Keeping in mind at all times that there are no perfect houses and few problems
that money can't fix; you need to review the last four of the six questions
we laid out in our previous
��Is this a problem that must be dealt with immediately or just something that should be done eventually?
Again we come back to the immediacy of the problem. There are bound to be a lot of changes you would like to make to the property "someday." Are the repairs noted in the inspection report merely more of those someday items or do they represent a safety concern or a deteriorating condition that must be addressed immediately? If either of the latter is true and these are big ticket items, you need to talk with your agent.
��Given what you know about house prices in your locality, might this problem have already been taken into consideration in pricing the house?
A savvy agent will often discount a listing price to compensate for a roof needing repair or a required exterior paint job. A savvy agent also notes this in the listing agreement; i.e. "Listing price takes into consideration that the roof is near the end of its useful life" but some agents are leery of spelling out a problem so blatantly. Take a look at comparables in the area that have newer roofs or spiffy paint jobs to better evaluation the problem.
��Do these negatives merit further investigation?
Before you panic, get a rough estimate of the repair costs. You may be overstating the expense of rewiring the house or, more critically, underestimating it. Try to get a contractor's estimate for the work but realistically the time available for responding to an inspection is often too tight for a thorough investigation . www.get-a-quote.net is a good source to do a quick and dirty estimate on your own.
��Are you willing to walk away from the house because of the negatives on the report?
If you are desperate to own the house no matter what, then temper any request for repairs or contract adjustments accordingly. If you make an overly aggressive demand or make it in an undiplomatic way you risk making the seller so irate that you will not have a chance to back down.
How do you approach the seller and renegotiate the contract?
You don't! It is when working through an unfavorable inspection report that a good real estate agent really earns their commission. The seller has already, in his mind, spent the proceeds from the sale of his house and also has a certain amount of pride of ownership involved. Therefore, keep your agent and the seller's agent between you and the seller at all times. Under no circumstances should you speak to the seller - and if you are dealing with a FSBO you are about to get a lesson on in the value of a full service agent. Inform your agent that you have problems with the inspection report and provide the following:
- A copy of the relevant portion(s) of the inspection report (and only the relevant portions);
- A straightforward, specific, non-judgmental, and non-threatening statement of your request for remedy;
- Any back-up materials you have been able to obtain such as contractor's quotes.
Pay at least some attention to your agent. If they review your request then kindly suggests that you are being a real jerk about a noisy attic fan, at least consider their opinion. Again, nothing is perfect and the next house could be worse.
What kinds of concessions can you request if an inspection report is unfavorable?
- The sellers to correct the situation prior to closing. This removes uncertainty about costs. If the problems turn out to be larger than anticipated, it is the seller's problem. However, you will lose all control over the fix. The seller might slap together the repair himself, use substandard materials, or employ his hapless Uncle Max to do a job that requires a licensed tradesman.
- A reduction in the purchase price. Sellers like this one because it reduces those closing costs based on purchase price such as tax stamps, land bank charges, and real estate commissions. But such savings are really negligible; for example, a $2500 reduction to compensate for a dead furnace would reduce the real estate commission by $125.00. From the buyers prospective, any such adjustment has the effect of reducing the size of the mortgage rather than freeing up cash to get the furnace fixed.
- Cash back at closing. This is usually the best option for the buyer as it is real money and can be applied in total to correcting the problem or problems.
How should you respond to a demand for renegotiation if you are the seller? In much the same way as if you were the buyer. Let your agent handle it. Keep calm and be reasonable. If possible get a repair quote or even a second opinion as to whether the problem actually exists. Decide how much it is worth to you to save the existing offer. A bird in the hand, time is money, and all of that, but especially relevant is that some types of negative information may need to be disclosed to subsequent buyers and that most of the bad news will probably emerge again when the next buyer has his inspection.