Negotiating After a Home Inspection

Even though home inspections are not required in most states, it has become standard practice these days for potential home buyers to have an inspection done before settling on a price. An inspector will do a visual walkthrough of the home and make a note of the standard of the home’s structure, plumbing, HVAC, or if there is any physical damage and compile a report for their client. Any faults they encounter during their inspection can then be raised with the seller to begin negotiations. The buyers can either request that the asking price be lowered or that certain repairs be done by when they are ready to move in. 

What Happens After Your Home Inspection 

The home inspector’s report is a handy tool for a new home buyer. Home inspectors only do a visual examination of the home, and they don’t look deeper than what can be seen by simply opening a door or cabinet. Still, if there are more serious issues within the home, there will be some indication at this observational level. Armed with this report, buyers then have four paths to take — negotiate on repairs needed or a lower price, decide the asking price is too much and walk away, skip negotiations and make a counteroffer, or accept the seller’s price of the home. This unique step places equal power on both the buyer and the seller since neither one truly has to accept the other’s terms. We’ll be covering what happens after a home inspection, reasonable requests to make, and what to look for to help you to know when walking away is your best option. 

Negotiating After Home Inspection 

Sellers and their realtors fully expect to begin negotiations once you receive the home inspection report, so don’t adopt the childhood “you get what you get” mentality about buying your new home. Still, a few risks come with negotiating repairs after a home inspection. The sellers have full power to deny your requests with zero justification and move on to more willing buyers. Your realtor will be aware of the so-called “industry standard” of reasonable requests after home inspection for buyers to make, and they will work with you to identify what those are to give you the best chance of not being rejected. 

Reasonable Requests After Home Inspection

Damages to a home fall into three general categories — expected/minor, unlivable, and uninhabitable. 

  • Uninhabitable home – has major safety concerns that need to be addressed and are the most reasonable to request, especially because of the high repair cost. 
  • Unlivable home – factors that make the home uncomfortable or difficult to reside in, including broken appliances, HVAC issues, plumbing leaks, poor water pressure, or poor insulation. If there are many issues in this category and the price of the home does not reflect its disrepair, many sellers will fulfill requests or lower the price a bit. 
  • Expected issues – Minor damages that you can repair with a fresh coat of paint or purchase small replacements are expected in any home. The buyer takes on the task of these renovations after the sale is final. 

What Fixes are Mandatory After a Home Inspection?

No law in any state legally requires a seller to make any fixes to a home before selling. While a seller faces no legal repercussions, the home market has created a standard that strongly urges sellers to grant certain repairs. If they go unaddressed in a home, these items are major red flags. They include safety concerns like water damage and mold, pest infestation, fire hazards, toxic hazards, and building code violations. The owner of a home with these issues is doubtful to sell at full cost, so definitely bring these repairs to the table. Depending on the time frame for these repairs, it might make more sense to ask for the price to be lowered to reflect the amount you take on to complete the renovations yourself. 

How to Counter Offer After a Home Inspection

Slightly different from negotiating a lower price, once you receive the results of your home inspection and they are significant, you and your realtor can come up with a reasonable counter-offer for the price of the home where you take on all repairs. If you anticipate your offer being accepted, this is an attractive option for buyers who plan on doing renovations anyways and can use the money they saved on the purchase to put towards all the planned changes. For example, if the home has plumbing issues, but you plan on putting in an extra bathroom, instead of asking the owner to fix the original plumbing, make a counter-offer and replace it due to your renovation. Be sure to delicately balance your desired price with what the owner will expect to get out of selling their home, so your offer is not rejected. 

When to Walk Away After Home Inspection 

Just like a seller has no obligation to fulfill any requests after a home inspection, you have no obligation to agree to the terms of the home. This is where having a realtor and contracts in place is important. You may have paid certain fees and costs before you had the inspection done — earnest money, the cost of the inspection, and possibly a down payment. If you paid any of these before the inspection, hopefully, your realtor included a contingency clause that returns those funds to you should you decide to walk away from the home. It’s improbable that you will not be entitled to your down payment. Still, if the seller states it is nonrefundable in your initial contract, you may be forced to eat the inspection cost or the earnest money for the seller to take the home off the market in exchange for the time they spent attempting to sell you the home. 

This may seem unfair, but it is a small price to pay to be able to walk away from a potential money pit if someone is trying to oversell a home in disrepair. What you can take away from the experience is what to look for in your next home prospect to ensure you are getting the home of your dreams without having to suffer financially.