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Listing Agent – Broker
Experience Pays – Home Inspection Negotiation
Ok, great you are in contract! But now the buyer has done their home inspections and in many cases the negotiations after the home inspection (with the Buyer requesting repairs) can be more complex and more pain staking than the negotiations for the initial purchase contract. When it is all said and done, a highly successful sale requires a strong, competent highly experienced agent at your side. Below are some key business points a good and experienced agent uses to navigate you through what can be a challenging part of your home sale.
Get to know the Buyer
The more you know about the buyer, the more knowledge you might have in understanding the flexibility and latitude there might be in negotiation. Meaning to say different buyer’s profiles have different level s of motivation. Some buyers are more motivated than others. For example, a buyer that just put their home in contract and has made an offer on your house could be categorized as a highly motivated buyer in most cases. The reason is that this buyer most likely would like to avoid a double move and would simply prefer to close escrow on their home and move in your home. On the other side of the spectrum, you might be dealing with an investor that has no emotional attachment to the home and is in the “early stages” of the search for a house to buy.
How easily can the Buyer be replaced at current purchase price?
This business point involves many variables. For example, are you in contract at the “high end “of the price spectrum for you house or the “low end”? Is it a sellers’ market or a buyers’ market? Is it the holidays or late spring? Did you receive multiple offers at a similar purchase price? How long was the property on the market before you received an offer? These questions all can be reduced to one simple question: If this deal falls apart; how difficult will it be for you to find a replacement buyer at the current purchase price? Having a good insight and understanding of these variables will provide a practical overview on how flexible you the seller might want to be in negotiations after the home inspection.
Do you consider current Buyer’s request for repairs reasonable?
Let’s start by saying what is reasonable to one person might not be another; I think we all can agree to that. However there is definitely a common sense approach to what is “reasonable”. For example a health and safety issue might be considered a reasonable request for repair. Some other examples are if a hot water heater needs to be double strapped or an electrical outlet is not compliant. These all might be considered reasonable assuming the house is not being sold as a “fixer”. On the other side, unreasonable repairs might be small issues not unusual for normal wear and tear associated with the house. After all, there is a reasonable assumption that no house is perfect upon entering in to a contract to purchase. Some potential unreasonable requests could include a broken seal on a window and evidence of corrosion associated with a pipe. Yes, these items might eventually need to be replaced however a reasonable approach might suggest they fall under the category of normal “wear & tear”.
Creating a Win Win in Negotiation
Everybody wants a feeling of fairness in negotiation. In the spirit of a “win win” concept and some (even small) concessions might be considered to fulfill this basic need of a buyer. Even if you feel that the buyer could easily be replaced if negotiations failed. The idea here is your time is worth money and there is no guarantee the next buyer will be any more reasonable than the current one. One way to consider what small concessions can be made would be to go down the list of requests and find one that represents very little expense to you the seller. This small concession can go a long way in “building a bridge” that allows the buyer to move forward and not fixate that they are not getting everything they want.
Offering the Buyer a monetary concession in escrow.
It is not uncommon for the seller to offer some sort of monetary concession in escrow for work to be done. A credit in escrow rather than doing the work might be to the advantage of the seller for two reasons:
- Easy to do as the Seller has other things to consider such as packing and moving.
- It avoids the possibility of additional negotiations regarding the “quality or workmanship” of the work being done. It also avoids the paper trail requirement of receipts showing the job done by the appropriate trade person or professional.
The need for a strong competent agent on your side.
It is important for your agent to guide you through what many sellers believe can be the most difficult part of a house sale. In many cases it is up to the agent to identify what items on a request for repair might be considered legitimate and formulates a path to resolve the issue as economically as possible. Additionally it’s up to a competent agent to immediately identify what requests are unreasonable and should be given little if any attention. All this needs to be done while having an in-depth understanding of the sellers needs and requirements and giving the seller professional insight on how to succeed with the current buyer.