At the height of the competitive sellers’ market up until mid-2018, many buyers were just happy to “get” a home with a “winning” bid. No home inspection…just make an offer, cross your fingers and be happy with whatever condition of the house is in if you’re the highest bidder.
Guess what? Those days are over and home inspections have reassumed center stage now that buyers are driving the housing market.
So what happens once the home inspection has “discovered” some things about a house with a now “pending” offer that need to be addressed? The terms of the deal need to be renegotiated to allow for repairs, concessions, buyer’s expectations, the type of sales contract in use, customary norms in the area, credits and/or price reductions. And it’s up to both the buyer’s and seller’s agents to make the deal work.
Here are some renegotiation tips for buyer’s and seller’s agents from Cara Ameer, a broker associate and global luxury agent with Coldwell Banker Vanguard Realty in Florida, in an article she wrote for InmanNews:
- Take a step back and look at the overall, big picture. In your inspection knowledge, determine what is major and what is Determine what is structural and/or mechanical and/or electrical. This includes HVAC systems, roofs, water heaters, plumbing, etc.
- Prioritize what is important and/or critical to get the deal to close and/or to get a home loan approved. Determine whether of not a roof or a fence needs to be replaced or fixed.
- Get multiple estimates on repairs so you negotiate from a position of facts and figures, not arbitrary numbers. Both buyers and sellers will likely get their own estimates and those estimates are the basis for renegotiations. Seasoned buyer and seller agents can expedite the estimate process by having their own rosters of trusted contractors and subcontractors to do the work.
- With estimates in hand, determine whether or not it’s a fix, a concession or a price reduction. If the problem is major and must be rectified in order to close, ask the seller to fix “it” prior to closing. If the problem is minor, it may be better if the buyer fixes “it” after the closing with her “own” vendors. Either way, price reductions and/or closing cost concessions may be appropriate.
- Do your best to avoid liability. Make sure to give your buyer or seller a list of “fixers,” not just one, so he/can choose. If “your” fixer doesn’t fix the problem, the result will become your liability
- Be both reasonable and realistic. Know from the get-go that every resale will have “things” based on what is found in the home inspection report.
- Sharpen your negotiation/renegotiation expertise and work it out. It’s in the interest of both parties to solve whatever problems with an acceptable compromise. If the buyer’s and seller’s agents don’t/can’t create acceptable compromise the deal will blow up and the seller will be faced with relisting the house and explaining why the deal blew up. Such a scenario raises red flags to any future potential buyers. And, if the deal blows up, the seller might be faced with having to “do more” in terms of repairs and/or concessions plus the seller may have to lower the price of the house more than if she/he had worked out an acceptable compromise.