Tips for Negotiating a Home Inspection (Sellers)

 In #Home Selling Process, #Selling Real Estate, #Thoughts

Passing a home inspection is an important part of the home selling process. In this video, I discuss some tips for negotiating a home inspection for sellers and proactively preparing your home for a buyer’s home inspection.

Pros and Cons of a Pre-Listing Home Inspection



Hey y’all, Zach McDonald, your real estate agent with Real Property Associates, and I previously made a video titled Tips for Negotiating a Home Inspection for Buyers. And in this video I want to give some tips for negotiating a home inspection for sellers. Now, many sellers think that once they’ve negotiated the purchase and sale agreement, that they are done, the negotiations are over buyers moving forward. But that is not the case. The purchase and sale agreement, which is the main agreement between the buyer and seller, is the majority of the negotiation of the bulk of the negotiation up upfront. But it’s more like a dinner reservation, is what I tell buyers. And I, I think it applies to sellers too. They haven’t committed to anything completely. They have written a contract, they’ve deposited earnest money, but they still have the opportunity to do their due diligence during the inspection process.

And if they don’t like what they see, they can still back out. most often buyers will want to do some kind of negotiation during this inspection period. But for sellers, I think it’s important to know going into it that the negotiation is not over. They haven’t fully committed to the purchase yet until you pass this inspection period. So as a seller, the expectation should be in going in that there might be some negotiation of the inspection items after the buyer’s inspection. Now, before we jump into the inspection negotiation process and also some tips for sellers on how to handle the inspection negotiations, I want to talk a little bit about what the buyer’s going to be doing during the inspection process. If you are a seller, you’ve most likely purchased a home before. Occasionally people are selling a house maybe for a loved one who passed away, and it would be a little bit different process.

You wouldn’t know this, but this is a good refresher course for you if you’ve owned a house for any length of time. Now, the buyer is most likely going to include what’s called an inspection contingency in their agreement, in the agreement. And this allows the buyer to have a certain amount of time that’s negotiated in the contract. Typically, in Washington state, we see between five and 10 days to conduct initial inspections. The buyer’s inspectors are gonna be looking and generally the buyer has one inspector, a home inspector that’s more of a generalist, not a specialist. So they’re going to be looking at the cosmetics, the systems, the structure of the house. They’re gonna be pointing out things that might be bigger issues. So the inspector isn’t necessarily telling the buyer exactly what the issues are, even though they do find things, they are going to be looking for clues that might lead to bigger issues. So generally speaking, if they find something that’s super obvious, they’ll say, Hey, there’s rodents in the crawlspace. And then they will recommend additional inspections or bids from specified and qualified contractors. So in this inspection

Period, the initial inspection period, which is typically more of a general inspection, and buyers then also have the opportunity to conduct additional inspections as the inspector recommends. There are a few other inspections that might be included in this period. And typically they also include a different addendum. So the sewer inspection is fairly common in the Seattle area, at least in the older homes. Some people elect to do them on newer homes too, but most people do sewer inspections on the older homes because there’s a lot higher chance of issues with the sewer. What they do is they stick a camera, it’s kind of like a colonoscopy for a house. They stick a camera down the sewer line to make sure there aren’t any issues or underlying problems that you wouldn’t know about without sticking a camera down there. The other couple inspections that are fairly common but not as common in the city of Seattle or the surrounding suburbs a little bit farther out.

In the more rural, rural areas, you’ll see a well inspection or maybe a septic inspection. Septic inspection would be a lot more common in the Seattle area, again, not in the main suburbs or city, but just on the outskirts. In some of the older parts of town, you’ll see the septic system is typically the sellers responsibility to provide the inspection and also pay for it. Whereas the well inspection is typically a buyer’s expense and a buyer beware situation. So the buyer is the one that’s hiring the inspector and proceeding with the information that’s provided. whereas the sewer scope we just talked about is typically part of the normal inspection process. So you’ve got the general inspection and sewer scope together, and then you would have the septic and the well inspections separately. Occasionally, if it’s competitive, the buyer will do their inspection ahead of time.

This is called a pre-inspection. And sellers love pre-inspections because the buyer’s doing their due diligence ahead of time before entering into contract, and they know that the buyer’s not going to be coming back to them later with specific requests for repairs or concessions and further negotiating, which is super, super awesome. in the competitive situations, like I said, they’re fairly common in Seattle right now, but there are times in a buyer’s market where it’s not as competitive and the buyers have a lot more leverage during the inspection process and also during the negotiation process. And in those cases, buyers most likely not going to get a pre-inspection, but they’ll be doing their inspection after coming under contract. So what is the buyer actually looking for during the inspection period? The first thing the buyer’s looking for is to get information about their purchase. If you are making a big decision, a home purchase is one of the biggest decisions anybody’s going to make.

They’re looking to see what they’re getting themselves into. So they want to know if there are problems with the house, and they want to know what upcoming repairs, what maintenance they might be facing. And so the inspection gives the buyer that information. Some buyers come into the process with experience and they’re not necessarily looking to nitpick on everything, but they are going to be looking for big ticket items. What are the really, really big things that are going to be expensive coming up? They want to know that there aren’t any. And in those cases, a lot of times, a, a buyer will just proceed with the purchase. Other buyers, maybe a first time home buyer, has no clue about houses, doesn’t really know what they’re getting themselves into, and they don’t have any context for how much certain maintenance projects cost or what goes into making repairs.

So these buyers, first time home buyers tend to be a little bit more nitpicky about different inspection items and a little bit more concerned about everything that an inspector might point out. And I think an expectation as a seller, inspectors always find things no matter what. They find things on new construction houses, they find things on the old houses, they find things even if you’ve done a whole bunch of remodel projects because the inspector’s getting paid to point things out. And so they’re gonna be pointing out every little possible n nick in the wall, they’re gonna point out if there’s a railing that’s missing a support, they’re gonna point out everything because their job is to protect the buyer but also protect themselves. They wanna make sure that they’re pointing everything out and providing a good service to the buyer. It’s also important to note that during this inspection period, the buyer can back out at any point.

The buyer can decide they don’t want to proceed with the purchase. They can do this before conducting their inspection with the inspector. They can do it during the process and they can do it all the way till the end of their inspection period. And it’s important as the seller to know that it does happen. Sometimes buyers do change their mind sometimes and decide they don’t want to proceed with the purchase, and other times they’ll proceed when you don’t expect it. But it’s important to know that there is an opportunity for the buyer to back out and still get their earnest money back during this process. So it’s not over yet, I guess, is the message for this part. A couple quick tips before the buyer’ss inspection for sellers. Number one, make sure that there are two straps around the water heater. We call these earthquake straps, and you want to make sure that it’s double strapped.

An appraiser’s going to be looking out for this and the lender’s gonna want to know that it’s taken care of. You’re also gonna wanna make sure that the fire and smoke detectors are functioning properly and that you have at least one carbon monoxide detector that’s operational on each floor. Okay, so before we get into specific tactics to help you as a seller prepare for and nail the inspection negotiation, I want to first talk about the process of how the negotiation works, and then we’ll get into some more of the tactics and tips. So the home inspection negotiation process starts off, first of all with the buyer’s inspection. So the buyer conducts their inspection, but then they need to make a formal response to you as the seller. So the buyer is going to have a few different options. The first option is they can say, thumbs up, we’re good to go and proceed with the home purchase.

And I’d say this isn’t extremely common. Usually buyers have at least a few requests or conditions. It could be as simple as servicing the furnace, but usually there are a few requests. But occasionally a buyer that’s seasoned is like, you know what? We’re good to go. I think this house is good. I’ve had a lot. This one’s better than most. The buyer also has the opportunity to say, you know what? I don’t want to purchase this house anymore, and they can back out. And as a seller, you just have to say, okay. And sometimes the buyer will give more information about why and what specifically caused them to want to back out. Other times they just simply change their mind. And unfortunately that happens occasionally. The third response the buyer can make is a request for additional information. They can request additional inspections and you know, the Washington State Inspection contingency form, there is an opportunity for the buyer to extend the timeline and get additional days to have professionals come in and analyze and bid on specific projects.

So the initial inspection period can be extended. I don’t see that a ton, but I’ve utilized it with my buyer clients and I’ve seen other people utilize it as well. So they have this initial period and then they can extend it. And then the last option is the buyer can request certain repairs or conditions to proceed. And of these four, I’d say that’s the most common one that we see, is that the buyer will make a request for certain conditions or repairs and then they will send it over to the seller. The seller then has the opportunity to respond to the buyer. The seller’s options for response are going to be somewhat similar. They can accept the buyer’s conditions and repair requests. They can reject them altogether. They can say, you know what? We don’t want to take care of any of this. We don’t think it’s an issue.

You can take it or leave it. And I personally had that happen to me during my most recent purchase. You can also, as a seller decide to take on some of the repair requests and conditions, but reject certain ones. And finally, as a seller, you can go ahead and propose completely different terms and conditions so you can reject outright what they’re requesting and propose a different alternative. And I’d say the most common alternative here might be, instead of making repairs, you might offer to provide a seller credit or some form of closing cost payment by you to this buyer so that you don’t have to hassle with making those repairs. And sometimes buyers will actually request that instead of repairs because they’re willing to take on those repairs later on versus doing them during the process. And sometimes it’s kind of a pain to try to coordinate contractors and things like that.

So I’d say that’s the most common proposal for a complete rejection of the buyer’s request in a complete new proposal. but those would be your options as a seller. As the buyer, you then have another opportunity. So it goes buyer, seller and buyer, and the buyer then has the final word here, an opportunity to continue these negotiations or proceed as the seller has dictated. The buyer can say, yes, we’re good to go. We accept the seller’s conditions, let’s proceed. They can also reject the seller’s proposal and decide, you know what? This isn’t worth it anymore. We don’t wanna move forward. We don’t want to work with you anymore. You’re being unreasonable, whatever it is. And the final option, and I see this one a lot too, the buyer then makes another proposal to the seller, says, you know what? We’re getting closer, but let’s keep working on this.

And this time period, at least in the Washington State addendum, the standup standard time is three days. So there’s an opportunity to go back and forth again for those three days, but the period doesn’t repeat. So you have three days to finish up the negotiations and come to some kind of an agreement or else the deal’s going to be terminated. Buyers tend to get a little bit more cautious towards the end of this final period because what happens is if they don’t reach an agreement with the seller, their inspection contingencies waived. And so the buyer’s usually pretty vigilant at backing out. At this point, I’ve had clients have to back out of a purchase and then get back into contract later on because the seller was either dragging their feet or not wanting to come to an agreement and then maybe coming to an agreement later.

so those are some tactics a buyer might use. but as a seller, you want to be cognizant of this and make sure that you’re hitting those deadlines. And those are things that I advise on during the process. At this point, we’ve gone through the general philosophy of what the buyer’ss inspection is. We’ve gone through some of the negotiation process and now I wanna share a few tips for you as a seller to help set you up for success during the inspection period. The main one, number one I’d say is providing an accurate detailed seller disclosure. In Washington State, it’s required that every seller provides a disclosure form to the buyer. And it’s a six page form. It’s pretty lengthy, and this form goes through yes, no, don’t know, and not applicable answer. So it’s pretty much a check yes or no kind of form.

It’s hard to screw it up. but it’s really, really, really important. And there are also options and opportunities to explain yourself more as you get further into the form. And this is something that I think’s highly important as a seller, is to provide the accurate information. There’s no benefit in hiding anything. The buyer’s going to find it out later if they didn’t find it out before. And as a seller, you also don’t want to get hit with a lawsuit or some kind of claim later on that you were falsifying this document or not providing accurate information when in fact you did know about things. So again, we’re talking about like big things. We’re not talking about like there’s a little crack in the sidewalk, although the form does ask those kind of questions. Now, in addition to this form, as a seller, you also have the opportunity to prepare your house, not only for sale, but also for the inspection.

This is your opportunity to beat the buyer to the punch, so to speak, and anticipate what their requests are going to be so that you don’t have to deal with issues later during the inspection. Some of these common issues can be uncovered and also dealt with. With a pre-listing inspection. You can actually hire a home inspector to do a full inspection of the house prior to listing, and they will do the same exact inspection that a buyer’s inspector is going to do and provide you with all that information and the opportunity to make repairs as needed. And you can prioritize the big ticket items, you can get the furnace service, you can get the larger items bid out, so you know what they’re going to cost. You can take care of some of them, you can choose not to take care of them. But really as a seller, this empowers you to take control of that inspection negotiation before it even happens.

If you don’t want to go this route and pay for a pre-inspection head of listing your house, you can also have contractors come in, specific contractors and they can first of all, investigate and also bid out different things. So as a seller, it’s very common that the buyer’s going to ask for the furnace to be serviced. If it hasn’t been serviced, you can have the furnace serviced and have repairs made. You can have a roofer come and inspect the roof if it’s been a while and make necessary repairs. You can have somebody come down and check the crawlspace to make sure there aren’t any rodent issues or any problems in the crawlspace and have those taken care of or addressed ahead of the purchase. You can have an electrician come out and look at the electrical systems and make sure there aren’t any issue. I mean, you can go down the list and most contractors will come out.

They won’t charge you anything and they will want to potentially get a job, right? They have the opportunity for a job, but if there isn’t work, they’ll also tell you there isn’t work. So if you don’t want to go to the pre-inspection route, you can also go the more maybe inexpensive route and have specific contractors look at the bigger ticket items that typically come up on an inspection. And those are things I can advise on as well. In addition to having the pre-inspection or the contractors come out. I think the low hanging fruit is fixing the issues you already know are a problem. If you’ve lived in the house for any number of years or any length of time, you probably already know things that aren’t working properly, maybe there’s some deferred maintenance. Those are all things you can take care of prior to listing.

And I typically recommend having deferred maintenance addressed, having minor paint, touchups done anything like that, fixing things that are broken. If the drain under the kitchen sink leaks and you know that it leaks, why not fix that and make the repairs ahead of time? Because a buyer’s going to find out and then they’re gonna want to have those repairs done. So if you know something’s a problem, address it ahead of time. The big message here for sellers during a home inspection negotiation is to first of all, make adequate disclosures and also get yourself prepared. In addition to these two things, you can also really, really, really come to know and understand what the buyer is most looking for. You can understand and ask what’s most important to the buyer. And once the buyer makes their initial response, you’ll see what they think is most important.

But it’s even more important to dive into that. You don’t always have to make all the repairs that the buyer’s asking for. Sometimes they’re unrealistic. Sometimes they’re just shooting for the moon and hoping that you’re going to do it, but they would be completely okay with you only fixing a leaky pipe. So it’s important to figure out what those big ticket items are to the buyer and, and sometimes as a seller standing firm, the easiest way to stand firm in that inspection negotiation is going to be if you have done the prep work upfront, if you haven’t done the prep work and you’re not confident that your house is in good condition, going into those negotiations, it’s a lot harder to navigate because you do know there’s problems. So if you know there’s already problems and you’re thinking you might be giving the buyer some kind of a credit, why don’t you just take care of it before?

And then you don’t have to give the buyer credits on the backend. So that’s gonna be my general thoughts there on the actual negotiation process is if you come in prepared, you don’t have to worry as much about the back and forth negotiations here. Now, there are unrealistic buyers and buyers that even if there aren’t anything, will say, oh, we want you to pay all of our closing costs $10,000, or We’re not gonna buy the house anymore. And that’s kind of ridiculous. you can offer to pay those closing costs for the buyer, but those are opportunities where when you really know that there aren’t any issues or you know you’ve already taken care of the big ticket items, it’s an opportunity to ask ’em like, what did you find? What’s going on? And as a seller, you can stand firm on that request. You can say, no, I, we know there’s not any big issues, and it is just unreasonable.

So there are those unreasonable requests, and I think it’s important as a seller to also stand firm on those. If you want to, you can concede, but I don’t think it makes sense in certain situations to actually concede to the buyer’s request. So I always ask for that explanation, and I always ask for the proof, what, what is your, what is your claim based on? And as a seller, it’s when you have that information, it’s empowering to decide whether you do want to concede and make those concessions to the buyer, or if you don’t. Wow, we just covered a lot of information specific for sellers during the home inspection period. If you wanna see my advice to buyers, you might actually find that helpful too. So you can see the psychology that goes into the other side of the process as well. And I’ll make sure to link that video up down below. Thanks so much for watching this video, tips for negotiating a

Home inspection for sellers. If you found this information valuable, first of all, please give it a thumbs up. And if you know somebody else that could benefit from it, please consider sharing it with them.

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