This month’s “The Art of…” examines the point in the escrow process post-inspections. Many people believe that the most difficult part of buying a home is the negotiation of the home’s purchase price, when in fact much of the “heavy lifting” happens after inspections.
Here are a couple of tips we like potential buyers to keep in mind when it comes to repairs:
1) Negotiate a credit for the work to be done– The seller is already thinking about their post-sale move and will likely not want to address any noted repairs with the same level conscientiousness that you, as the new owner, would. It is generally a better practice to request a credit at the close of escrow. This way, you can ensure the job is completed by licensed professionals that you choose, and to your specifications
2) Think Big Picture and/or Project future renovations– If you’re already planning to make renovations in the home, it is likely you won’t care if the floors are damaged. However, the repairs may still be up for negotiation. Asking the seller for a credit for a legitimate issue will help offset the cost of repairing them.
3) Keep your plans for renovations to yourself– It is common practice with good listing agents to walk the property with you, your agent and the inspector. It is best practice to keep your future plans for renovations to yourself in order to avoid any issues in further discussions or negotiations.
NOTE: Bear in mind that a Seller does not have to grant you the repairs (or the cost of repairs) after inspections. This is especially true in a Seller’s Market (which we are currently experiencing), where there may be Backup Offers waiting in line.
If you’re a Seller, these tips are equally as important, in order to gain a better perspective of the Buyer’s frame of mind and to strategize accordingly prior to listing your home for sale.
In conclusion, you should never make an offer with the assumption that you can later negotiate the price down after the inspection, as this is not always the case in a competitive market. If an inspection comes back flawless or with minimal repairs, there is little to nothing to negotiate. If you attempt to negotiate, you risk alienating the seller at future negotiating points prior to the close of escrow.
Always keep an open mind during the escrow process and be sure to arm yourself with a savvy and proficient negotiator. A real estate transaction is never a done deal until the money changes hands and the deed is transferred. Understand the process, otherwise, you may risk losing out on negotiation opportunities. My team and I work hard to ensure our buyers become happy homeowners.