How to Negotiate After the Inspection

By Barry Stone

Dear Barry,

After a home inspection is completed, how should a buyer negotiate price adjustments and repairs into the deal? Do you have any tips? -Arlington

Dear Arlington,

After receiving a home inspection report, deciding what to do next can be perplexing and challenging. It is probably the touchiest transitional phase in the purchase process. With most deals, the opening salvo is the edge-of-your-seat offer and counter offer interchange. That procedure is comparable to a poker game, where each party tries to gauge the cards of the other, without showing their own. Once the bets are settled and escrow is opened, it would seem that the remainder of the deal is on a routine track, but suddenly, with new revelations by the home inspector, negotiations are reopened and nothing is certain.

The question at that point is, "What repair requests are appropriate?" As a general rule in most transactions, your negotiating position will depend upon five factors:

1. What repairs, if any, are specified in the purchase contract? In some contracts, special provisions are made for repairing particular problems. In those cases, sellers are required to address specific issues that are revealed by the inspector. In other contracts, no such provisions are contained.

2. What repairs are mandated by law? In some states and municipalities, sellers are required to make specified upgrades. For example, smoke alarms might have to comply with current building codes or plumbing fixtures might need replacement to comply with water conservation standards. Agents are typically aware of such requirements as they relate to specific localities and can usually advise clients accordingly.

3. How motivated and negotiable is the seller? Market conditions and personal circumstances can make a big difference when determining requests and demands to present to a seller. In a hot real estate market, a no-contingency approach might be the best way to secure the deal. When the economy is slow, a seller might be willing to jump through hoops to complete the sale. Personal circumstances affecting a seller''s negotiability might include a court ordered sale, a divorce sale, out of state residence, impending foreclosure, etc. In those cases, sellers might be willing to make sacrifices or they might be unable to do so.

4. How capable is your agent as a negotiator? Brokers and agents come from divergent professional backgrounds, with different blends of strengths, abilities and experience. Some may be great administrators, organizers or motivators, but not everyone is a gifted negotiator. When it comes to haggling, your agent is your gladiator. Hopefully, that person will be equipped to effectively present your position.

5. Are you willing to walk away from the deal if you don''t get what you want? Masters of negotiation say that the strongest negotiating position is the willingness to forego the entire deal if you don''t get what you want. For many people, emotional attachment to the purchase, whether a home, a car or a pair of shoes, negates this essential advantage. This does not mean that one should be so obstinate as to demand every preference with an "or else" approach. But where critical issues are at stake, emotional detachment is a valuable tool when discussing the terms of a sale.

Finally, it should be remembered that a home inspection report is not a repair list for the seller. It is an information list for you, the buyer, to help you know what you are buying and to help you decide whether or not to proceed with the deal.

Copyright 2002-2006 Barry Stone. Distributed by Inman News Features