The home inspection is a critical step in the homebuying process, providing a detailed look at a property’s condition and uncovering potential issues. Once the inspection is complete, buyers must decide how to handle the results—whether to negotiate repairs, request a price adjustment, or even walk away from the deal entirely.
Understanding your options and how to navigate this stage can save you money and ensure a smoother path to closing. This guide explores what happens after the inspection, how to interpret the report, and tips for negotiating with the seller.
Why the Home Inspection Matters
The home inspection provides an unbiased, third-party evaluation of a property’s condition. Conducted by a licensed inspector, it covers key areas such as:
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- Foundation and structural integrity
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- Roof condition
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- Plumbing and electrical systems
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- Heating and cooling (HVAC) systems
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- Pest infestations or mold concerns
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- Appliances and fixtures
The goal is to identify any major defects or safety hazards that could lead to costly repairs or affect the home’s value. While cosmetic issues or minor wear and tear are not typically deal-breakers, significant problems—such as a leaking roof or structural damage—require further action.
Step 1: Review the Inspection Report
After the inspection, you’ll receive a detailed report outlining the findings. The report will categorize issues, often labeling them as major or minor. Some inspectors use a color-coding system to emphasize urgency, such as red for immediate repairs and yellow for less critical issues.
Key Areas to Focus On
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- Safety Hazards: Faulty wiring, mold, or asbestos that could pose immediate risks.
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- Big-Ticket Repairs: Expensive fixes like foundation problems, roof replacements, or plumbing issues.
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- Deferred Maintenance: Tasks neglected by previous owners, such as aging HVAC systems or peeling paint.
Action Step: If you’re unsure about the severity of certain issues, consult your real estate agent or a contractor for clarity. They can help you assess repair costs and prioritize concerns.
Step 2: Decide What to Request from the Seller
Once you’ve reviewed the report, it’s time to decide how to proceed. You have several options:
1. Request Repairs
Ask the seller to fix specific issues before closing. For example, if the inspection reveals a leaking roof, you can request that the seller address the problem. Be clear and specific in your request to avoid misunderstandings.
2. Ask for a Price Reduction
If the seller isn’t willing to make repairs, you can request a reduction in the sale price to account for the cost of fixing the issues yourself. This approach allows you to take control of the repairs once you own the home.
Keep in mind, a $5,000 reduction in price doesn’t keep $5,000 in your pocket. It will make your monthly mortgage cheaper but won’t change the out-of-pocket that much, especially if you’re using a low down payment.
3. Request Closing Credits
Instead of a price reduction, ask the seller for credits at closing. This gives you immediate funds to cover repairs or improvements.
Important: If you’re using a mortgage and the seller is already giving you a closing cost credit, make sure you don’t go over the maximum allotment allowed for your loan type. Otherwise, the seller keeps these funds!
See the limits here:
4. Walk Away
If the inspection reveals severe issues that the seller won’t address and you have an inspection contingency in your contract, you can walk away from the deal without penalty.
What to Avoid: Focus on significant issues rather than minor or cosmetic concerns. Requesting fixes for small items, like paint touch-ups or scratched floors, can make your offer seem unreasonable and risk alienating the seller.
Step 3: Submit Your Request Through Your Agent
Once you’ve decided what to ask for, your real estate agent (if you’re working with one) will draft a formal repair request or addendum to the purchase agreement. This document should be clear and specific to avoid confusion.
Example
Instead of saying, “Fix the roof,” specify: “Repair the roof to address the leak in the north corner as noted in the inspection report.”
Your agent will present the request to the seller’s agent. The seller can respond in one of three ways:
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- Agree to your requests: They may complete all repairs or adjust the price as requested.
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- Offer a compromise: The seller might agree to some requests but not others.
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- Reject your requests: They may decline to make any changes, leaving you to decide whether to proceed or walk away.
Step 4: Negotiate Repairs or Adjustments
If the seller doesn’t immediately agree to your requests, negotiations begin. While this process can be tense, staying calm and focused on the facts is key to reaching a fair compromise.
Tips for Successful Negotiations
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- Be Reasonable: Sellers are more likely to cooperate if your requests are focused on major issues rather than minor ones.
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- Stay Professional: Approach negotiations as a business transaction, not an emotional debate.
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- Understand the Seller’s Perspective: Consider the seller’s financial position and willingness to compromise.
If an agreement is reached, the contract will be updated to reflect the changes, such as agreed-upon repairs or price adjustments. If no agreement is made, you may choose to walk away if your contract allows it.
Step 5: Conduct the Final Walk-Through
Before closing, you’ll have the opportunity to do a final walk-through of the property. Use this time to ensure that:
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- Agreed-upon repairs have been completed.
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- The home is in the same condition as when you made your offer.
If you notice any discrepancies, inform your agent immediately so they can address the issue before closing.
Step 6: Closing the Deal
Once all negotiations are settled and repairs are completed (or adjustments made), the sale moves to closing. This is the final step, where you’ll sign the necessary paperwork, transfer funds, and receive the keys to your new home.
Final Thoughts
The home inspection is a pivotal moment in the homebuying process. By carefully reviewing the report, prioritizing significant issues, and working closely with your agent, you can navigate post-inspection negotiations with confidence. Whether you request repairs, negotiate a price adjustment, or decide to walk away, staying calm and focused on your goals will help you make the best decision for your future.
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