A Bad Inspection Should Not Be The End Of The World (Cont)
10601
Views - Printer Friendly - Email
This Story To A Friend
That inspection contingency on your offer to purchase is not
a permission slip to nit-pick. Chipped paint, a dead tree, stained countertops
are things that are easily visible to the untrained eye and should have been noted
by the buyer before the offer, not used as a reason for withdrawing or renegotiating
it. Rotting cills, non-functioning built-in appliances, outdated wiring, small
but urgent repairs that add up to more than two or three percent of the offering
price may be a reason for revisiting that offer.
Or not.
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
article.
• 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.
Related Tags
Select a Tag for more information related to that Tag. (View
All Tags)
|
