Learn how to handle post-inspection negotiations to make way for a smooth sale.
Almost all buyers request a home inspection when they submit an offer on a house. And many end up requesting repairs or concessions after getting the inspection report back.
As a seller, it's important to prepare yourself for the home inspection process, and to know how to negotiate after a home inspection if it comes back with some not-so-great news. After all, among sellers who had a sale fall through, 15 percent were due to the buyer backing out after the inspection report.
Performed by a licensed professional home inspector, a home inspection is a comprehensive review of the home that's for sale, based on a visual evaluation and testing the home's systems and components. The result is a home inspection report, which details the current condition of the home and alerts buyers to any major issues. Most buyers request a home inspection when buying a home so they can avoid spending thousands (or more) in unexpected repairs after closing, and to protect themselves from overpaying for the property.
A home inspection contingency is an addendum to the offer contract that allows the buyer to conduct an inspection and then back out of the deal if they are unsatisfied with the findings. Occasionally (and most commonly in a very competitive sellers market), buyers may waive their right to an inspection in order to make their deal more appealing to the seller.
The language in each contract varies, but usually it states that the inspection must be satisfactory to the purchaser, and if it's not, they can renegotiate the terms of the deal or call the deal off and receive any earnest money back in full. If you have questions about the terms of the home inspection contingency your buyers are presenting, ask your real estate agent — before you sign.
Typically, the buyer pays for their own inspection, and can use a licensed home inspector of their choosing. However, sellers who may be concerned about what might be found in an inspection sometimes opt to pay for their own pre-inspection. Based on the results, you can price your home accordingly, and you won't be surprised by the results of your buyer's inspection. Do note that any problems revealed in your pre-inspection have to be disclosed to your buyer.
The timeline depends on the market and the contract, but within 5-10 business days of both parties accepting the deal is standard.
Again, it depends on the market and your specific contract. Usually, the 5-10 business days allowed in the contract includes both conducting the inspection and requesting any repairs in writing. In a buyers market, buyers sometimes have more time, but in a sellers market, they usually have to act quickly.
If you're selling your house on your own, then it makes sense for you to attend the home inspection. If you're working with an agent, it's best to have them attend on your behalf.
Sellers are often caught by surprise when a buyer's inspection report comes back with a long list of repairs, even if the home isn't very old. Here are some of the most common major issues that come up during inspections.
While a bad home inspection report isn't what any seller is hoping for, the good news about the process is that as a result of the inspection, the buyer knows what they're getting into and has the chance to ask for repairs or walk away — both actions that protect the seller from future liability.
Depending on the terms of your contract, the buyer may do one of three things after receiving the inspection report on your home:
Don't panic if you receive a bad home inspection. Reasonable buyers will understand that no home is perfect — not even new construction. And remember, they want to buy your house! So, they should want to move the deal forward as much as you do.
You have a few options, and should pick your course of action based on what makes the most sense for you financially and for your local real estate market. Here are some options:
Knowing what to do when a home inspection is bad can be tricky. Buyers choose their own home inspector, and occasionally a seller will feel like the report is incorrect or exaggerated.
Regardless of the inspection results, home inspectors should not be advising buyers as to whether they should move forward with the purchase. Their job is simply to inspect and report their findings, and then let the buyer come to their own conclusion.
Home inspectors have been sued before by sellers who believe a deal falling through was the fault of the home inspector and their incorrect reporting. Whether you’re able to sue the inspector depends on state laws. However, it can be difficult for sellers to challenge the inspection as a third party, since the relationship in question is between the buyer and the inspector.
Remember, if a buyer backs out and you re-list, you're going to have to disclose whatever was found in the report to future buyers, so the best thing to do is go ahead and complete the repairs and hold on to documentation from your contractor that proves the work was done.
You could also add a mention of the repairs to your listing description. Buyers and their agents will know your home is back on the market after being under contract, and being forthcoming about why — and letting buyers know that all issues have been fixed — can be a good strategy. Here's an example: 'Seller has fixed every item from previous inspection report, including a new roof and electrical panel.'
Before you go too far down the path of arranging for seller repairs after the home inspection, it's important to separate reasonable buyer requests from unreasonable ones. Buyers shouldn't expect the house to be flawless.
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