Home Seller: Did Nobody Tell You The Seller ALWAYS Pays For Repairs?

Real Estate Agent with Joe Manausa Real Estate 8508880888

During a real estate transaction, it is very typical for a house inspection to be performed on behalf of the buyer.

It is not uncommon for this report to reveal some issues with the property, and this raises the question of what will be done moving forward.

There are several options. First, the issue(s) can be ignored, second, the homeowner can repair or replace the problem(s), and finally, the buyer can repair or replace the problem(s).

Regardless of the option chosen, it is the homeowner who will "pay" to bring the house to "market" condition. Do you want to know why?

Supply And Demand Determine Real Estate Values

The supply and demand for homes similar to the one in question determines its value in the market. It really is that simple. Why would a buyer pay more than market value for a house (for the sake of this question, think "significantly more, not just a few dollars).

If a homeowner goes to contract with a buyer and the amount agreed is "fair market" but the house inspection reveals a significant problem with the home, the homeowner will eat this cost. Every time. Period. Here's why.

Fair Market Value Means Fair Market Condition

Fair Market Value Means Fair Market Condition

The buyer has other options. The buyer has agreed to pay "fair market," and that means the cost of the renovation would increase the cost of house and push it far above a fair market purchase. Of course, if the buyer was paying far below fair market value, the condition of the house was already factored into the contract. The homeowner still paid, he did so with a concession on the contract price.

If a homeowner will not reduce the price or repair or replace the significant defect, he needs to understand that the buyer will have many other homes that are better buys that do not require an additional expenditure to acquire.

If the homeowner does not repair the significant problem, then the buyer will cancel the contract and go find a fair market purchase. In other words, the significant problem identified during the house inspection proved the buyer was over-paying for the house in its current condition.

A Known Defect Requires Disclosure

The homeowner's initial response will likely be emotional. He will think "let the buyer walk, I'll sell it to a different buyer."

I cannot tell you how many times over the years I have heard this reaction, both when working with a homeowner or from the agent of a homeowner. Regardless, I like to remind them that they now have a dilemma that does not simply disappear if the buyer goes away.

Unfortunately, the significant problem discovered during the house inspection is now a "known defect" and the homeowner (and his real estate agent) must communicate (disclose) the defect to all new buyers.

Is it likely a new buyer will come in and agree to pay well above fair market value when there are other options available? Would you? I think not.

Ultimately, the homeowner owns an asset in a condition that will sell at or very close to fair market value. Fair market value considers the condition of the property and a major defect reduces the value of the home.

How To Slip Known Defects Past A Housebuyer

I only used the sub title above to catch your attention. In Florida, this is not something a homeowner will get away with.

Florida law requires that homeowners disclose known defects involving Florida residential real estate; homeowners who fail to disclose these defects will most likely be in violation of Florida’s real estate disclosure laws.

I have seen many transactions over the past twenty six years where the homeowner was obviously hiding defects, and it never paid off for them. They either were found during due-diligence and then become "known" to everybody, or they were found after the closing and the buyer's attorney got the defect repaired (plus attorney's fees paid) from the homeowner.

It Is What It Is

Ultimately, you have to realize that the market value for your house is determined by supply and demand in the market for homes similar to yours (both in location, features, amenities, and CONDITION). The condition of your house will impact its value, and you should not be surprised by this.

You wouldn't think you could sell a banged up car at the going rate for a brand new car, right? Does a ten year old boat fetch the same price as a new one with zero hours on the engines? Well, a house with a bad roof will be discounted in value by the cost of a new roof.

For this reason, homeowners should know that online house valuation tools are likely to be inaccurate. Does Zillow know the condition of your roof? Your HVAC system? Have they factored in the occasional flooding in your basement? Nope.

Estimating The Fair Market Value Of Your House

You can get a feel for what other homes around you have fetched recently in the market by using the local specific home valuation tool on our website, but know that it takes an on-site inspection by a top-notch local real estate expert to provide you with the fair market value of your home.

If you would like an analysis of what your house would fetch in today's housing market, no strings attached, simply provide us your contact information and the property address and we'll be in touch with you right away.


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Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Hi Joe Manausa If I represent the Seller I ALWAYS recommend a pre-list inspection so we can start off on our best foot.

If I represent the buyer we get an inspection and then RE-NEGOTIATE the price. I don't trust the seller to make the necessary repairs since they "lived" with them for years.

Bill Roberts

Aug 01, 2016 12:15 AM #1
Doug Rogers
Bayou Properties - Alexandria, LA
Your Alexandria Louisiana Agent

My favorite sales strategy is when the sellers seek to sell "AS-IS Where Is". No mister seller, that does not mean you can cover up defects.

Aug 01, 2016 12:21 AM #2
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

Agreed Bill Roberts ... you can run ... but you cannot hide :)

Aug 01, 2016 12:29 AM #3
Joe Manausa
Joe Manausa Real Estate - Tallahassee, FL
Tallahassee Real Estate

So true Doug Rogers ... it's not in-lieu of disclosing

Aug 01, 2016 12:30 AM #4
Belinda Spillman
Aspen Lane Real Estate Colorful Colorado - Aurora, CO
Colorado Living!

It has been a competitve market here in Denver CO for the past couple years.  Many times, sellers are taking a hard stance about repairs and insisting that the buyers need to tackle them at their own expense.  Sometimes it works but if the repairs are major, they typically must step up to the plate.

Aug 01, 2016 02:36 AM #5
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg IL Real Estate

Definately have to disclose. I'm sure there are plenty of people that think they can get away with it.

Deferred maintenance (aka I don't do required repairs) always catches up with you one way or another.

Aug 03, 2016 05:15 AM #6
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