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Are Home Inspections for Renegotiation or Buyer Protection

It's fairly ubiquitous today to hire a licensed home inspector when purchasing a home. This is a good thing. For most folks a home purchase represents the largest amount of money to be spent in their lifetime. The home inspection contingency is typically one of the "big three" contingencies in an offer to purchase.

While specific language and format will vary, the basis of a home purchase agreement has, in essence, three components from the buyer's point of view.

We will purchase your home if...

You agree to our price
We can acquire appropriate financing
Upon inspection(s) the home has no defects which we deem unacceptable

If any of those contingencies are not met, the buyer has an out and will likely be able to recoup any money paid into an escrow or trust as a deposit.

I guess this is where I should put my disclaimers.

I am neither an attorney nor a home inspector - this post is to be construed neither as legal advice nor specific recommendations on any construction, structural, etc issues regarding a home you wish to purchase. Any similarities to actual persons living or dead is purely coincidental. One offer per household and finally - employees of Rick Schwartz Homes, any affiliates, wholly or partially owned subsidiaries or related companies are not eligible.

The question I'm posing, as a Realtor is this: Should it be assumed, by the buyer, that the seller should bear the cost of repairing any and all defects uncovered during a home inspection?

My purpose in this discussion is to raise the issue for thought as to why we do home inspections and should the buyer plan to use this moment to renegotiate the purchase price of the home.

We do home inspections in order to uncover defects in the home that might not be noticed during the shopping process. Things that might not be visible during a routine walk-through. Most defects are fixable. There is obviously, a cost involved in any remedy. The key point, in my opinion is one of expectations. The purpose of the inspection is to uncover things that were not likely to be apparent when you are in "shopping" mode. Examples:

If you see water dripping into a large puddle in the center of the basement directly under the kitchen, you should not be surprised when a home inspector reports a plumbing issue.
If you see scores of rodent traps on the floor in several rooms, you should not be surprise if the inspector hints that there might mice present.
If there is black tape across the front of several electrical outlets, you should not be surprised if the inspector recommends that an electrician check the place out.
If the front view of the house looks more like the one on the left in the image below, rather then the one on the right, you shouldn't be surprised at anything the inspector finds.

nice vs ugly

Serious point here is that your own walkthrough which happens long before you negotiate price should give you a general idea of the condition of the house. If you have a feeling that there are issues yet to be discovered, say so early on. Have your Realtor let the listing Realtor know that you are making a lower offer because you saw, this or that or the other. Take the condition of the house into account before you decide what you want to pay.

Your home inspection is, without a doubt, going to reveal some items that need to be corrected. If they are minor, put them on your list of things to work on when you move in. If they are major safety, health or structural issues, then either ask the seller to pay for repairs, split it with them or use your contingency to pull out.

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Posted by Rick Schwartz on 11/30/2009 02:06 PM

Comments (105)

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105 Comments on Are Home Inspections for Renegotiation or Buyer Protection

NOV

2009

Because of multiple "outs" in most agreements, this naturally has become a negotiating point. This is fine as the market forces will prevail. Sadly and surprisingly, the buying public has the expectations that very minor repairs should be made. That is fine, and the seller has the right to say no. The problem is that buyers are walking from deals. Just had a request for a scratched window and scratched refrigerator. Seller so no, and the buyer back out and bought their backup home. There are a zillion similar situations, thus, the seller should be aware that a buyer may back out from the smallest of requested items.

Nice post Rick. I totally advocate having a buyer get a home inspection, but not as a renegotiation tool, but rather, as you stated above, a guage of what will need to be looked at once they move in, so that perhaps they can keep a little money aside instead of rushing out to the furniture store for that new pool table. Once you have an inspection performed and start asking the seller to fix things, you may as well kiss the deal goodbye. You are not buying a new house, so go kick someone else's tires. lol

As a realtor and not a home inspector or someone with previous construction experience, I always recommend a home inspection, even on New Consttruction. This removes the liability for me (where the buyer says "you should have noticed that" and puts is on the home inspector). I use the inspection as a point of discussion and unless it's new construction, I advise my clients to always show the seller everything the inspector found, but don't ask for it all. Just pick you top 3-5 things

Rick, I teach my agents and buyers to write any obvious repairs needed into the contract for negotiation. I also teach everyone that a home inspection is a report card on a home and not a seller paid shopping list. We are looking for major detriments to the home, not leaking faucets or cracked windows. Little things are part of the "joy" of home ownership and not things to beat up the seller about.

DEC

2009

Being informed is always a better position from which to make a decision about anything, rather than surprize or being too late to do something about what you find out. I agree with inspections every time.

Good Post.

With todays buyers market it is for both. More and more it is another point to work a deal

Have a great day

Tony

This topic has been debated for a long time. I believe renegotiation and buyer protection are one in the same.

If a buyer closes on a property that has an unsafe electrical system, a leaky roof and a major mold issue and they are not financial prepared for improvement, they are left unprotected. Accordingly, a request is made for resolution which will involve repairs or a price reduction.

The problem often arises from all the defects that were not visible or not understood. Compounding the situation are sellers with amnesia when asked to provide an accurate disclosure.

The solution is to provide an accurate representation of the home's condition and eliminate surprises.

Great topic for discussion in your post, Rick! My operating line on this topic is that a home inspection is for the buyers' understanding of what they are purchasing. I believe they have a right to ask the seller to make repairs if the flaw affects the structural integrity of the house. I do not believe the seller is responsible for other repairs, with the exception of new construction where I hold the builder to a slightly higher standard. When I initially explain the home-buying process to a buyer, I remind them that they are purchasing a used house. It is all about setting the buyers' expectations from the start of the whole process so that when they get into negotiations, they are well prepared.

I think most people enter into this thinking a home inspection is for buyer-protection. However, as a practical matter, it usually turns into an excuse for renegotiating the contract. In a recent case, a seller turned the tables on my buyer-clients and refused to repair major mold/moisture damage and ended up repairing none of the less serious things they did agree to. Most of the time, however, buyers can write their own ticket at this point in the transaction.

I always find is curious when a buyer does not have an inspection done. It is worth the money spent and provides value to the transaction. I consider it one of the costs associated with buying the house. And as always it is all a negotiation.

South Carolina built in an automatic out on our contract around inspections. I always try to see any unseen problems and advise before the contract.

Tim - You are right that it has evolved into a 2nd point for bidding. I try and educate buyers at our first meeting as to the primary purpose of the inspection.

Jean - Absolutely, I've seen deals go out the window over small repair issues.

Jim - I don't suggest a number of things to ask for but if we are asking for anything I always do what you do and suggest we show them the whole report so they know what we're NOT asking for.

Damon - Great idea about putting the repairs in the contract. Thanks for that tip

Terrylynn - A surprise during a transaction can often be a catalyst for implosion

Tony - The inspection does benefit both sides, but my feeling is that it doesn't have to automatically become a new negotiation. I think it's about early education.

Glen - No question that undiscovered defects in homes need to be brought to the surface as quickly as possible. I agree with you there. I guess what I'm saying is that as a buyer's Realtor we need to provide them with a plan BEFORE the inspection. I have a conversation early on in our relationship and help them figure out what their strategy is going to be towards unexpected minor repairs that come up. Major things, as I said in my post such as safety, structural and health issues are an entirely different animal.

Colleen Expectations, Expectations, Expectations - the three most important word in any relationship be it business or personal. Set them early.

Margaret - In a buyer's market it's surely true that the buyer can write a better ticket than when houses are flying off the shelf.

Lee - One of the great mysteries of life why someone would opt not to perform inspections.

Excellent post. Yep I believe they are used for both although the real reason is to protect yourself, the real estate agent.

Rick,

A home inspection is no longer used as the tool is was intended to be. The inspection was to be used to uncover major defects in the home and to that end opened up the ability for the buyer to re-negotiate with the seller on who and how much of the repair each would pay. Over the years the inspection has become another loophole for the buyer to exit the contract. I have had demands that cracked switchplate covers be replaced, etc. This is why I advocate for a pre-listing home inspection. It shows the seller what needs to be addressed. The seller may opt to fix the problem or discount the list price to reflect the cost of the repair.

Rick, great topic. When I first started out four years ago, the home inspection was for informational purposes and to identify major defects. Now that we have a buyers' market, there has been a subtle shift to renegotiation. I like Damon's comment above about home inspection being a report card.

I generally advise my clients that there will always be repairs needed on a home. They sprout up with every seasonal change. The major issues to be concerned with are structural defects or problems with the major systems in the home - electrical, heating, plumbing etc. If the furnace has not been serviced in 5 years, well then the sellers should take care of that. But a cabinet door that is a bit out of line? No. That's just from general use.

This is a very timely thought because it is happening more often as buyers get bolder.

You have to do inspections for obvious reasons, but nickel and diming the seller for things which really ought to be on the "to do" list has always struck me as bad faith. We just had a walkthrough where the seller had left the place in disarray-filthy, debris not moved out, tiles missing in the bath, and a cat odor that was not there when we first saw the place. it was as if the seller had left the place to go to seed once it was under contract. Who knows what their circumstances were. My buyers got a $600 credit, which in this case was justified.

In this climate, all too often, buyers do view the inspection and walkthrough as a means of negotiation, part II. It should not be that way except in severe cases.

Rick,

Some agents use it for "renegotiation" all the time, and have a preferred list of inspectors who suit their purposes.

In most cases, depending on the age of the house, some additional repair work is usually in the cards.

In dealing with a difficult agent, a minimum cost of repairs can be negotiated as a threshold.

Brian

hello...

great topic! i find the inspection period to be a really unique period in the transaction. i mean, the buyer likes the home enough to put an offer together, go through the process of getting a mortgage, and now they're concerned because the wax ring on the toilet has too high of a moisture reading??!! ...real concern or buyer's remorse? most times a bit of both.

the most effective thing i try to do in preparing for the inspection period is to really prepare the buyer for what could be the worst situation. when it's that wax ring and a couple windows that may need replacement down the road, the buyer is usually good to go. on the other hand, i do a lot of bank-owned work. when i prep them for mold and broken pipes, they don't always believe me. when we find this during inspection it all comes down to how good of a deal i got them on the price and what resources they have to correct the issues.

ahhh... who doesn't love the inspection period?!

Steven Terry- Mark Hagan and Associates

I am most pleased when I get an offer from a "superior" real estate agent all set to teach us the "art of the deal". These negotiators often forget to inform their buyers that the seller may in fact say NO! They also fail to mention that once they state the price and terms are not acceptable based on a home inspection that the seller is free to negotiate a deal with someone else. These self declared negotiators have built themselves a reputation among their peers - we talk (most of us are of the human species) and we advise the sellers based on those past experiences and conversations with our peers. The best part is, the "buyers agent" (who (in my experience) most of the time has no contract with the buyer) failed to tell the buyer that a buyers market does not mean they are the only buyers. The house was priced because of its condition. DUH!

Rick, good questions. I see my reports being used both ways---depends on the house. Usually something in the report gets negotiated other things don't----lately lots of houses are "as is" and the seller warns everyone up front that nothing is going to be fixed. I have noticed that even in those situations there are actually still things that get negotiated :) It just depends how motivated everyone is I guess.

Rick...

Excellent post. Our contracts used to say if a defect was disclosed, it could become a repair or renegotiation issue. Now anything goes and it makes it harder to get a deal done!

I am in agreement that too often buyers use the inspection results to get more money from the seller. I have sellers who say, no repairs when they negotiate the original offer. That is what the option period is for. If there is something so haneous that you cannot live with it, well then terminate the contract. It is especially tough when the seller has given all they can and then the buyer comes back post inspection and asks for even more! I say to the sellers...hold your ground...that buyer is in love with your house and saying no to them will likely not result in them walking.

A buyer's inspection should be viewed, first and foremost, as an educational process, not as a cure for buyer's remorse.

As Rich (comment #14) mentioned, I also strongly recommend that sellers have a pre-listing inspection. This enables the seller to address any "surprises" at their discretion, with the service provider of their choice. Or they may choose to adjust the asking price accordingly and simply disclose any issues. When my sellers have invested in a pre-listing inspection, they have the results available for serious buyers to review, they maintain some control over the repairs, and offer more "transparency" to the buyers. I haven't yet had a seller complain that they shouldn't have gone through with the inspection!

When i bot my home it was "as-is" and this was 12 yrs ago before the short sale crap...but my home has 3 floors and 3 AC/heat units....the inspector said 2 of the 3 were about to go out...could be 6 weeks or 6 months but they were on their last leg...we bot the the home anyway, because we wanted this house....but 4 months to the day 2 of the AC's went out...at $4000 It hurt but i felt better that i had the inspection, because it did not come as sucah a surprise

Rick

A home inspection to me is a mandatory part of the home buying process. However, it should be used to discover the condition of the property and uncover any problems. That having been said, when problems are discovered then further negotiations are always warranted.

Rick, A lot of it is expectations on what the buyers perceive will be their options after a home inspection. Also it depends on how much the seller really wants the house. I do agree that you typically should have good general knowledge of the house by your walk through before putting the offer in. Everything I have sold this year was in great shape as my buyers opted for well maintained properties as discounted prices because of our crazy market! All the best, Michelle

In Oklahoma we have repair limits on our contracts, but often that becomes the beginning of negotiations. It does allow either buyer or seller to walk away, but if you spend $400 and up on an inspection it is not play time. Common sense needs to rule the day, and if a seller bust the contract they need to think hard about the next contract and if that defect is truly a defect, and for the buyer if it is the home you love don't let small numbers on repair overage scare you.

Rick -- great post. I tell my buyer clients that the inspection is not intended to provide a laundry list of items that the seller is required to fix. It is done to educate the buyer and point out any issues that the buyer may not know otherwise. Some issues are minor, while some are major. One cracked tile in the bathroom does not mean the whole floor has to be replaced ... unless ... it is found that water has consistently seeped through and ruined the subflooring. Then we would request a replacement or credit. If an inspection issue is health, safety, or structural related, I always ask the seller to repair before closing. After all, if the seller refuses to repair it, it must be disclosed in the property disclosure and that will certainly deter future buyers.

The home inspection period has become a negotiation period. Lets look at the following scenario: Buyer gets in contract on a 10 year old home. None of us really looked at the roof closely.... It's only 10 years old! The home inspection found numerous defects in the roof that caused it to need a replacement. This became a negotiation point on the home, and the seller agreed to split the cost of the new roof with the buyer. There was no original intent to make the home inspection a negotiating point, but it became one due to a home defect that was discovered during the home inspection. I agree that it should not be used to nickel and dime the seller to death, but it shouldn't be an "accept these defects or walk away" choice either.

I agree that home inspections are a must, and I see that buyers have shifted their views of them since the economy took a turn down. With the buying frenzy buyers just wanted to 'win' in getting their offer accepted and took more problems with the purchase. These days I am seeing them get so picky about anything it is hard to get a sale to closing.

I agree that buyers need to see the inspection as a report card of the home and it's current condition so they are a well informed buyer. Protection is great. But it isn't a lisence for a completely remodeled home. There has to be a balance somewhere.

I think that part of the issue with new buyer expectations in this market is the shift from conventional loans to FHA and USDA loans. With all of these first time buyers coming to the market with no money down and no wiggle room in terms of funds for things like downpayments and closing fees, they need a perfect home so that they are protected from disaster in the first year.

I am seeing that with a client right now who doesn't even have the money for a good faith check but insists they are ready to buy a home. Before even showing them a home I asked what they would do if the heater went out. Do they have the money for a repair? Do they know how much a repair may be? They have no clue and yet they are ready to jump in and want a perfect home, through USDA which will finance 100% including closing fees.And their limit is $100,000 (including closing fees), which in our market is mostly junk.

Are we headed into another disaster in 2-3 years? Sorry, got distracted, but I do think we are in a new era in how buyers view the inspection report, and I think the new way to finance homes has some to do with it.

This can be a difficult situation when the buyer sees the home completely different from the seller. We have also had situations with new homebuyers who hired an inspector that was scared to death to get sued, so the inspector nit-picked every little thing he could find - things that were not health or safety or maintenance issues such as the button to the garage door opener being several inches too low on the wall, plants that may not be getting enough water??? Not sure how these are health and safety issues. Needless to say, he scared the buyers so bad about buying a home that they backed out of the deal.

Your very last paragraph echoed my feelings exactly. Major defects should be fixed and other minor issues should not be given too much thought and gives the new owner something to do after closing.

Part of being a homeowner is rolling up your sleeves and learning how to maintain your own home. Most things can be fixed rather easily and it should give the owner a sense of accomplishment which will hopefully lead to other things getting fixed and in the process gaining more knowledge about how to fix things.

It seems many owners today are not putting enough of an investment into their own home and I don't mean money. Taking pride in ones home means a person is more likely to respect what a house represents and it turn take better care of what should end up being one of the most important financial investments of their lives.

One problem seems to be that buyers don't always understand the reality of owning a home. They have been use to calling the landlord and this is their first taste of dealing with maintenance issues themselves. Many feel that they should be getting a home free of problems when they buy.

Alot of great posts about the topic. But a question that I have is, are buyers using repairs as a way to get a seller to lower the price? The issue may not be a major concern to the buyer, but are using the repair as leverage to have a price adjustment. Especially in this market where the sellers want to typically sell as fast as possible.

Dennis

I enjoyed your post. Negotiating repairs is my least favorite part of real estate on the buyer or seller side.

i encourage my buyers not to 'nitpick' on inspections. if there are issues that we see during the walk thru, we will certainly ask about them and there will be provisions for them in the original agreement or offer accordingly.

I love your picture of the old house. I have driven by barns that looked that way but never taken the time to photograph them.

Rick, this timely topic about using home inspection reports to re-negotiate sales prices continues to pique my interest as both a seller's agent and buyer's agent. Thank you for raising this issue to the forefront. Educating our buyers beforehand about the purposes and objectives of the home inspection is paramount. If a serious material defect is uncovered by the inspector, then that, of course, is grounds for re-negotiating price. I use the health and safety perspective when explaining how to respond to the inspection report. What this means is, ifthe inspector uncovers a problem that jeopardizes the safety and integrity of the home, then we need to address this in our reply. Additionally, I say that the smaller items are part of the responsibility of home ownership. If there is not a clear cut answer as to whether a piece of equipment such as furnace or air conditioner is malfunctioning or at the edge of its viability, I recommend that the buyers hire a professional HVAC technician. If the buyers are overly concerned about the conditions outlined in the inspector's report, I will advise them to go home, mull it over, and give me their decision about whether or not to terminate the contract. The 24-hour rule, i.e., sleep on it, is my preferred strategy.

How refreshing to read an intelligent post about home inspections that isn't bashing home inspectors, buyers, sellers, Realtors, or anyone else. Just a well thought-out post about doing your own due diligence and having a home inspector as part of that due diligence.

Back in May 2002, the California Real Estate Inspection Association released an article about this subject: http://www.creia.org/i4a/pages/index.cfm?pageid=3407

The regional contract that we use here in Northern Virginia includes that following language;

"Seller warrants that, except as otherwise noted, the existing appliances, heating, cooling, plumbing, electrical systems and equipment, and smoke detectors... will be in normal working order as of the possession date."

Which obligates them to repair any problems noted in the home inspection for these systems with a simple notice form. However, anything that comes up regarding say the structure, roof, etc become a negotiation point. Anything that is obvious when we initially go through the property, per Rick's examples, would already be included in the purchase price but we will go back to the seller if something substantial is uncovered in the inspection. We are never in favor of the nickel & dime approach, unless it happens to be new construction.

Rick a thoughtful blog with excellent thoughtful comments. It is an educational pleasure to read both.

One of the comments above suggested the seller have an inspection performed prior to showing the property. This seems like a good idea to me because it allows all the repair issues to be handled in the initial negotiation.

Thanks again.

Rick,

I think this a a great post, and deserves attention given the state of our market that has left many houses with repairs needed. Short sales and bank owned properties will nearly ALL need repairs, and we are not dealing with just scratches on the walls. Whether the bank or seller renegotiates the price is really not an issue in the overall scheme of things, if they do not get fixed. If the home is sitting vacant and has pinhole leaks in the plumbing, the issue should be discovered sooner than later. You can ask the seller to fix it, and if they agree, that's great, but if not, then at least you know what you are dealing with. In buying a used car, would looking under the hood be optional or a renegotiating item on the price? Home inspections should be mandatory. In fact, I would not be surprised if they become legally mandated... kind of like passing the "smog" test out here in California.

Unfortunately, the home inspection has turned into a renegotiation, because buyers are more "savvy" (weasely) than ever before. The will do what they can to worm every penny our of somebody, because they want to brag to their friends about how great of a negotiator they are. It is sad.

Wow - Thank you all for the great comments. Some excellent tips that I will try to incorporate to help my clients (both sides) get through this part of the transaction with grace.

A summary of some of the points in the comments.

1. Home inspections are a necessary and vital part of the process for all parties.

2. A pre-listing inspection can help the seller prepare and help the buyer learn the issues early on.

3. During an appreciating market fewer repairs are asked for as a negotiation tool but during a depreciating market some buyers tend to want to get an even better deal than they already got.

4. The tough economy can be part of why buyers are paying more attention to what used to be considered minor issues. Buying a home is a huge investment and people want to stretch their dollars as far as possible.

5. This is a tough issue and everyone needs to work together - Realtors, Clients, Inspectors. We all have the same goal after all.

6. Safety and Health issues are pretty straightforward. Sellers need to provide a safe, habitable home for the buyer.

7. If major defects are uncovered in an inspection, it is quite reasonable for the buyer to ask to have them repaired - it is the inevitable minor repairs that can escalate into controversy.

8. Pushing too hard for minor repairs can cause the deal to fall apart and the buyer does not get the house he wanted. The "out door" at inspection swings in both directions.

9. When asking a seller for repairs, the buyer can make it go more smoothly by showing the seller the entire report - showing the things he is NOT asking for.

10. Buyers should plan ahead and have money allotted to pay for minor fix-ups. If the house doesn't need anything, it's a nice surprise and it becomes found money, in a sense.

I think the expectation of the outcome of the inspection depends a lot on the buyer's agent. If the buyer's agent preps the buyer that they are going to use the inspection to help get some credits for the property then they are setting up another renegotiation. I saw that a lot when I was selling in a residential setting.

Hi Rick -- I totally agree 100%, very well said. A buyer's agent needs to properly educate their buyer to perform visual due diligence and factor in what they "think" the actual state of the home is and the home inspection is for tweaking as well as uncovering hidden health and safety defects, as far as further negotiations are concerned.

This is a good discussion. I particularly liked the language that AJ & Jodee Heidmann put into the purchase offer:

I think I might add it to my offers.

Thanks.

Hey Rick,

Thanks for sharing your thoughts on this point. I believe that all parts of a contract are negotiable, and inspections are part of that.

Rick,

Thank you for the post. I think the disclaimer is the most important thing. We aren't home inspectors and we don't know everything about the inner workings of a home as each one is different. If we think it looks pretty good, there may be something lurking on the otherside of the wall that could be enough to make our buyer run like their hair is on fire. It is protection for our client to ask them to please take precautions for themselves in this huge purchase and make sure that the home is in acceptable condition to ensure they will not have buyers remorse the day we put the keys in their hands. Home inspections are necessary and should never be skipped!

Wendy

Rick, you wrote: The question I'm posing, as a Realtor is this: Should it be assumed, by the Buyer, that the Seller should bear the cost of repairing any and all defects uncovered during a home inspection?

Rick, great post. I love these types of inquires and discussions as they provide a lot of insight into Realtor's perspectives of home inspections and provide a means to educate each other to better improve our mutual services.

My response is based in part on the following observations I've made as an experienced home inspector and former market analyst. First, consider the following generalized and categorized mindsets I have observed of my clients with respect to how inspection findings are used by Buyers.

Expectations of Buyers vs. The Seller's Representation of the Home's Condition. - A real situation I just had with a client explains this well. The home was only a few years old, well maintained and decorated, and had the hardly lived in appearance. The Seller's flyer marketed the home as "better than new." My inspection found about a dozen issues to address, mostly maintenance type items and a couple of minor cost repair items with potential bigger consequences if not corrected sooner than later. The Buyer was not discouraged with the inspections findings. However, he stated to his wife (they were there with me for the entire inspection) that he (Buyer) wanted the Seller to fix everything. He was surprised the inspection discovered anything as the Seller presented his house as being defect free (the Seller stated, "I've maintained this newer home and you shouldn't find anything") and the flyer said "better than new." If you were the Buyer in this scenario, how would you respond? His expectations, as sold to him, were that the home was defect free and better than new.

Expectations of Buyers in a Buyers vs. Sellers Market - This one is self explanatory. Most Buyers are going to take advantage of market conditions and use it to their benefit. Why not? I thinks it's the Buyers (or Seller's) prerogative, depending on those market conditions. Wouldn't you?

Risk Tolerance Level of Buyers - This one I find few Realtors either fully understand or take the time to understand their client's position on risk tolerance. I use it to gage how I speak and interact with my clients in order to best communicate the inspection findings. We all have different risk tolerances and this is especially true when making a big, if not the biggest purchase decision and emotionally charged purchase of buying a home. The bottom line is some people want to eliminate as much risk as possible and others don't care as much. Where your client falls on this scale will help answer this blog's posted question. For example, a low risk tolerant Buyer with "minor" inspection items, yet with the potential to become a bigger problem regardless of likelihood of occurrence, is more likely to request the Seller correct the items or provide an allowance. I see this often, with the Realtor frustrated in trying to understand why the Buyer is being "nit-picky" or assuming the home inspector lead the Buyer to this position. Regardless, I find this to be a very common occurrence that could be a useful means for a savvy Realtor to come out as a hero for their client by simply understanding the client's level of risk tolerance.

Negotiation Savvy of the Buyer - Many Buyers just don't know what options they have or how the purchase inspection negotiation process works and are not the subject of this Blog question or discussion. However, other Buyer's are pretty sophisticated and actually look forward to using whatever inspection information they have to negotiate a better position with the Seller. This may include a strategy of asking the Seller for everything, sometimes even upgrades. Their approach is that they don't know what the Seller will do until they ask, so why not ask for everything as a starting point and make trade-offs from that point. I've often heard back from Realtors how they were surprised the Seller agreed to correct or make financial allowances as requested by the Buyer. I've seen banks with foreclosed properties under contract in "as is" condition give up concessions on repairs because the Buyer (or their savvy Realtor) simply asked for them.

Here's another noteworthy observation. I've had investor clients ask me not to share the inspection report with their Realtor because they "didn't want the Realtor to interfere in their negotiation strategy."

Anyhow, if I were a Realtor, and it should be apparent that I'm not, I would understand my Buying client's mindset and expectations going into an offer with respect to your question and the position points I've observed and stated above. Knowing this would then enable me to best advise and serve my client in meeting their needs with regard to handling inspection items and negotiation expectations. I would also be respectively open to the Buyer's decision to negotiate whatever they want, even if my professional advice was contrary.

Thank you for the opportunity to contribute.

- Jon Rudolph

It depends on the repair item and how much it would cost. Most big ticket items are required by the appraiser.

Jon - outstanding analysis. Thank you. Risk tolerance - hmmmm. This sounds like something that I as a Realtor, should learn about my clients. I'm printing out your response. I think you should actually take the comment and post it as a new thread. I think there are others, who might not come to this thread, that would like to hear your thoughts.

In Florida our contracts only allow for bringing up issues if the repair costs go over limits placed in the contract. In the normal contract the sellers stipulate what they will pay up to for Warranted item repairs (no cosmetic issues that are spelled out in detail) or if it is an "as is with right to inspect" contract the buyers put in a dollar limit for repairs they will accept. If the repairs in either case go over that amount, then the buyer or seller can get out of the deal unless they work out an agreement to cover the costs separately or together.

Where it gets tricky for the seller is that if the repairs are major or involve a live termite infestation, if the contract is "as is" they do not HAVE TO do anything. However, from a practical stand point, they really DO have to fix the problem since from that point on I (and they) have to disclose the presence of live termites or rotten wood, etc. in the property to any new buyers. We all know what that will do to the price of the home in the buyers' minds. So the seller is nearly "obligated" to take care of the problems or lose more than the repairs would cost.

Luckily, most of my buyers and sellers are from a generation where it was more common to work things out together rather than look for a way to "get" the other party.

I always recomment to buyers having a home inspection. It's like life insurance, it's there if you need it. You never know so why not check out the house before taking possession. When you buy a car you can take it and have it checked out so more importantly why not a house!!

Patricia/seacoast NH

Frequently buyers use the home inspection for re-negotiation.... even when sellers think home inspections are for major issues only.

I deal with more buyers than sellers, and I often have to have a talk with them about inspections and how they aren't there to renegotiate the deal, but to find HIDDEN defects. Here is GA we have gove to a Due Diligence Period and the rules are a little different now... but we still see the renegotiation attempts...

Excellent post and comments. Don't know if this might be the start of trend, but some of the asset managers I've worked with on REO properties require the inspection be done BEFORE they sign off on the contract.

They're selling the properties "as-is" (also open to broad interpretation), but no contract is signed by the bank/asset manager until the inspection is done and the value of any of the potential deal killers have been settled. Then, and only then, is the property is listed CTG (contingent on financing) or PENDING on the MLS.

I'm thinking of doing the same on my future non-REO listings, and already counseled one buyer client to do just that. Yes, it removes one step from a protracted negotiating process, but the inspection issues are brought up from the start to negotiate the best price, or walk away.

The arguments against are, why would the buyer "risk" the cost of the inspection if there's a chance the property goes to someone else while they're doing their inspection. My response has been, the buyers are going to spend money on an inspection on any property they buy, and the same rules will apply on anyone else coming to the table after them. Unless, of course, it's from someone waiving the inspection outright. So get the inspection done quickly, decide whether to pull the trigger and regardless, keep moving.

Rick - Outstanding post! Thank you! And, thanks to all of you who agree that a home inspection is a valued part of buying a home. I am a professional home inspector. I am not an alarmist. Most every defect I find in homes are repairable.

Buyer inspections are rather traditional and are indeed in the best interest of the buyer. I have a webpage that I use to help buyers and sellers better understand How To Use A Home Inspection. Please feel free to bookmark this page and refer your clients to it. Many Realtors also find it helpful.

In addition, I just started marketing and promoting the important marketing advantages that a Seller Home Inspection or "Seller Certified", "Move In Ready" Home Inspection provides to the seller. Home inspections should not be just for the buyer, but, offer tremendous advantages to sellers.

Finally, I fully understand the frustration over major vs. minor deficiencies listed in a home inspection and the effects on the negotiation process. Most states including my home state of Texas require that minor items such as switch plate covers as well as major defects in structure or systems be reported. It is also amazing how often buyers complain that an inspector missed listing even the most minor of defects. It is a difficult job. At Selman Home Inspections, I understand what is at stake for all parties. So, while I am required to report any defect I find regardless of severity, I am not an alarmist. Homes are resilient and repairable.

Need a professional home inspector for your north Texas clients? Give me a call.

Also, of any of you want more info, check out my post on the Top 10 Reasons To Get A Seller Home Inspection.

Excellent post!

DEC

2009

Well Written Post! I recommend my Sellers have an inspection prior to putting their home on the market. Have the inspection report readily available to the buyers and their agent. It does not take the place of a home inspection that a buyer should conduct on their own - but it sure saves a lot of money, renegotiation,headaches and endless disputes over a home inspection!

Great Post!

I agree with Dave Selman. There is a way to report the facts without being an alarmist. Most problems can be fixed - it's the solution that is the issue! Is the buyer/seller emotionally and financially able to handle the solution?

Good points to ponder. I agree with your post that we need to educate buyers that this is not a brand new home and there will be some items that will be found in an inspection. We cannot expect the seller to fix them all. This is a starting point for their "in the future list". Yes we need to address the major items but don't nit-pic. I feel that an inspection can be kept under control if the agent is present when it happens to minimize any finding.

It would seem to be obvious enough: in a buyers market, buyers will use whatever leverage they have to get the best deal. If that includes repairs at the seller's expense, then I see no issue with that. As we all know, in a sellers's market, the seller will hold the cards on these things, and if nothing else, turn around is fair play.

I have seen seller's fail to disclose major issues, like known termite infestations, known mold issues, and the like... known because, as you walk around the perimeter of the property, you see termites bait systems in the ground, yet, when asked point blank, the seller, or their agent, says they know of no issues with termites... then, as you walk the floor of the house, you notice a soft spot... inspection comes, and you point out this soft spot to the inspector. What does he find, a repaired termite infestation that was cosmetically fixed just so that no one would notice. Well you noticed... renegotitate... or back out of the deal...

Honesty is the best policy... and if, as some have said above, the seller hired an inspector and provided that report to prospective buyers, much would be avoided in last minute renegotiations... But as far as I can say, renegotitating based on inspection reports is par for the course... especially if seller disclosures are not accurate.

The truth is, the inspection DOES open the door to renegotiation. As a buyers agent I have a fiduciary responsibility to help my buyer get the best price and the best terms possible. While I would never recommend that my buyer walk because of minor repairs, the inspection does provide an opportunity to improve his position.

A good point is how we as agents for buyers can educate our clients on the inspection process and give them a reasonable set of expectations, most that I work with have owned homes themselves or are selling currently and I "remind" them that they too have been or will be in the sellers shoes.

Great post. Sometimes the buyers get carried away with what they ask for in the inspection response. We as agents need to educate them that they are not getting a new house and "yes" there might me some items that an inspector will find - that is a starting point for their "to do list in the future". I have found that if the agent is present at the inspection it helps to keep the inspection under control or at least know what was found.

Here we go again...All homes are sold "as is". If the seller wanted to put in a new furnace, he would have priced the home accordingly. The inspection is for the buyer to better understand what he needs to focus on a) immediately b) in a few months and c) down the road. Inspection issues related to unknown defects, such as wood rot, pests, dangerous electrical wiring, etc. are legitimate issues and would either have to be disclosed to the next potential buyer or remedied before any sale, so I would encourage the buyer and seller to work through these issues.

Much of the successful negotiation of inspection issues arises from the correct setting of expectations by the brokers with their clients. I always tell my buyers up front what they should/should not expect a seller to do after an inspection and I always tell my sellers that I will deflect all but the most major inspection issues from the buyer.

If the seller has already performed a pre-sale inspection, this always works to their advantage because the "line in the sand" has already been drawn and many times the seller will not allow any contingencies for performance after a home inspection. Rather, they stipulate that the home inspection by the buyer is for "informational purposes only."

Timely topic. I think the purpose of inspections is to uncover unknown/undisclosed defects, not to renegotiate the contract over known issues. I have my buyers consider the known defects when making an offer and this justifies the lower price. I have seen a lot of buyer abuse of this stage of the process in this buyers market.

This is such a great post. I always tell my buyer that a inspection is for you're benefit and you're about to hire a licensed professional to exam this home. They will find problems with the home and they will draw attention to every little issue. They have the obligation to show you the problems and must report them. Then I continue and say, this does not mean the house is falling apart rather it is a man made structure and will from time to time need repair. If, there is a major safety, health or structural issues we will deal with them. If not, we will also request a remedy on the lesser minor issues.

Having this discussion as saved a lot of concerns a buyer might have. HUD or REO Foreclosures are completely different story.

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Rick,

I think it depends on whether we are in a Buyer's or Seller's market. When we were in a Seller's Market, the Seller's didn't need to fix nor renegotiate ANYTHING! Now the Sellers are doing whatever it takes to keep the Buyer going forward.

I agree Rick,... the inspection clause is exactly what it states,.. the inspection clause. I do not believe that the "market" dictates the purpose of the inspection agreement.

The problem with the clause in many area's is that it is simply to subjective,.. if the Buyer decides he doesn't like the way the clouds float over the house,.. the Buyer can cancel his/her agreement or come back at the Seller to renegotiate the agreement. Too many agents concur or support this philosophy.

Ultimately it hurts everyone. The carpet was purple when the contract was drawn,.. so why is it being listed as a correction on the inspection agreement?? The correct way to negotiate the replacement of that ugly carpet would have been when the contract/offer was initially drawn. That is the place to address items known about at the time of contract,... the intent of the inspection is to reveal deal breaker items that need to be addressed if the Purchaser is going to purchase.

In my offers,.. even in this market there includes a clause that state's that any inspection items listed shall be limited to those with an estimated repair cost exceeding $500, or tthat are of a safety or structural concern.

On LOW offers I have been known to strike the Purchasers right to ask the seller to fix anything while reserving the right to terminate should the Buyer find things that are catastrophic.

This helps to negotiate a better deal in the front end, because the Seller is not worried about being nickeled and dimed to death and makes for a cleaner deal the whole way through.

Just my thoughts.

Great topic Rick,

This topic obviously turned up alot of responses and is a sticky area of contingency upon the sale of real estate.

I see in my profession as I am a home inspector the growing use of the report as a negotiation tool or as some has posted a loop hole in backing out of the contract. I believe the key to this is the expectations set by the Realtor and the delivery of the information by the home inspector.

I set the expectations for my clients at the inspection as a educational step of getting intimate with the house before signing off on ownership. Of course high dolor repairs or heath, fire, and safety issues should be addressed A.S.A.P. The typical issues found are relative to the houses age, care of, and type of construction and should be expected before even setting foot into the house.

Have a great day!!

In response to Weichert above, it depends on the state you live in. In VA the seller is not obligated to disclose ANY defect...they just cannot try to conceal the defect.

Our contract states that the inspection is to uncover major mechanicals that are broken or cause a health hazard. That's how I explain it to my buyers but it is very evident that other agents do not point out the true meaning of the home inspection section of our contracts. Age is not to be considered as long as the item still functions as it was intended.

On one of my own properties I sat across the closing table with an older couple that bought a duplex I owned (as a single Mom raising 3 kids). They asked me to replace the windows (at the closing) because they were original, old windows. They wanted thousands of dollars back and saved that for the closing!

Duh! I certainly wasn't hiding that fact! Their own lawyer looked embarrassed and my lawyer said absolutely not. However, they sat there glaring at me like I was getting away with something. I guess it was because I was a REALTOR which meant my house should have been perfect and like new when I sold it to them. I'll never forget that.

I always insist that my clients have a home inspection, even when the sale is "As is". If they choose not to have an inspection, we have a form that we ask them to sign, stating that we have advised them to have a home inspection and that have waved the home inspection.

I think a home inspection, as previously stated it protects me, should something turn up after closing and I believe it protects both the buyer and seller. The buyer knows exactly what they are purchasing "warts and all", and the seller might not have been aware of problems the inspection has turned up. So Far, even in this market, I have not lost a deal because of the home inspection. When the market was better, I did loose a few deals because of home inspections. Seller did not want to fix problems and buyer felt they were paying top dollar and wanted the items fixed. So they would continue looking till they found a home that they felt was in good condition.

Great topic. I am a home inspector as well as a broker and investor. I work with investors looking for rental properties that don't sweat the small stuff. They want to know if they have anything major they have to repair in the near future that rent profits won't cover. I also work with retail buyers and they want to know everything. I also am not an alarmist. I understand the difficult position the broker is in trying to get the deal closed. I want to make the process as smooth as possible so I will get called the next time the broker makes a sale. Whenever possible I want the client at the inspection at least at the end so I can explain what I saw. I have the chance to let them know the options. They feel more at ease than just reading something about a major system in the report.

I have been trying to get brokers to encourage pre-listing inspections. For a minimal amount of money the seller can have peace of mind. As an inspector, I try to list everything I see large and small, including replacing burned out light bulbs making the house show better. The major benefit is time. If something major is found like a rusted heat exchanger in the furnace, the seller has time to get bids for the repairs and make the right decision. During the 10 days to get repairs done when the contract is accepted, how many good contractors are available? They are usually booked weeks in advance. (Well at least in a normal economy.) Then the seller can use the report, if they wish, as a selling tool. The report can be on display during showings with receipts from qualified contractors showing at least the major items repaired.

I also agree that an inspection is meant to protect the buyer from major items, from buying a "money pit". It's up to the broker to educate the buyer about what to negotiate and what to live with. The broker should also know the value of the house involved and if it's a great deal already, don't waste time and frustration negotiating.

If you need an inspector in the Charlotte NC are, give me a call.

I still remember getting yelled at by buyers post closing in the ole' "Caveat Emptor" Days. Home Inspections are great if not used to beat up sellers for minor repairs.

In Florida we have paragraphs D and N which specify what counts as a reason for buyers to walk (ie, water tight structures, electrical , plumbing HVAC in working condition, etc....) I have my buyers read aloud these paragraphs so they know what counts as a reason to walk from the contract or if the flaw is deemed a cosmetic repair. They can make their offers based on what minor repairs need be fixed.

I hate the "Buyer's Sole Descretion" Clause in some Addenda. I had one of my sellers loose a sale because the sister didn't like the house. Had nothing to do with any flaws. But Sole Descretion gives buyers a free walk. After all the effort getting to contract and time lost, this is unfair to the Seller and us Realtors.

I handle only commercial property, so my experience is specific to those transactions. I understand that having an inspection done as a seller may highlight items you did not know about.

Maybe I am naive from the residential side, but I think that a pre listing or seller inspection is a no brainer. Now I know everything there is to know about the property, and what I am willing to address. This removes the surprise re-negotiation and levels the buyer / Sellers market aspect of the deal.

Great post! I prepare my buyers for the inspection by telling them that, while we might get a list of things that need attention, we are going to pay attention only to the most important issues. We are not going to "poke the seller in the eye" with a long, nit-picky repair list.

I am also running into sellers and listing agents who do not want to see our inspection report, because then they will have to disclose what we found to future buyers if our deal falls apart.

I agree with the remarks about seller inspections helping with this renegotiation isse.

Seller's pre-listing inspection can give the seller an advantage prior to accepting an offer by uncovering possible deal breakers in advance. It gives the seller more options to deal with them before the "contingency" or "contract to close" period.

On the buyer's side, I would never let them buy without their own inspection. However, like the others here have said, we have to educate the buyers about the purpose of the report.

40 more comments since I last replied. Yeeks - I hope everyone doesn't think I'm rude for not acknowledging everyone individually. It's been my habit to do that. Apparently, though I haven't posted anything prior to this that interested so many folks.

I thank you all for reading and commenting. For the most part it seems the feeling is that early discussions with buyers and sellers can help alleviate tension later on. Everything in life is always negotiable.

This post is the second in a series of three on negotiations. The first was about trying not to be too adversarial - and the third (still in the works) about the possible repercussions of starting out too tough.

Thanks, again for stopping by.

What a great post and really thoughtful comments, there is much to be learned here.

My personal favorite is foggy windows. I try really hard to always find the foggy windows ahead of time so the buyer undrstands the offer they are submitting takes the foggy windows into account. They were like that before the inspection and after the inspection. I also try to cover other obvious things in the offer - ok the trap under the sink is leaking, let's ask them to fix it right in the offer. I tend to suggest asking the seller to fix things that are not safe - and therefore not safe for them either. Water dripping into the panel box, things like that. Or things that if they continue in the current trend will only get worse - a seroius leak we didn't see (pipe or roof) in Rochester it is almost always 60 days to close so things can get a lot worse in 60 days, especially if outside problems (our weather is so nasty).

On some of my listings that are cosmetic and mechanical messes, I stipulate that it's for info purposes only - the seller just has to be prepared to hold their ground. And I had one in 2008 that was pretty bad and after the first buyer walked becuase of cold feet after his inspectoin siting all the things that were seen the day of the open house no less (not the inspectors fault) we required the inspection be completed prior to accepting the offer. That worked out pretty well because the house was price 30K under neighborhood value (79K vs. 109K).

Hi Rick, Excellent analysis of this important issue. I really like your writing style. No, the seller should not be obligated to fix every defect. Our contract allows us a dollar amount for which the seller agrees in advance and becomes part of the contract. Only material issues are considered.

From my perspective, unfortanately too many buyers and their agents use the home inspection as fodder for round 2 of price negotiation.

It seems lately that a primary purpose of the home inspection is to re-negoitate the sales price and not to simply find the mechanical, structural and environmental defect as the inspections were intended to!

Rick, excellent topic, and there are a lot of well thought out comments. As a home inspector, it is not up to me to even consider whether items should be renegotiated. That is completely up to, and between, the buyer and their realtor. It is my job to do as thorough an inspection as possible and to report conditions as found. Many things fall under the heading of deferred maintenance, but others are actually defects, or safety issues. I am often asked by clients if they should ask for something to be fixed. I refer them to their agent for answer (even though I probably do have opinions). There are certainly some things found in inspection that it is a good idea to get estimates on prior to closing. The cost of repair may be staggering.

I don't think you can answer the question about opening the door to renegotiation without a specific deal in mind. It all depends on where the seller has his price situated and how much you do find in the inspection. Therefore all those that answered in general terms trouble me. If a seller knows he has failed to properly maintain his home yet he prices it on the low side to indicate that then the buyer should not expect them to pay for repairs as the seller has already allowed for that in the price. On the other hand if the seller has not maintained the home but has it priced on the high side of the market then yes the buyer should renegotiate the price once repair items are found.

I didn't take the time to read all the comments, so forgive if it's been said, but in short, it can be both. What defects are found, and how serious they are, and if the buyer/seller wanted to continue, would determine if a home inspection becomes a renegotiation tool.

The REAL issue with the home inspection is that the majority of the agents, and therefore, the buyers, don't know what repairs are part of the purchase and sale contract. State laws, and contracts vary, but most have some form of inspection and repair contingency. ONLY repairs that fall into the guidelines set in the contract affect the contract. Most agents and buyers see ANY issues as needed repairs and demand satisfaction.

If the home is not new construction, then the buyer should NOT be expecting a NEW home. Some examples of...well...stupid repair requests by buyers: light switch plate cover is cracked, needs fixed. light bulb is burned out, needs replaced. ice maker not installed on refrigerator. light fixture is not centered in room. And my personal favorite...attic insultation is only 2 3/4 inches thick, needs to be 3 inches.

Until the agents learn what a home inspection is for..and not for...the buyers will continue to view them as a way out of the contract or a renegotiation tool for every dripping faucet that they find

it is TV . The shows have opened the door to this re negotiating.. And it spread like a bad disease..

Buyers have varying degrees of understanding what they see when they walk through a house. As a result a home inspection can mean different things to different buyers. For some, it is a lesson in understanding how to take care of their future home. For others it is uncovering a termite problem in a structural beam that they weren't able to recognize themselves. No matter what way you look at it home inspections are important. The most important thing is to make sure you have a good inspector.

I feel that the home inspection provides an opportunity for the buyer to learn about their new home. In my opinion it should be to identify safety, mechanical and structural issues and those are the issues that potentially should be negotiable and the agent should take this position in educating the buyer on the purpose of the report. Unfortunately, many buyers interpret the purpose of the inspection differently, many times doing their own resourch and developing their own mentality on this, or very often listen to the opinions of others which can be totally off track and without foundation. And, as it was mentioned in some of the comments, many buyers have little or no tolerance for anything that needs to be repaired. When buyers go beyond consequential safety, mechanical and structural issues, keeping those types of buyers on track is extremely difficult and almost always jeopardizes the contract .

I advise my buyers to look at the house and offer what they would pay as is for it. If they see a problem plan on fixing it after they close. The inspection is to find something they did not see when we looked out at it. If we find a unexpected problem such as a bad HVAC unit then ask the seller to fix that.

Nothing is guaranteed. It is all negotiable. I tell my clients in this market to only look at major issues. Any good home inspector will find something. You should not nickle and dime. Safety issues and price make something major; as well as lender issues.

DEC

2009

Rick, with all the above comments, all I can say is know your client

" Should it be assumed, by the buyer, that the seller should bear the cost of repairing any and all defects uncovered during a home inspection?"

That depends on what the meaning of the word "repair" is? Is it a "repair" to install a GFCI outlet near the kitchen sink of a fifty year old home? Or is this a safety upgrade?

Is it a "repair" to replace a 15 year old water heater that works fine and does not leak?

Many buyers expect the seller to "correct" these things. In my opinion this is unrealistic.

A seller can (at their option) correct or compensate a buyer for any non-disclosed items in need of "repair"

Such as a leaky roof, inoperative Central AC unit, structural damage, etc.

Unfortunately, many buyers are asking for much more especially in this market. This can be addressed in the sales agreement.

Excellent post. The agent should discuss what is expected from the home inspection. It seems when that is done & clear in the buyers mind, most problems don't arise.

DEC

2009

Hi Rick,

I personally always recommend to my clients that they complete a property inspection. Not for the purpose of renegotiating the price. But for the simple purpose of insuring that my buyer is well informed about the home they are considering. My buyer will make the ultimate decison on whether to request for repairs, accept the needed repairs and agree to fix them themselves, or walk away from the deal . However it must be noted that in California the Seller does not have to agree to make any repairs. This includes code violations. The seller does not have to repair code violations, nor do they need to know the various housing codes. The only acception to the above mentioned is the Seller MUST strap the water heater and the Seller MUST install all required smoke detectors prior to close of escrow.

All buyers must be aware that when purchasing a home you must expect that there will be things wrong with the home. They must also be informed that expecting the seller to make all repairs or cover all the cost of the repairs depending on the market is not always realistic. Very good post!

Matt

DEC

2009

Well, Rick, what a great discussion. Great article.

DEC

2009

This is a terrific post and too often now-a-days buyers feel the inspection is just their tool for price negotiation. It IS their tool but to make sure they are buying a safe and well built home. More and more they seem to be forgetting this.

This is a very interesting and enlightening post. Most the comments here say that the buyer's inspection is limited to what a buyer can or can't negotiate with the seller. What a Realtor will "tell" their client they should or shouldn't ask the seller to do. A few posted statments on inspection negotiations are based on state contract language but, most seem to be Realtor opinion.

I'm curious, as a prospective home buyer, why wouldn't I be allowed to negotiate whatever I want? Isn't that my prerogative as a buyer? Is there a law, other than in a few apparent states with specific contract language, which dictates what a buyer can or cannot negotiate?

Again, with a few state exceptions, I haven't seen what the basis is for limiting a buyer's negotiation position. Can anyone provide some justification?

Thanks.

Hi Jon, thanks for reading and commenting. I'll try to give you my answer to your question.

It is totally the buyer's prerogative to attempt to negotiate anything they want.

Purchasing a home is about as close to a textbook definition of a free-market as you can find. Either side can make any requests or demands that they choose - and either side can pull out of a deal at any point provided if they are keeping with a contingency that is spelled out ahead of time.

A Realtor should not ever "tell" a buyer what they can ask for anymore than a Realtor should never "tell" a seller what they should or should not agree to.

When working with a buyer my goal is to help them find and purchase a home at the best possible price with the least amount of inconvenience in the shortest amount of time.

When I discuss this topic of inspections and negotiation with my clients, I do so at the beginning of our relationship not after the inspection was done. I offer them the benefit of my experience and I advise them that should make a decision early on about how they fell about inspections.

It's a matter of philosophy

Philosophy #1. Negotiate for the best price you can get and order a home inspection to find out if there are unexpected defects in the house. Ask for major repairs but absorb the minor ones as part of being a new homeowner.
Philosophy #2. Negotiate for the best price you can and then plan on using the inspection to uncover as many minor issues you can and push the seller to fix them all or you will pull out of the deal.

When representing a buyer, it is important for me, as their advocate to know how they think on this subject. The more I know, the better I can help guide and advise them.

If a client is a firm believer in #2, I usually go on to make sure that they understand that negotiation is a two way street. Although they have the right to walk from a deal if the seller will not do as they are asked, the seller also has the right to refuse.

The second thing I advise them about negotiations in general is this. Pushing really hard at the front of a deal can have repercussions. The fact is, that even in a buyer's market, the buyer needs the seller's goodwill and cooperation.

If you as a buyer, pressure a seller into agreeing to a laundry list of small items you may feel that you've "won".

If you fast forward a few weeks and your loan commitment is delayed or the closing is delayed or the closing on the house your selling is delayed and you need to ask the seller to have some flexibility with you - they have the option of being cooperative or holding you to the letter of your agreement.

I think it's obvious that my recommendation is go with philosophy #1. I will work with buyers who believe in the latter but I always make them aware that there are risks with rewards.

If you manage to push a seller into $2500 worth of cracked switched plates, running toilets, stuck windows, sidewalk cracks, leaves in gutters and other small repairs - the seller will remember.

As long as you as a buyer are not surprised when they remember, then move ahead and negotiate twice.

It's all about what your goal is.

I personaly practice the principal of negotiating the price and then have a home inspection to make sure that the home is in good shape.

If a buyer wants to use a home inspection to negotiate the sales price than they should do the inspection before they put an offer on the house.

AUG

2010

Contrary to popular opinion, Buyer Inspection Period is not an opportunity for a "free look". The Buyer must act in "Good Faith" when making a decision to cancel during the inspection period. Deciding they no longer like the floor plan doesn't count.....

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Rick Schwartz

Danbury, CT

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William Raveis Real Estate

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