Most people have never been part of the home inspection process. First time buyers and sellers are often confused about what to expect from these inspections. Sellers tend to be embarrassed by defects discovered in their homes and buyers are equally perplexed when they discover that the home that they fell in love with has hidden flaws and imperfections. What can follow is a confusing emotional response by both parties as they try to complete the sale or purchase. However, if both parties follow a few basic rules of negotiating and if both parties agree on a few basic concepts a home inspection can become a painless process for the buyer and the seller.
Some Simple Negotiation Rules
1. Don’t take it personally: From a sellers perspective it is unsettling to have buyers, agents and inspectors poking thru your closets and your home. Keep in mind that these are not curiosity seekers. They are simply confirming that the feelings which led them to choose your property are good decisions. Buyers simply do not want surprises later on in their home ownership. They don’t mean to offend sellers or to invade their privacy.
2. Rely upon experts: Inspectors may not be able to estimate accurately in all trades. Think about this for a minute. Inspectors, if they are allowed to at all give you a ballpark estimate it is probably in the higher price range for that type of repair. The true cost of the repair is the cost charged by the contractor making the repair. Allow enough time to get the facts about the true costs to repair the major defects.
3. Expect defects to be present: Many buyers look at homes thru rose-colored glasses until the home inspection. Then for the first time they can see the defects in the property. Many buyers are actually surprised to find defects in an older, used house but this is not a reasonable expectation. Homes have many systems. Roofing systems can last 20 years, masonry systems 60 years but carpeting lasts only about 5 years. It would be unreasonable to expect that all of the systems in a home are new. It would be equally wrong to expect that all parts of a property will look or operate as if it were new. This is only appropriate to expect in new construction.
Some effective ideas
Create a list of tradable and must haves. In any negotiation some trading has to occur. Prepare yourself with a written list of tradable and must haves. Safety items should always be must haves and the good news is that sellers understand these concerns. It is easier to negotiate away an electrical hazard then it is the color of the paint on the wall.
A basic truth
The truth is that the seller has very limited time to make changes to the house. Often times they are packing and moving within the month. The buyer on the other hand has years to fix up and make repairs to the property. For this reason buyers and sellers should try to be practical about repairs. Ask for only the most essential repairs to be completed prior to settlement. Asking for the seller to remake the house to brand new would change the value of the purchase. If the seller could have made those repairs he would have. If he made those same extensive repairs and then marketed the property the price would have been out of the buyer’s price range.
If the buyer is concerned about the repairs being made to the highest standard than asking for a CREDIT instead of repairs is a good idea. From the sellers point of view it is an easier way to move forward because they are very busy with their upcoming move.
Remember the purpose of the inspection.
For most buyers the purpose of the home inspection is two fold. It is to make sure that the home is safe to live in. Second, the inspection is performed to rule out any costly surprises that may pop up during the ownership of the property. Inspectors will look for every minor flaw in the property but buyers will then interpret this information and decide which are really important to them. Buyers who understand this have successful negotiations with sellers who also understand these basic tenants. Buyers who ask for repairs for every defect discovered on an inspection report typically have unsuccessful negotiations. They waste time and money in pursuit of the wrong goals. They try again on the next house and the next and the next and they still have failed negotiations. It is important to be realistic and fair-minded. Striving for a win-win in negotiations is the most successful strategy. A home warranty can relieve the buyer of any fears that costly repairs will surface in the years ahead. If the home warranty is in place prior to the inspection the warrantee may cover the seller’s costs to repair the item. Ask your
Keep options open
agent about a home warranty
Many buyers make the mistake of negotiating the purchase terms (the price) too much. They leave no room on the table for the seller and the buyer to both enjoy a win-win transaction. The result of these “hard” negotiations is to create animosity between the
seller and buyer. Then when a buyer makes reasonable requests for repairs or credits after an inspection the seller takes that opportunity to get even and the seller rejects the repair proposal. Try to remember that we negotiate for things but with people… the best way to negotiate is to insure that both of you have met the needs and goals of both buyers and sellers.
The other option to keep open is your financing. Unfortunately most buyers and sellers make their costs and their gains permanent before the home inspections Sellers look at their projected proceeds and buyers identify a mortgage amount and sometimes lock in that amount with a lender.
Keep these options open. Buyers, tell you lender that you may borrow “X” amount but that amount is subject to revision based on the results of the home inspection. Sellers should try not to become fixated on their bottom lines because they are not real yet. Many things can change the numbers prior to final settlement. It is important to understand that inspections can uncover real defects that must be fixed to make the house safe and to assure the buyers that there are no costly surprises in the near future
Consider the big picture.
On the day of the inspection buyers focus on the details as they should. But in the end they should try to remember the big picture. All homes have something wrong with them. There is no perfect home. They should ask themselves if this house will make for a good home. Does it meet the goals of the home search that were communicated to your agent at the beginning of the search? Feelings change, buyer’s remorse is a common theme in making emotional decisions such as buying a home. This is typical but it can be avoided by keeping the big picture in mind. Just like the purchase of a car. The feelings of new wears off as you spend more time in the car. Keep a realistic attitude.
A few basic issues come up in most inspections.
Balance the good with the bad. I once witnessed a buyer and a seller trying to negotiate the results of a home inspection. “It has an old roof “said the buyer” But it has a new heater” said the seller. They both thought about it for a while and then the buyer said “But I will have to put on a new roof” and then the seller said “You won’t have to put in a new heater” In a way both were right but both were wrong. The truth is that the costs to replace the old roof were already factored into the asking price and the appraisal completed by the lender. If the property had a new roof and a new heater it would cost more money to purchase. If the property had an old heater and an old roof it would be priced less and it would appraise for less. Having a home inspection is an information gathering exercise. If this buyer could recognize that they paid less for the house solely because it had an old roof he would probably be ok with the transaction and he could arrange his finances to afford the new roof when it was required.
Home inspection reports are by their nature scary. If you strip away from the home inspection all of the language and just leave the boiler plate issues that most home inspections contain most buyers would never buy the property described. Issues of an environmental nature are brought up (Radon. Mold, Electromagnetic fields, underground sewer lines) are all part of the inspection prior to the inspector actually looking at the house. Add in the defects noted by the inspector and most people would not buy most houses if they only relied on the inspection. Stop a stranger on the street, show them a typical report and ask them “Would you buy this house ?” and most people would say “Heck no!”
What’s going on here?
The truth is that the inspection is just part of the puzzle. It looks at only the defective parts of a house. It does not consider the neighborhood, appreciation, tax benefits, investment aspects or the simple plain truth that people need a place to live. The inspection is one single facet of the purchase. Most people who accept inspections for what they are enjoy the house they bought and look forward to many happy years in a residence. On the other hand people who are overwhelmed by the defects will never know the good part….the many wonderful aspects of owning this home. It’s the proverbial glass of water. They see it as half empty and they forgot the basic rules outlined above regarding inspections. It is important to see the big picture before you make any decisions. The real key is to understand that inspections are ordered to make sure the property is safe and to make sure no avoidable surprises in your home ownership. They are designed to be a back-door exit out of a real estate contract.
Nothing is perfect
There is no perfect house. If there was most buyers could not afford it
All defects are magnified It may sound like a simple rule but it is a true enough statement All sellers underestimate the true costs of repairing defects and all buyers overestimate the costs of repairs. I’ve heard people say that roof will cost $30,000 to replace and then $4300 later a beautiful new roof is in place and the transaction is back on track. It is important to use real contractors and professionals to make estimates.
Many home inspections misunderstandings begin because one of the decision-makers tries to rely upon the written inspection instead of being there and witnessing it for themselves. It is essential for any decision-maker or negotiator to see and understand the defects that are discovered in person. The additional benefit of being there is that the decision makers also experience all of the good discoveries that a home inspector will find. Otherwise the negotiations become biased only dealing with the negative and missing the big picture.
This is Hard Work
Expect to come down off of the emotional high. Most buyers spend about 20-30 minutes when they visit a property before they decide to make an offer. It is a great emotional high that carries them up to the day of the home inspection. However on the day of the home inspection the first thing the inspector does it tell you about all of the things that he can’t inspect. (Under-ground pipes, things hidden behind walls or imbedded in flues). It is an unnerving experience to understand for the first time just what a gamble buying an existing home can be. After that the inspectors take you to the basement or crawl-space where a majority of your time is spent looking at the guts of the house. This does not do much to reinforce that great feeling you had when you bought the home. It is easy to forget the beautiful kitchen or the center hallway when you are in a basement for an hour or two. Expect home inspecting to be hard work. After 2 or 3 hours your legs will be sore, your perception of the house will change and you will finally have the true picture of the property amoxicillin tablets online. Home inspections are not glamorous. Be prepared for lots of information. Every home inspection works pretty much the same way
Know Your Role
Understand each person’s role in the process- The role of the agent and the home inspector is not to talk you into buying the property. They are there to clarify each part of the report that will come later. The inspector’s job is to objectively report on the condition of the property. The agent job is to question the inspector until all of the important facts are out in the open. Your job is to make sure that the inspector does not go onto the next item until you have a thorough understanding of the condition of the home. You should be sure to understand how essential an item is and if this is a safety concern. In a resale house typically 2-3 safety related items are discovered at every home inspection and then about 15-20 other defects are discovered.
Know the Score Going In
Most home inspections are typically negotiated by the seller agreeing to fix any safety related or surprise items that are discovered. Gas leaks or misfiring electrical circuits are common examples of items that most sellers are willing to repair because they did not know about them in advance. Both the seller and the buyer were both surprised by the findings. It becomes very difficult to negotiate a repair that has been already disclosed by a seller on a seller’s disclosure. Sellers in this situation are simply saying I want to sell the property but I cannot or do not want to repair the disclosed items. Negations that go beyond safety items and surprise discoveries are the hardest to negotiate. Expect to be trading away most of these. If there were 5 broken windows in a property and they were obvious fro every buyer to see and the price was lower than the typical home in the marketplace than most sellers would be correct in believing that these conditions were already built into the price. The largest mistake that buyers make is to think that the inspection is simply another opportunity to negotiate the price. It is not. Don’t wait for a written report full of boilerplate information. Begin to negotiate any repairs as soon as the inspection is completed so you can be sure to have enough time to iron out every issue.
In Conclusion
I have found that it is the misunderstandings that get home inspections off track. Buyers don’t know there roles. Sellers become offended and very quickly it becomes big knot to untangle for the agents and negotiators. However, if you approach the home inspection with a plan for negotiations and when all parties know their roles a successful negotiation can be achieved and both sides can reach their goals. Good luck on your inspection. Your agent is ready to help by being there while the inspection is going on and by reminding you of the generally accepted rules for negotiating successful home inspections.