Step 13 to Buying a Home: Reviewing the Home Inspection Report and Negotiating Repairs

We can usually expect the inspection report back within 24 hours of the inspection taking place, unless otherwise notified by the inspector. Once the inspection report comes back, you need to review it thoroughly and make detailed notes as to what questions you have. We will also review it and send you our thoughts and feedback on the reported items and issues (please note that our notes are based on our years of experience in real estate and dealing with inspection-related issues; they do not constitute an "expert opinion" on any repairs -- that's what contractors and service providers are for).

Don’t be surprised if it’s 30 + pages long with more than 25 “issues” that need to be repaired. This is typical. We’ve never seen an inspection report that didn’t have at least 5 items that needed repair. (Remember, an inspector's job is to find those things - minor, moderate, or major  in nature.) However, there is a big difference between small mainly cosmetic repairs such as needing to recaulk a shower or repair a broken microwave handle and large issues such as sewer back-up in the basement. The home inspection is an informational report for you, the buyer, not a to-do list for the seller. We should only be concerned about structural issues, safety defects, or appliances/mechanicals not working or being substantially close to end-of-life.

Here are our tips for reading the inspection report:

1. Pay particular attention to issues relating to the electrical, plumbing, roof, foundation, or water intrusion issues, as these can be big ticket items to repair.
2. If there are any big ticket items which are concerning to you, decide if you want to have additional inspections performed. For example, we can bring in a structural engineer, a sewer inspector, an electrician, a pest inspector, a mold inspector, or other providers to give you their specialized opinion and to give repair quotes. If you want to bring in additional inspectors, you’ll be responsible for paying their fees. Also keep in mind that we are under the Due Diligence Period deadline, so we need to act as quickly as possible or we need to request (and hope the seller agrees to) an extension of the Due Diligence Period.
3. Make a list of items you feel the seller absolutely must repair or you’re not willing to go through with the transaction.  
4. Make a second list of items you’d like the seller to fix, but would be willing to still close on the house without the seller fixing.  
5. Make a third list of the items you’re OK with fixing yourself or feel don’t really need to be fixed. 
6. Once you’ve done this, email us your list and we’ll review it and then we can discuss it, along with our thoughts, suggest changes if you’re leaving out an expensive repair, and give our feedback if we think you're not asking for enough, asking for too much, etc.
7. Keep in mind that you can ask the sellers to repair items or provide a credit for you to fix the items after closing. Credits go towards your closing costs. For instance, if we negotiate a $2,000 inspection credit that amount would come directly off your closing costs. Therefore, you’d bring to closing $2,000 less than originally expected. That way you have that $2,000 to do needed repairs after the closing.
8. Remember that the things on the inspection report which are important are:
   -- Safety issues
   -- Structural issues
   -- Working components such as appliances which are not working.
   -- We should NOT be asking for paint to be touched up*,  the scratched hardwood floors be refinished, etc. Unless you are buying new construction, no home is going to be perfect. If you want a perfect home, buy new construction. If you aren’t buying new construction, then we need to accept the house with its cosmetic flaws or find a new house. Remember, we are concerned with safety issues and things not working.

Once we’ve agreed on a strategy, we’ll negotiate the inspection repairs with the seller’s agent. If there are only a few minor issues which need to be fixed, the negotiation will probably go quickly. However, if contractors or trade people need to be brought in to give estimates, expect the inspection negotiations may take us right to the end of the Due Diligence Period -- or may even require that all parties agree to an extension in order for us to successfully be able to conclude in a way that works for all parties and allows the contract to move forward.

In some cases, we may negotiate for the actual repairs to be completed by the seller prior to closing; in other cases, we may agree that the best option for you is to negotiate compensation (in the form of seller-paid closing costs, for example) in lieu of the seller completing the actual repairs. Click here to read more about the pros and cons on negotiating repairs versus compensation in lieu of repairs as part of your home inspection process. 

If we are able to come to an agreement with the sellers, we’ll sign an amendment to the contract outlining the terms all parties have agreed upon. The repairs then need to be completed by the final walk-through with receipts proving the work was done sent to us ahead of time. If we are not able to come to an agreement, you have the right to terminate the contract instead and get a refund of your earnest money.

Keep in mind, as part of the inspection negotiations we can also ask the sellers to provide a home warranty for the first year. Click here to read more about home warranties. Let us know if you’d like us to ask the sellers to provide a home warranty as part of the inspection negotiations.

Questions?  Call us at 404-994-2181 or email us at Maura(at)BuySellLiveAtlanta(dot)com

*One exception to paint touch-ups may be if you are obtaining a VA or FHA Loan. VA and FHA appraisers may require some repairs that, under other circumstances, may seem to be cosmetic (for example, a VA appraiser will require that there is no peeling paint on the exterior of the house). With our VA and FHA borrowers, we will have a different conversation centered around the inspection process.