Kimberly Bean
Kimberly Bean
Published on September 27, 2017

Which causes more nail-biting: The home inspection or the appraisal? It’s a tossup. Southern Maryland homebuyers, sellers, and the agents involved await the results of both with a mixture of anticipation and feat. The latter, at least statistically, is unfounded.

 “Nationally, [only] 3.9 percent of sales failed in 2016,” according to Forbes staff writer Samantha Sharf.

Sharf doesn’t mention the reason for the failures, though it’s safe to bet that not all of them were because of a nasty home inspection report. So, the chances are in your favor that your deal, regardless of what the inspector finds, will sail through to closing.

But it might need your help. When you’re faced with problems that the home inspector turns up, you, as the buyer, have several options.

First, Choose Your Battles

There are some repairs – such as electrical, roof, the HVAC system, and plumbing – that you can reasonably expect the seller to make. In fact, anything that presents a health and safety concern or that negatively impacts your use of the home is not only something that the lender may require, but that, should you walk away from the purchase, the next buyer will expect as well.

But it’s the little things that bog down transactions, sometimes bringing them to a halt. If you really want the home, ignore the small stuff, and fight for what actually matters. Items to ignore include anything of a cosmetic nature and problems that are inexpensive to remedy. Save your big guns for the major repairs.

Know Your Options

Ask the seller to make the repairs

When faced with major repair or replacement costs, many homebuyers ask the seller to make the repairs before the close of escrow. Often, sellers balk at the request, but once they’re reminded that the next potential buyer will most likely make the same request, they relent.

Ask the seller for a credit

Rather than ask the seller to make the repairs, ask that he or she credit you with the cost of the repairs at the close of escrow. This way, the seller avoids the hassle of having to hire a contractor and the inconvenience of home repair work happening while he’s trying to pack up and move.

Note that FHA will only allow the seller to credit the buyer 6 percent of the sales price. But, if the problem has to do with the roof and the required repairs are extensive, FHA may require that the work be done before the close of escrow.

Renegotiate the price

A third option is to ask your agent to amend the purchase agreement with a reduced price, reflecting the deduction for the cost of the repairs. You’ll need to get bids from contractors to determine the cost of fixing or replacing whatever is at issue.

This option depends on your current cash flow. While it lowers the cost of the home, it does nothing to put money in your pocket. Before exercising this option, determine if you have the funds to do the work.

Switch your financing

If you’re using a FHA-backed loan, contact your lender to find out if you can switch to their 203k program. Because this loan rolls the cost of the repairs into the mortgage, you’ll, in essence, be financing the repairs but only make one payment every month.

The 203k program is a bit complicated, and the loan takes time. It will significantly slow down the purchase process so you’ll also need to ask the buyer for a later closing date. One problem you may run up against with this option is that the seller is under no obligation to cooperate with your efforts to obtain financing that differs from that stated in the purchase agreement. There is a risk that the seller may cancel the sale.

But, since whatever problems the inspection turned up are now disclosure items (the seller will have to inform any subsequent buyer about them), many sellers will be amenable to the change.

It’s important to work closely with your real estate agent on inspection problems, requests, and remedies.

La Plata MD Homes for Sale and Real Estate Services in Southern Maryland. You now have a search engine to help you with your Southern Maryland home search! And I’m ready to provide you with a custom home valuation if you’re considering selling your home. Let’s connect to discuss how I can help you. Contact Kimberly Bean at 301-440-1309

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