After the completion of a home inspection, there will usually be a list of problems to fix - unless you are buying a brand new home. After all, generally no house is perfect.
If the buyer is lucky, the list will be small and easy to complete. However, in many cases, the list of problems may prove to be too overwhelming or too expensive for the buyer. In cases like these, buyers typically have three options: ask for a price reduction or credit to fix the problems, ask the seller to fix all or some issues, or walk away from the deal altogether.
• Negotiating Price: When the home inspection has been completed, a buyer may choose to negotiate the purchase price for the property, given the repairs needed. If the seller agrees, in many cases, they will offer a "closing cost credit." This is a credit on the closing statement from seller to buyer that will generally go towards the buyers closing costs. This is oftentimes done in lieu of a price reduction.
• Fixing What's Broken: After an inspection, sellers will often be reluctant to fix every little item on the list. It is important to focus on the major items that need to be repaired instead of harboring on every little thing. Negotiate to have the seller repair the items that require a significant cost to repair and leave the low-cost repairs alone. This is particularly true for buyers who are paying below market value for a home. Buyers should acknowledge that they are getting the property for below the market value because it is not in perfect condition, and should therefore expect some flaws. Ask for major repairs and safety items to be completed only, and accept responsibility for all other repairs.
• Walking Away: If the completion of the home inspection unearths a list of repairs that were not evident prior to the offer and prove to be too expensive and negotiations cannot be settled, it may be in the best interest of the Buyer to walk away.
Negotiating after a home inspection is a unique and meticulous process. Since no two homes are alike, no two negotiations will ever be the same. It is important for both parties to weigh the pros and cons of the repairs and pick your battles accordingly.