Whether you are buying or selling a house, the condition of the property matters. Taking care of a home is a lot of work, and with so many components that can break down or become inefficient, homeowners must invest in their properties to maintain them.
It is estimated that homeowners spend roughly 1% of the value of their homes each year on maintenance and repairs.
A home inspection is a critical step in the sale process. Some buyers may choose to waive this phase to facilitate a faster sale or pay a lower price for the home. However, both parties can benefit from the inspection process, though the buyer has far more incentive to pay for home inspectors and review the results with a real estate agent.
The Purpose of Home Inspections
A home inspection assesses the condition of a property before a sale is completed. Typically, the buyer will pay for a professional inspector to visit the property, observe and test its various components, and compile an inspection report summarizing their findings. The buyer must work with experienced home inspectors who know what to look for on a property.
The buyer then reviews the home inspection report to determine if the home is worth the price they agreed to pay the seller. Often, these inspections reveal issues with the home that the buyer would rather have addressed before they move in.
Without a home inspection before the purchase, the buyer could find themselves investing in substantial repairs shortly after moving in. These may be necessary for a real estate appraisal.
Key Areas Covered
A home inspection covers many areas of the property. The inspector will look for safety issues, potential repair needs, and future maintenance concerns throughout the property. The most important areas assessed in the inspection will be the structure of the house, roof, electrical system, plumbing system, HVAC systems, and appliances.
Additionally, the inspector will check crawl spaces and basements for rot or mold in hard-to-reach areas. Some professionals will also check the yard to see if there are drainage concerns.
The more comprehensive the inspection, the more information the buyer will have to consider their decision. In many cases, the home inspection will result in further negotiations between the buyer and the seller. It can impact closing costs, the closing date, and the home appraisal amount, and may result in a repair addendum.
The Home Inspection Report
The most important element of the inspection is the report that it yields. This report is a summary of the inspector’s findings. In it, they will describe the property’s main issues, detailing potential solutions. If there are elements of the home that are not immediately concerning, they will still make recommendations for specific repairs or maintenance in the future.
Both the buyer and seller should review this information before signing a purchase contract. The buyer has the most incentive to do so since they shouldn’t pay for a property with tons of issues that are not worth the asking price. Some lenders require an inspection before the final credit check to ensure the house is in good repair.
Reviewing the Inspection Report
Before the real estate transaction is finalized, it is important to carefully review the inspection report and understand the severity of any identified problems with the property. Here are a few tips to help buyers understand these reports and use them to facilitate a smoother homebuying process.
Categorizing Issues
Your priority should be categorizing the findings of the home inspection. Only some items in the report need to be addressed to make the home worth the asking price. Look through the report and sort the health and safety issues into major repairs, minor repairs, and ongoing maintenance categories.
Mandatory repairs, such as plumbing issues, electrical hazards, structural defects, or other health hazards, should be considered for negotiations. Minor issues, such as nonessential repairs or cosmetic issues, may not need to be addressed before closing day.
Seeking Clarification
Some home inspectors will review the report with you once they have created the summary. However, if they simply send you the inspection report, it is important to seek clarification about issues that you are concerned about.
If you have questions about potentially expensive repairs or you aren’t sure how to categorize major problems and minor issues, don’t be afraid to contact the inspector and ask for clarification.
This information will be important when you approach the seller to negotiate the real estate purchase price or submit a repair request.
How to Negotiate Repairs
Before closing, the buyer and seller may negotiate potential inspection issues. This could include a repair request, seller concessions, or a lower asking price. Negotiating is important at this point because it can help you get a good deal on the home.
Otherwise, you may spend all your money to acquire the house and then face needed repairs shortly after moving in, which will be difficult to afford.
Requesting Repairs
The buyer has the right to request home repairs before finalizing the purchase. They could do so by drafting a repair addendum into the contract that states they will only purchase the home if a specifically requested repair is made. This is often called a home repair contingency.
Negotiation Strategies
Depending on the findings of the home inspection, there are several strategies to negotiate repairs before buying the property, as well as seller pricing strategies. You can prioritize the most expensive repairs, such as roof damage, HVAC issues, structural damage, or a water heater replacement. These can ensure the buyer doesn’t go looking for a new house.
Consider the cost estimates of repairs and decide if you are willing to take them on. If so, you can negotiate with the seller for a lower sales price or for them to offer a credit to cover the repairs in the future. This is especially common in a seller’s market. In many cases, a buyer’s agent will negotiate with a seller’s agent instead of the homeowner having to negotiate.
Reaching an Agreement
Negotiating fairly is key when agreeing to purchase a home. If you make too many unreasonable requests of the seller before deciding to buy the house, they may reject your offer and find a less picky buyer to make closing stress-free.
However, most sellers are willing to make concessions and invest in certain repairs if it means getting a deal done. Work together to agree on the suggested repairs, and be willing to walk away if the seller declines the asking price or repair request.
It’s crucial to do your research before making a repair request or closing with the seller. Tell the seller how the repairs impacted the appraisal. Consider compromising on repairs not necessarily required to live in the house.
Other Potential Outcomes
If a property has numerous health and safety issues discovered in the home inspection, you can pursue several solutions. The first is requesting the seller make certain repairs before the transaction is completed.
You can also ask for a seller credit where they pay for the repairs, but you do the work yourself after the sale. Other options include renegotiating the offer on the home, walking away from the deal, or pursuing the sale as is.
Renegotiating the Offer
Renegotiating the initial offer agreement is the best way to ensure you get a good deal on the home. Spending all that money on a new home should not become a burden, so either the repairs should be addressed or the price should be lowered to ensure you don’t waste your money. If you aren’t sure about negotiating, you can ask your real estate agent to get involved.
Walking Away from the Deal
The buyer has the right to terminate the sale agreement based on the repair contingency. As long as you meet the conditions legally required for the contingency, there will be no penalty or legal repercussions for backing out of the sale.
If an agreement cannot be reached with the seller after the home inspection, make sure you understand the terms of this contingency before backing out.
Proceeding with the Sale As-Is
Although it is not advisable, you could always proceed with the sale. This is a viable solution if money is not a concern and you want to purchase the home quickly. However, be prepared to pay for these repairs shortly after covering all the other costs associated with buying a house.
Should I Sell My Home After an Inspection?
On the seller’s side, you can certainly sell the home after the inspection is completed. It depends on the demands of the buyer. If they demand repairs, you could risk losing their offer if you prefer to sell as is.
However, if you invest in replacing those missing tiles in the kitchen or addressing the drainage issues around the foundation, it will be easier to sell the house. You must assess whichever route is in your best interests.
Contact a Cash Home Buyer to Sell As-Is
Sellers who want to sell their properties to willing buyers have another option. Cash home-buying companies often buy homes in any condition. At A-List Properties, we are prepared to buy your house without a home inspection. You do not need to make repairs, clean the property, or worry about financing delays.
You can also save money by not hiring an experienced real estate agent and avoiding their commission rate. We will buy your house with a hassle-free process, even if it needs a few repairs.
Call A-List Properties today at 972-526-7042 or complete the online form to request an all-cash offer.
Zach Shelley
Zach Shelley is a seasoned real estate investor with a diverse network spanning across the nation. As the founder of his own real estate venture, Zach is committed to offering innovative solutions to homeowners facing various real estate challenges.. Through his dedication and strategic approach, Zach continues to make a significant impact in the real estate industry, providing homeowners with alternative pathways to navigate their property transactions.
