Home Inspection and Repair Negotiation

Home Inspection and Repair Negotiation

Most home sellers and buyers assume that price negotiation is finalized upon signing of the contract by all parties until the inspection report unearths some hidden problems.  The inspection reports are actually software programs, which the inspection companies purchase a subscription for the software.  The reports are fairly standard and although the forms may look different from one company to another, but the content covers the same items including roof, electrical, plumbing, and termite.  Depending on the inspector some reports are very detailed while others concentrate on major issues.  The problem with the detailed information is the possible negative effects of them on inexperienced home buyers who may become overwhelmed with a laundry list of repairs, which in reality majority are minor issues.

Regardless of the report type, some repairs are costly enough to either break the deal or trigger another round of negotiation.  The following are the actions necessary by both the seller and buyer in order to remedy the issues raised in the inspection report:

• Cancellation of the Contract – Buyers is completely turned off or have a change of heart and will simply opt for the termination of the contract.  This is absolutely within the contracts’ guidelines as long as the inspection period has not expired.  The default inspection period is 15 days in Florida Sales and Purchase Contracts, but could be any number of days as long as both parties have agreed to the terms.
• Seller Concession – Seller will pay buyer a predetermined amount at closing for repairs of the items listed in the inspection report.
• Lowering the Price – Seller will agree to a lower sale price to compensate for the necessary repairs.
• No Concession – The best outcome for the sellers is for buyers to continue with the purchasing process by accepting the property “AS IS” without asking for any concession from the seller.  This normally happens in a strong seller’s market when prices are on a continuous rise and buyers feel the market adjustment will easily justify the costs to remedy the inspection issues.

It is important to note that not all inspection issues are repairs related, an example is the requirement for tenting the property in case of the severe termite presence.  Also, the inspection is not the only event to trigger a price renegotiation, as appraisal reports could also force the sellers to lower the contract price to match the appraised amount.