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Negotiating After the Home Inspection: 8 Tips to Get the Best Deal

Once you’ve had your offer accepted, the home inspection is one of the final steps to navigate before you can close and move into your new home.

It also represents an opportunity to confirm you’re buying the quality of the house you expected, and negotiate to make sure you’re still getting the best deal. And good on you for including an inspection contingency in your offer. Despite popular belief, data shows that waiving a home inspection doesn’t significantly improve the odds that your offer will be accepted. So what’s next? Reviewing the inspection report and negotiating with the seller, and here are 8 tips to help you get the best deal.

1. Plan your strategy

As with any negotiation, it’s to your advantage to enter the fray with a plan. A thorough home inspection should equip you with the information you need to be confident that you’re buying a house that’s in acceptable condition, and avoid overpaying for a property that’s going to need expensive repairs.

2. Determine your goal

The core of your strategy when negotiating after a home inspection is to figure out your goal and keep it front-of-mind throughout the negotiation. For example, let’s assume the home inspector discovered that the water heater and the heating/AC compressor are functional but out of warranty, and will probably need replacement in the next three years. The estimated cost to replace both is $15,000, so an understandable goal is to have the seller provide a credit to cover two-thirds of that replacement cost.

Or, let’s say the report surfaced an almost comical number of minor problems that would take a handyman a few weeks to address. Your goal could be to get a $10,000 concession that will cover your cost to remedy those before moving in.

3. Prioritize the issues

The home inspection report will summarize issues ranging from major concerns that need to be addressed right away (possibly by a specialist) to smaller items that you simply need to monitor. The inspector will classify the severity of each issue, which will help you order the items from most important to least important. A well-organized outline will let you prioritize the problems for the negotiation and determine your goal.

Questions you should ask yourself about expected home repairs:

  • What repairs do you need to make before you can actually live in the house?

  • Can you occupy part of the house while doing repairs on the rest?

  • Were you already planning on replacing the aging appliances or plumbing fixtures?

4. Empathize with the seller

Take a collaborative approach to negotiate, rather than a winner takes all kind of mentality. Present your requests as solutions that benefit both you and the seller in finalizing the sale transaction, while maintaining focus on your goal.

Also, you may want to consider the experience of the offer process as part of your strategy, a way to learn more about the home seller’s intentions. For example, if your initial offer was 5% below asking, and the seller countered with a much smaller price reduction or said take it or leave it, they may not be willing to concede much. If you reach an impasse over your goal, that’s when it’s most important to empathize with the seller, ask questions to understand what their objections are, and express appreciation. You may be able to get past this roadblock and still reach a deal.

5. Stay flexible when negotiating after a home inspection

It’s good to come in with high aspirations, but speak with your agent to find out what level of concessions are typical in your local housing market. You may want to compromise on more minor issues or let some things go in favor of achieving your goal. Your agent can recommend where it’s best to press and what’s realistic to accomplish. For smaller issues, think of some alternatives that would be acceptable to you, such as arranging for the seller to leave certain appliances with the home.

6. Be willing to walk away

Based on what you see in the report, determine whether you should exercise the inspection contingency, and walk away from the transaction. Most likely, this would be triggered by serious issues such as wood-destroying pests, a cracked foundation, extensive water damage, or sewer repair. If your home inspection report shows any of those problems, and your offer included an inspection contingency, you should be able to cancel the sale without penalty.

Even if you love the house, it’s not worth moving forward if the inspection uncovers major structural problems. You could also be inclined to walk away if the seller refuses to budge on your high-priority items. Also, if the inspection shows a large number of issues arising from inadequate maintenance, you might want to assume there are other latent problems that even the inspection couldn’t capture, and therefore other costs beyond what you can negotiate for.

On the other hand, if you know the house is a fixer-upper, you should let the inspector know beforehand so they can pay extra attention to areas where you’ll spend more money on home improvements. You’re going to be expecting to see more issues on the inspection report, and it’s especially important to get contractor bids for the work you’re planning, since replacing older systems like plumbing and electrical, or removing hazardous building materials like lead and asbestos, can get quite expensive.

7. Ask for a price concession

The typical approach to a less-than-perfect inspection is to ask the seller for a financial concession, which could be a reduction in the sales price or a credit at closing. In most cases, you’ll want credit at closing so you’ll have the cash to pay for repairs. Just make sure you check with your lender to confirm that they’ll permit this type of cash-out structure. You may also want to get a bid for the work to ensure that the credit you’re asking for will cover the work required.

8. Get as much information as you can

This applies to every aspect of the negotiation, including gathering info about the local market, the seller’s perspective, and documentation of maintenance and repairs the home has had over the years.

by Mike Cahill

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