How Should I Respond to the Inspection Report?
One major component of a real estate transaction is the home inspection. There are several ways this can go because there are many different parties involved in a transaction, each deal is going to be a bit different. There are several ways to react both as the buyer and as the seller to an inspection report. We’re going to cover each and offer suggestions and possible options that both buyers and sellers have with the inspection results.
Buyer Options
When a homebuyer decides to perform a home inspection on a potential property they will hire an unbiased, outside home inspector(s) to go over the property with a fine-tooth comb making notes and suggestions on issues of safety hazards, minor issues, and major concerns. This home inspection can run anywhere from $250-$500 depending on the type of inspection, the inspector, and the property. Once complete, the buyer will receive a comprehensive home inspection report highlighting any areas of concern. From here, the buyer has four choices to make:
#1. Accept the inspection as is.
The buyer can simply accept the inspection and the deal moves on towards closing. The seller doesn’t have to do anything as the buyer has agreed to purchase the property as-is.
#2. Reject the inspection.
Another option is to completely reject the inspection, terminate the deal, and get the earnest money back if given. The buyer might state in the termination agreement that they were not satisfied with the results of the inspection report(s). More often than not there is some communication between the buyer and the seller and the seller can appeal to the buyer to keep the deal alive, but ultimately it is the buyers’ decision.
#3. Accept the inspection with certain contingencies.
The buyer may still want to carry on with the home purchase but there may be issues they want to see corrected first. One good rule of thumb is that if buyers ask for everything, they may get nothing. This situation goes back to negotiations. We typically suggest to our buyer clients to focus on major hazardous issues like roofing problems, plumbing, electrical items, mold or asbestos issues, or major safety hazards or foundation concerns. These types of issues should definitely be addressed by the seller before finalizing the sale. Again, this can go back and forth negotiating repairs and amendments until mutual acceptance occurs. Whatever is agreed upon it must be completed prior to the sale or funds held back in escrow for any post-closing repairs.
#4. Ask for money off.
While most real estate transactions cannot directly credit funds to the buyer at closing, the seller could consider a price reduction in lieu of the requested repairs. For instance, if the home is selling for $400,000 but the home inspection reveals that the property needs a $10,000 roof, the seller may choose to simply take $10,000 off the purchase price of the home and sell the property for $390,000. Again, this is something that must be negotiated between the buyer and the seller prior to closing. Some types of loans like VA & FHA may not allow this scenario to play out. They may require repairs be completed before closing including an appraisal re-inspection to be certain.
Seller Options
The seller too has different options when they receive the buyers’ objections to their different home inspections. However, seller options are much more limited as the decision truly falls in the hands of the buyer.
Accept or reject some or all of the terms from the buyer.
If the buyer decides to make objections to the inspection report it creates contingencies. The seller can either accept or reject these changes. The seller can simply say no to all of the requests, pushing the decision back to the buyer. The buyer can either accept or reject or try to renegotiate the terms.
The seller can also simply accept all of the terms that the buyer is requesting. If the issues are relatively minor those concerns can be easily and quickly resolved and the transaction moves towards closing. If there are extensive repairs, there may be additional negotiations between the buyer and the seller before mutual acceptance can be agreed upon.
You can see that the power really lies in the hands of the buyer but the seller is free to accept or reject the results as well. The goal is for everyone to walk away with a win-win scenario. This takes communication and patience, something great agents can certainly bring to the table.
Have more questions? Ask me anything! I love helping people find the right property in the Albuquerque and Rio Rancho area, and can offer expertise and advice when conducting a home inspection. I look forward to talking with you today about finding the perfect Albuquerque neighborhood or Rio Rancho real estate for your needs. Call me, and let’s have a great conversation about your particular real estate goals.
Albuquerque Homes Realty
John McCormack Owner~Broker~REALTOR®
Realtor, CRS, CNE, e-Pro
505-980-4576
[email protected]
More Tips for Buying and Selling Real Estate
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- Valuable Tips for First Time Home Buyers
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