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Does doing a home inspection open the door to re-negotiate the entire deal?

Negotiating a price on a house and signing the agreement is no longer putting an end to the negotiations. When I first started in Real Estate, it was much simpler... Sellers and Buyers come to a "meeting of the minds" on price and terms to sell a house, they sign on the dotted line and wait for the funding to get approved and title policies to get written. That was so much easier, but people were not as informed as they are now... buyers did not know as much about the house they were buying. So they started to get home inspections. This is a great way to find out what you are buying.

Home inspectors do a thorough job at inspecting all facets of a home. They check the plumbing, electrical, heating and air conditioning systems. They make sure the roof does not leak, they also check various other areas, they make sure windows and doors function properly, they check to make sure all safety requirements are met.... smoke detectors, CO detectors, hand railings, etc, etc., etc. They provide valuable information to both the sellers and the buyers about the home.

After the house is inspected is when the re-negotiations sometimes start. Since the buyer's market kicked in... the buyers are suddenly asking for everything and anything to be repaired, updated, upgraded. And the seller's are looking at request lists that are longer then ever.

The buyer's attitude (sometimes expressed by the agent) is often, "Well, it's a buyer's market, and if they don't do it, we'll find another property." Even when it is spelled out clearly in the agreement that the house is selling "AS-IS" and is carefully worded by legal council, the buyers are coming back to ask for more.

So what can you do? As a seller... if it's broken... fix it before you list it, if it needs attention... give it the attention before you list it... Don't think you are going to 'sell' your problems to someone else. Buyers are looking to find the "BEST" deal.... is your house it?

Posted by Diane Testa on 02/25/2008 09:42 AM

Comments (14)

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14 Comments on Does doing a home inspection open the door to re-negotiate the entire deal?

FEB

2008

In our area we educate the buyer as much as we can. We sometimes us an spis (seller propery information statement) that outlines what the seller knows about their home. (defects and such) I also personally attend as many home inspections as i can. I have learned enough to point out many flaws ahead of time so the inspection is usually not a big surprise. Therefore no new negotiations. Usually, that is! There are always some things that can come up.

Up to us to educate the buyer as much as possible up front to avoid possible problems. Good Reminder!

Jeannette, I also educate the buyer~ that is so important.

When I have a seller that prepares a detailed disclosure, and the agent with the buyer still encourages their buyer to ask for a laundry list of repairs on an As-Is deal, I find it necessary to vent some.

It is ultimately important to disclose everything honestly and fairly!! This prevents future issues from cropping up! Thanks Jeannette!

Buyers really are looking for the BEST deal. Some of them can be a little out of line. But, it's like now they know how the market is and some of them are def. workin it! :)

I try to educate my buyers as much as possible saying that we should go into the negotiation with our eyes wide open. By that I mean let's negotiate the price knowing the condition of the house and get the best deal up front. Only if we find major structural damage we did not see( something that will cost over $1000 to fix) do i suggest we go back to the table. Most of the time it works but there has been times where the attorney takes over starts bickering over a few hundred dollars when we already have a good deal. Sometimes it works, I have also seen sellers walk away because of the "re-negotiation".

Lindsay, It is true that they want the best deal... but sometimes they push too hard and alienate the sellers.

James, The bickering leaves a bad taste in everyone's mouths and makes the happy and exciting transaction turn sour. I have also had seller's walk away when the buyer's pushed for more. And then again some sellers just give in to get out from under the house. It's a tough call where to draw the line. The one willing to walk away will win the negotiation.

FEB

2008

Great thought-provoking post Diane.

Lately I've seen laundry lists of buyer requests with not only what needs to be repaired ASAP, but also what is listed on the report as recommended/monitor.

The challenge to sellers is if they refuse to fix anything or give a credit and subsequently the home comes back on the market, they are now obligated to disclose all of the issues.

Unfortunately, in a slow market, buyers assume they can use the home inspection to renegotiate terms, Karen

Kim, Thanks, It is a tough battle sometimes, and if a seller says 'no' they gamble with the sale... Who ever is willing to walk away wins!

Karen, It is very true, I try to explain to my clients what they can expect, and try to communicate well with the other side too. It's really a tough spot for sellers.

Diane, one of the things that I do to help minimize potential post home inspection problems in today's market is I have my sellers get a pre-listing home inspection so that they can correct deficiencies before the house is listed. I convince my sellers of the importance of this by telling them that I will pay for half of the inspection cost. This has helped tremendously in significantly reducing the items that the buyer's home inspector comes up with and they are usually insignificant items that can be easily addressed.

This is an interesting topic. The challenge for many sellers is that there are some buyer brokers that believe that by having a home inspection it automatically entitles them to screw the seller even if there are no issues with the home.

FEB

2008

George, That is a good idea, however I have seen several different inspections on the same property come in with all different issues. I have found that the area of expertise that the home inspector was most fond of seemed to have more deficiencies then any other area of the inspection. Of course there is usually one that is very thorough and finds everything that everyone else did. Thanks for the comment!

Sam, Those agents should and will eventually understand to instruct thier client to ask for the things that are most important to them. IF they don't they risk getting the seller to respond much differently and then losing the property that they have now invested their money and heart into.

FEB

2008

Hi Diane - I love your attitude and believe regarding the agents eventually learning. In reality I believe these agents will shoot themselves and their clients in the foot so many times that they will put themselves out of business entire especially during this balancing market.

Thanks Sam, It is true that some don't learn soon enough... with the high rate of turn over in the industry it is easy to see why sometimes. Training would help some of these agents, but there is certainly not enough of that!

Diane - Your comment on many agents needing training could NOT be more true.

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