If you’re buying a new house, you will probably want to get a third-party home inspection. If the home gets a clean bill of health, you’ll feel assured that you’re buying a safe, well-maintained property, and investing your money wisely.
But what happens when that inspection reveals a problem? What are your options, and how do you move forward (or back out) if the results are less than ideal?
The answer depends on your sales contract, as well as the repairs that are needed, the seller’s willingness to negotiate, and several other factors. Here’s what to do if you find yourself potentially negotiating repairs after a home inspection.
- A home inspection can help you identify deficiencies in a home that you’re considering purchasing.
- If the inspection report reveals necessary repairs, then repair credits are usually a good option for both the buyer and the seller.
- Other options include asking the seller to make the repairs, asking them lower the sales price, or backing out of the deal (if there's an inspection contingency in your contract).
Your Options After a Home Inspection
A home inspection can help identify deficiencies in a home you’re considering purchasing. If the inspection reveals that problems are at work or that repairs are needed, you may be able to negotiate with the seller to fix those issues. You can also ask for credits toward your closing costs in order to make up for them.
If you have a home inspection contingency in place, and the issues that your inspector finds are deal-breakers, you may be able to back out of the purchase entirely. If you decide to go that route, you should be able to receive back the full deposit you put toward the purchase.
Here are your options after a home inspection reveals problems:
- Ask the seller to make the repairs themselves
- Ask for credits toward your closing costs
- Ask the seller to reduce the sales price to make up for the repairs
- Back out of the transaction (if you have an inspection contingency in place)
- Move forward with the deal
Negotiating for Repairs or Credits
In most cases, repair credits are a good option for both parties. Sellers are often hesitant to complete repairs because of the hassle and extra time they can add to the sales process. Buyers may also prefer to handle the repairs themselves to ensure that the project is done to their standards.
In order to negotiate for repairs or credits, start by getting an estimate from a local contractor or construction professional for how much the repairs will cost. If you’re working with a real estate agent, he or she should handle the negotiations on your behalf. Make sure that your agent has a copy of the inspection report to use as leverage when working with the listing agent and their seller.
If you’re going solo with your home purchase, you’ll need to work with the listing agent directly to negotiate. Use your contractor’s quote and your home inspection report to guide you.
What to Expect
Generally, sellers may be willing to negotiate on major issues, such as a leaky roof, a cracked foundation, electrical problems, or other items that pose a safety hazard or come with a high repair bill. That’s in their interest, since your lender may not approve your loan if the home has structural defects, serious safety hazards, or building code violations.
Sellers will be less likely to budge on aesthetic or superficial items that don’t impact the overall fortitude of the house. However, they might be more flexible if the home has been on the market for some time or if the local housing market is soft.
Sellers typically won’t consider negotiating on issues that were visible, or known before you made your offer on the home.
Before negotiating, you may want to consider:
- The state of your local housing market
- Your desire for the home
- The size and cost of the repairs
- The severity of the problem
- Your future renovation and remodeling plans
- Your budget
- The time the home has been on the market
- The home’s history and age
A Note for Sellers
If you’re selling your home and a buyer’s home inspection reveals defects, you also have options.
- Lower the price
- Offer credits for closing costs
- Agree to certain repairs
- Barter with appliances or other items in the home
Alternatively, you can opt to do nothing. Keep in mind, however, that depending on the issues at hand, the buyer may be able to back out of the deal. If that occurs, you can re-list the home or revert to a back-up offer, but you may be legally required to disclose the issues found during the home inspection to any future buyers.
In order to prevent a buyer’s inspection from throwing off your deal, you may want to consider a pre-listing inspection to identify any problems in the home before putting it on the market. That can reduce delays and hassle later on.