Whether you’re a home buyer or home seller, the process of scheduling, conducting and most importantly, negotiating the home inspection response is often times the most memorable part of any real estate transaction.
Interestingly enough, when it comes to conducting a home inspection, there are those who believe a home inspection is a PASS or FAIL process! Really…that is not the case at all.Interestingly enough, when it comes to conducting a home inspection, there are those who believe a home inspection is a PASS or FAIL process! Really...that is not the case at all.Click To Tweet
Some may also view the home inspection response as a way to negotiate a lower price in lieu of work to be done…this too is not the real purpose of this vital step in the home buying (and selling) process.
In actuality, the home inspection process is essentially the home buyers opportunity to conduct an assessment of the property for the purpose of their use.
Others want the home inspection to be about what they need to know from a deferred maintenance standpoint. They know the home may need some work…they just don’t want any surprises!
Then there are home buyers who need to know the home is in the kind of condition that allows them quiet enjoyment with little to no need for work on their part.
Whatever your reason for conducting a home inspection, depending on the markets condition…not to mention the homes condition, the home inspection response should be crafted with diligence and the intent to identify and remedy issues found in the home.
The intention of this post is to outline what you should expect and lastly, what you should negotiate as a home buyer and a home seller to insure the deal does not get nasty or worse…fall apart.
The Home Inspection Response – CONTINGENCY PERIOD
In my humble opinion, every home buyer MUST have their potential home inspected! It’s both pragmatic and safe.
Even in the case of a very hot market where home buyers will waive their inspection contingency in order to curry favor with the seller and their offer…you still should do what you can to make sure the major systems are in good working order.
In the case of a surging sellers market or entering a bidding war where parties are waiving the home inspection in order to “win” the bid, make sure to conduct a pre-inspection.
A pre-inspection is a home inspection done before writing a purchase and sale. This ensures that you are not jumping into anything blindly and allows you to waive the home inspection contingency.
That said, market conditions aside, the S.O.P (Standard Operating Procedure) for most home buyers is to attach a Home Inspection Contingency to their Purchase and Sale Agreement.
This opportunity, known as the inspection contingency period, is established for the home buyer to have a specified time period, generally 10 days unless otherwise agreed upon, in which they can conduct their overall assessment of the condition of the property. This contingency period does not preclude a home buyer from conducting additional inspections on systems such as sewer or septic, inspection of a Well and even termite or other pest inspections the home buyer wishes to have done. Matter of fact, most properties serviced by a Septic or Well require an inspection of those systems…check with your real estate broker for more information on that.
Often times, a home buyer will rely on their Broker to refer a home inspector for this task.
This can be a good thing and maybe a bad thing. Most Brokerages in the State of Washington require their Associate and Managing Brokers attach an Inspector Referral Disclosure which complies with WAC 308-124C-125*.
Simply put, Washington State law requires that a real estate broker, who refers a home inspector to a buyer or seller with whom the broker has a current or past relationship including, but not limited to, a business or familial relationship, fully disclose in writing to the buyer or seller the nature of that relationship. A home buyer should ask their real estate broker to provide them with this form (NWMLS 41D)
All that aside, hiring a home inspector is really just the first step in this process. The next step is to schedule the home inspection. Most home inspections will take several hours depending on the size and scope of the home inspection.
During your contingency period, you will have time to attend the home inspection along with your real estate broker (it’s required that they or a licensee from their Brokerage be there during the entire home inspection), go over the report with your home inspector and finally lay out a strategic plan with your real estate broker, the home inspection response for the sellers.
Successfully Negotiating the Home Inspection Response – HOME BUYER
This could be one of the more stress filled parts of the home buying process and honestly, where most real estate deals go ‘off the rails’ so to speak.
Gathering your thoughts (and emotions) as a home buyer and determining what is and what isn’t a ‘must fix’ item can be intense. After all, this is likely your largest financial investment you’re ever going to make so you want to be sure you get this right!
With the assistance of your real estate broker (hopefully), you begin the process of going through your checklist of what you want the seller to attend to.
Step One – Are all the major systems in good working order
As mentioned earlier, this may vary from buyer to buyer but this is the time you need to determine the overall longevity of the heart and soul of the house. I’d categorize the major systems as:
These are your ‘Big Ticket’ items and may or may not fall in the budget of a seller to fix. Some home buyers may consider any of these as ‘Deal Killers’ if the home seller are not willing or able to remedy.
NOTE: This post is in no way advocating how to proceed with negotiating your home inspection response…just my thoughts after 20 years of selling houses.
Step Two – What to Ask for and What NOT to ask for in your home inspection response
As the home buyer goes through the inspection report, some may feel the need to ask the home seller for everything and the kitchen sink. Bear in mind, no house is perfect and no home buyer should expect such. That said, focusing only on the things that logically should be remedied by the home seller will greatly reduce the likelihood of a negative reaction from the home seller.
At this point, the buyer has 4 options for request for repairs or modifications.
- Buyer inspection of the property is approved and the inspection contingency is satisfied
- Buyer inspection of the property is disapproved and the Agreement is terminated
- Buyer gives notice of an additional inspection. The buyer would need to attach the inspectors recommendations for any additional inspection
- Buyer requests the following modifications and/or repairs
What to consider asking for :
- Any indication from the home inspector that things like the water heater or furnace appearing to be at the end of it’s designated lifespan should be high on your request list. The home buyer should feel confident to ask the home seller to repair or replace these items.
- This also goes for vital systems that have known hazard issues or a history of reported failure. A few examples would be Zinsco & Zinsco-Sylvania Electrical Panels and Cadet wall heaters.
- Any area of the house that requires GFCI (Ground Fault Circuit Interrupter) such as the kitchen, bathroom and outside deck are also easy requests for remedy.
- Repair or replace a damaged or leaning fence is also a fairly safe request.
- Essentially anything that might be a hazard or pose a risk to the overall quiet enjoyment of you and your new home.
What to consider NOT asking for:
- Asking a home seller to replace an appliance will more than likely get you a big fat NO. That said, ask your real estate broker about purchasing a home warranty that may cover appliances in the event one decides to go on the fritz right after closing.
- We generally recommend using: American Home Sheild
- If you are in the market for a home warranty our friends at Review.com did a review of the top 61 home warranty brands that you can view here: http://www.reviews.com/home-warranty/
- Being overly critical of things like small or easily fixed issues with the house that don’t directly pose a hazard or risk to the overall quiet enjoyment of you and your new home.
- (Small) Holes or dings in the wall
- Removing unwanted items unless of course we are talking about an old car in the backyard or a transmission in the bathtub
- Fixing small scratches or squeaks in hardwood floors
- Making any request for removal of outside items like sheds or outbuildings
Successfully Negotiating the Home Inspection Response – HOME SELLER
Now that the home buyers request(s) for repairs or modifications has been submitted to the home seller, it’s their turn to respond.
At this point, the home seller has 4 options in response to buyers request for repairs or modifications.
- Seller agrees to all of the modifications or repairs in buyers request
- Seller offers to correct only the following conditions
- Seller rejects all proposals by buyer
- Seller rejects all proposals by buyer, but proposes the following alternative modification or repairs
What to consider saying YES to:
This is often where ‘Feathers may get ruffled” in the transaction. Most home owners have lived quite comfortably in their house for many years thank you very much (insert snarky tone here). And to have a complete stranger come in and
demand request this and that be fixed can be met with some resistance. Every home seller should detach themselves from the emotional side of the home and look at this pragmatically. Eyeing the bigger picture of selling the home and moving on should be the priority here!
- Essentially, anything that is of a mechanical or environmental hazard or poses a risk to the overall enjoyment of the new owner.
- An item that might potentially be called by the appraiser as needing to be addressed as a condition of the loan – CASE IN POINT: I represented a home buyer who was very concerned about a tree that was leaning dangerously close to the home. We asked the seller to have it removed but they refused. So, I asked the lender to make the appraiser ‘aware’ of the tree. The appraiser subsequently saw the tree as an issue and put in their appraisal that the tree was to be removed prior to closing. VIOLA, seller complied and bye-bye tree!
- Having the septic pumped and inspected or having the oil tank decommissioned if the home is heated by a source other than oil. In most cases, these MUST be done as a condition of the lender funding the transaction.
What to consider saying NO to:
Certainly, some items may be added to the home inspection response that can easily be dismissed by the home seller. As mentioned earlier in this post, some home buyers may feel the need to ask for too much!
- Aesthetic issues such as scratches, dings or mars to walls or floors
- dripping faucets, squeaky floor boards, uneven (or cracked) outside walkways and even repairing minor cracks in the basement and garage (cement) floor
- Landscaping or exterior issues such as over hanging shrubs or trees
Now the sellers response is sent back to the buyer for their reply
At this point, the buyer has 3 options to reply to sellers response.
- Buyer accepts seller response and agrees to proceed to closing as provided in the agreement.
- Buyer rejects sellers response. This constitutes the buyers disapproval of the inspection and the agreement is terminated.
- Buyer rejects sellers response BUT offer the attached alternative proposal for modifications or repairs. Honestly, if the buyers elect this route, they are usually looking for a financial consideration in the way of a new price or other acceptable terms that will give them a reason to waive the inspection contingency and proceed to closing.
See NWMLS Form 35: line items 29-30 as well as line items 54-58 or ask your real estate broker for details.
The home inspection response is something that is to be taken very seriously! This is the home buyers one chance to make sure their largest investment will give them the quiet enjoyment they want.
It’s also vital the home seller be diligent in remedying any major items or issues BECAUSE…these home buyers may decide to go away, BUT THE PROBLEMS IDENTIFIED WILL NOT!
It also bears noting, home buyers should ALWAYS ask their real estate broker to take the time to answer any questions or concerns they have about both the home inspection process as well as the verbiage on the NWMLS forms 35 Inspection Addendum and the NWMLS form 35R Inspection Response to form 35!