Discover El Paso Homes

Repair Negotiations

One of the most important steps when buying a home is the repair negotiations step. In an ideal world, the home you are buying will be perfectly move-in ready and won’t require any fixes or repairs. In reality, your home inspector will likely find some item that requires the attention of a handyman before purchase. It is mainly for repairs the buyer is asking. Lender-required repairs will have to be completed before closing.

There are several steps you have to take before even negotiating repairs.

Step 1: Get a home inspection!

It should go without saying, but some buyers, in an effort to save some money, forego a home inspection. It is a mistake. Inspectors are trained to find faults in homes, and a home inspection can save you lots of money down the line if a major fault is discovered. In Texas, we have what is called an option period. The option period is a negotiated amount of time, usually several days, during which buyers can terminate the purchase agreement for any reason. Yes, this includes cold feet. Buyer’s use the option period to get a home inspection, study the inspection report, get contractor quotes, and either negotiate repairs, or terminate the contract if the faults are major enough.

Step 2: Identify Repairs

Home inspectors are trained to find faults in homes, and will provide a multi-page report with every fault they found. Faults can range from minor cosmetic damage to general maintenance (i.e. resealing roof and wall protrusions) to more major items, like hail damage to the roof, electrical issues, foundation issues, etc.

It is unlikely that a seller will be willing to fix every single item on the report. My recommendation would be to focus on the costliest items to repair, the items that can lead to more problems down the line, or safety items. Stuff like leaky roofs or plumbing, faulty wiring, or smoke detectors. Ultimately, the repairs you ask for depend on what is important to you and your family.

Step 3: Negotiate

There are several ways you can approach this. All have their pros and cons.

1. Seller does the repairs: You can ask the seller to fix certain repairs once you and the seller agree on the specific repairs you want to be done. It will be the seller’s responsibility to ensure they are completed by the closing date of the contract.

a. Pros: The repairs will be worked on during escrow, and you will move into a repaired home.

b. Cons: Repairs are a drain on the seller’s time and money. They may elect to go for the least expensive repair, and this may lead to a disagreement between the buyer and seller regarding the quality of the repair. Sellers will argue the repair was completed, while buyers, expecting a higher quality repair, will argue that it was not.

2 . Buyer negotiates a price drop: You may choose instead to get quotes for the items you’d like addressed and ask the seller to drop the purchase price by the amount of your quote.

a. Pros: This avoids the argument about repairs prior to closing since the buyer has control over the contractor chosen for the work.

b. Cons: Buyers still have to come out of pocket to pay the contractor to fix the items on top of having to pay the down payment, closing costs, etc.

3. A buyer asks for a check from their contractor instead of the price drop: Buyers can ask the seller to provide a credit for repairs instead of a price drop. Title companies can cut checks out to the contractors at closing.

a. Pros: This alleviates the buyer having to come out of pocket to fix the required items.

b. Cons: If the home does not appraise for the purchase price, the seller may be unable to provide the checks.

Hope this helps some of you. Follow me at Discover El Paso Homes for more real estate tips.

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