After you sign the purchase contract, you think the hard work is over. You have a contract and now you just have to wait for the financing to go through. The negotiations should be behind you. Unfortunately, that’s not always the case. Sometimes, you still need to negotiate after the home inspection. If you had an inspection contingency on your contract, this is your time to speak up.
If the inspection comes back with issues you are not comfortable with accepting, you have two options. You can talk to the seller and try to work out a deal or you can walk away from the home. Assuming you want to purchase the home still, you’ll need to figure out a way to work it out with the lender.
Following are some simple tips you can use.
Ask for a Credit
The last thing the seller will want to do is make repairs. He’s likely ready to move on to the next phase in his life. In his mind, he no longer lives in this home. He’s likely started packing and planning for his next home. If you suddenly demand certain repairs to be done, he could refuse and just let the sale fall through.
Rather than demanding the work be done, you can ask the seller for a credit. You’ll need to find out the cash value of the repairs that need to be done. You can then work with the seller to get a credit of equal amount at the closing. Yes, it’s more work on you in the end, but you’ll get to oversee the work and make sure it’s done right rather than letting the seller do a hasty job.
Renegotiate the Sales Price
If you are unsure if the seller will give you a credit, consider renegotiating the sales price altogether. There’s something about giving the buyer money that is different than lowering the sales price. The seller may feel like he is giving you money out of his own pocket when he gives you a credit. Some sellers find it easier to lower the sales price.
You actually benefit from the lower sales price as well. If you are using FHA financing, you may be eligible to secure the FHA 203K loan. This loan gives you enough money to purchase the home as well as make changes to it. The lower sales price may give you a little more room in your LTV allowing you to pay for the changes you want yourself.
The main concern is that the home passes the appraisal. The type of issues the inspector finds will determine how the appraisal will go. If they are issues that affect the home’s value, the seller may not have a choice but to fix the issues. Even if you back out of the deal, the seller is obligated to make the issues known to anyone else that shows interest in the home.
Pick Certain Repairs
If you are buying a used home, you are not going to find everything in perfect condition. This is an example of picking your battles. What issues bother you the most? You could focus on those, leaving the others by the wayside. Choose the issues that will have an impact on the livability of the home or its value.
Issues that you know you can handle on your own don’t mention. You can fix them as you have the time and the money. The inspection report can serve as a way of letting you know what you need to do, but not necessarily things that must be fixed right now. If they don’t interfere with the safety or livability of the home, you may want to ignore them.
Meet the Seller Halfway
Lastly, you can ask to meet the seller halfway. Rather than expecting him to fix all of the issues for you, consider asking him to split the costs in half with you. This way you cover half of the expenses and he covers the other half.
This shows good faith to the seller rather than him feeling like you are taking him to the cleaners. You don’t hold the sale over his head. Instead, you let him know that you are willing to split the difference with him. This way you get the home you want in decent condition, but maybe not quite perfect.
It’s not easy to negotiate with the seller once you already negotiated the sales price, but it is possible. You want to stick up for yourself when buying a home, but you also shouldn’t expect perfection. Do your best to get what you can from the seller without seeming unfair. The rest you can deal with through the years as you will soon learn, houses constantly need maintenance and repair.