Best Practices for Negotiating Repairs When Purchasing a Home

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Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000
http://activerain.com/droplet/5ckQ

 Best Practices for Negotiating Repairs When Purchasing a Home

 

You’ve signed the contract and all terms are agreed upon in order to buy your new home.  The price is set, the close of escrow negotiated, and now you’ve just completed the home inspection and other related inspections. 

 

The home inspector(s) creates a report provided to you with possible “defects,” items that need repair or some sort of attention to make them functional.  The inspector suggests consulting professionals to verify findings that might require a secondary review, ie a furnace or air conditioner. Reviewing the entire report, you then create a list of must-have repairs that you feel are required to move forward.

 

The repair “list” is given to the buyer’s agent who shares this information with the buyer.  In Arizona, the inspection report is also shared with the seller’s agent, along with any other findings that the buyer deems important to relay the message toward getting a satisfactory response from the seller.

 

But what if the list of repairs is so extensive that the seller becomes anxious and suddenly doubts that the sale is worth maintaining with the current buyer?  In this instance, a credit to the buyer toward repairs might be wise, in order to reduce tensions that occur during repair negotiations.  

 

Oftentimes, sellers aren't prepared for a lengthy list of repairs.  If a homeowner has been in a home for more than 10 years, it's wise to get a home inspection and work on those items from the beginning.  Managing those expectations up front in a listing appointment can help ease those concerns and keep a contract together.  Each home is different based on age, habits, and maintenance. 

 

But what if the buyer receives a credit (price reduction) and has no funds to pay for the needed repairs after the sale closes?  In that case, a credit can be withheld by the title company so those items can be repaired after the sale closes, except in the instance that the needed repairs might affect a mortgage completion.  Moneys held at the title company are typically called “escrow holdbacks.”

 

Health and safety items are typically required to be repaired prior to close of escrow for a FHA and/or VA mortgages.  Sometimes they are also required for a conventional mortgage, depending the severity of the damage.   These items must be completed in order for a home purchase to finalize.  

 

As a professional educated in energy efficiency, it's always my policy to ask if a home buyer would like to add energy efficient improvements to a home.  If so, they can be added to the mortgage so there is little or no out of pocket expense.  In that case, an energy audit is needed so that the report can be provided to the lender.  

 

For more information about purchasing a home in Arizona, give me a call!  

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Rainmaker
2,715,006
Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Great post, in my market we just like to get the reduction in the price and we do not care if the new owner fixes the issues or not... just makes life smoother after the deal is done, Endre

May 17, 2018 10:41 PM #1
Rainmaker
1,524,633
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Jan - it certainly would make senile to negotiate a credit or a price reduction 

May 18, 2018 07:56 AM #2
Rainmaker
1,720,210
Patricia Feager
DFW FINE PROPERTIES - Southlake, TX
Selling Homes Changing Lives

Jan Green - I concur with all you said! Your post is well written and you illustrate the importance of having a home inspected succinctly! The repairs that come up on an inspection report should be taken into deep consideration, without debate about cost. A home has many parts that tend to break, wear out, or cause fires. When it comes to safety, repairs is critical. 

May 28, 2018 05:11 AM #3
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

I can appreciate that Endre Barath, Jr. !  There are definitely times when a price reduction is the easiest route.  When I have a client that needs them done prior to moving in is when I ask for them.  It's a based on what the client wants of course.  Thank you for commenting and have a great Memorial Day!

 

May 28, 2018 11:00 AM #4
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Yes it does Grant Schneider , unless of course the client cannot do the repairs after closing for financial reasons.  It all depends on the buyer.  Here in Arizona our contract is an As Is contract, however, I still see requests for repairs often. Thank you for commenting and have a great Memorial Day!

May 28, 2018 11:02 AM #5
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

You are so  right Patricia Feager !  Health and safety first.   Have a wonderful holiday weekend!

May 28, 2018 11:02 AM #6
Rainmaker
4,258,882
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Good morning Jan.  Very often this is the most stressful and disputed aspect of real estate transactions.  Good guidance and cool heads can make it a bit less stressful.

May 29, 2018 05:10 AM #7
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

You got that right Gabe Sanders !  Negotiating repairs can be as heated as agreeing to a sales price!  Thank you for commenting and have a great week!

May 29, 2018 08:45 AM #8
Rainmaker
1,524,633
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Jan - in an older house I know there are plenty of repairs and coming to an agreement can be difficult.

Jun 03, 2018 05:27 AM #9
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Tiy are so right Grant Schneider .  There is also the possibility for hazardous materials and they have to be handled with more care than a traditional repair.  It all works well if done properly.  Thank you for commenting and have a great Sunday!

Jun 03, 2018 02:57 PM #10
Ambassador
1,573,549
Debb Janes EcoBroker and Bernie Stea JD
ViewHomes of Clark County - Nature As Neighbors - Camas, WA
REALTORS® in Clark County, WA

We just got through an inspection for buyers - fortunately, we were able to negotiate repairs and a credit at closing.  Next, an inspection for one of our sellers, I know we'll get through that one too. Your post is a good outline for the process. 

Jun 10, 2018 05:48 AM #11
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Thank you for stopping by Debb Janes EcoBroker and Bernie Stea JD .  I can imagine you are very good at negotiating those items with your calm demeanor.  Heated discussions don't solve anything.  Good luck with your next one! 

Jun 10, 2018 08:56 AM #12
Rainmaker
2,572,771
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

You’ll have to take a moment to really assess the repairs needed in such a concise way that we know what we’re talking about when we find the right person. I think that’s what you were going for.

Jun 13, 2018 11:26 PM #13
Rainmaker
460,219
Pat Starnes, Brandon, MS
Front Gate Real Estate - Brandon, MS
Front Gate Realty ~ 601-991-2900 Office

It's frustrating when a buyer wants EVERY item on the home inspection repaired, even minor cosmetic issues. In some cases, a credit or limit placed on repairs is helpful and satisfies both the buyers and the sellers.

Jun 14, 2018 08:10 AM #14
Rainmaker
885,095
Jan Green
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

So true Pat Starnes, Brandon, MS !  It can frustrate a seller when a buyer goes over-board in requesting repairs.  

Jun 14, 2018 09:18 AM #15
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Rainmaker
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Jan Green

HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN
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