The average home closing takes about 45 days. Although most mortgage loans are ready in 30 days, the house negotiation can tack on additional time. And if you want to get the most out of your negotiation, you need to rely on a home inspection.
As a buyer, it may seem like the home seller holds all the cards. But a home inspection can totally alter your negotiating power if it reveals serious damage. Plus, it can provide some peace of mind so you know you aren’t purchasing a potential lemon.
Ready to save big? This comprehensive guide will show you how to win your next house negotiation with a home inspection.
Why You Need a Home Inspection
Most mortgage lenders require home appraisals before they’re willing to pay out. But an appraisal is different than a home inspection. Since it isn’t required, some homebuyers are tempted to save some cash and avoid a home inspection entirely.
But that can cost big bucks in the long run.
A house might appear to be in great shape. However, an inspector could find some troubling and expensive damage throughout the property.
You should walk away from the deal if an inspection uncovers red flags. If you choose to neglect a home inspection, you could unknowingly purchase a house in serious disrepair.
This is one reason why you should always opt for a house inspection. Otherwise, you’ll lose tens of thousands of dollars in surprise repairs after you’ve bought the home. But that isn’t the only way a house inspection can save you money.
A home inspection provides the essential leverage you need to win a home negotiation. Has the home inspection discovered some areas in need of repairs, such as a faulty HVAC unit or foundation damage? Now that repairs are needed, you’ll have an easier time negotiating below the listing price or earning repair credits.
And that’s a better alternative than stumbling into surprise repairs after you’ve bought the home. Because when that happens, the cost of the repairs is now your responsibility.
How to Win the House Negotiation
So the home inspection revealed a few problems, but you still want the house. How do you leverage the inspection results to win the negotiation? Since the ball is in your court, it’s easier than you might think.
Following a home inspection, these home negotiation tactics can help you get the best deal possible.
1. Set the Terms
If you want to win the negotiation, you need to know what you want from it. You might have a set price in mind, or instead, you want the homeowner to repair certain home features before you’ll sign a contract.
And remember: There are other priorities that don’t revolve around cash. Requiring the homeowner to make repairs could set back the closing date by several weeks. Depending on your living situation, you might not find that attainable.
The reality is a house negotiation requires a compromise from both sides. Don’t set goals that are too lofty to reasonably reach.
2. Credits or Repairs?
You typically have two options when a home inspector finds damage in the house. As a homebuyer, you can request that the owner makes repairs before closing on the home. Realize that they’ll be paying for the repairs out of pocket, which means you shouldn’t expect a lower price to boot.
As an alternative, you can request seller credits. A seller credit is a lump sum that is paid by the homeowner during closing. Basically, the homeowner gives you a set allowance which you’ll use to make the repairs yourself.
So which should you choose? Typically, seller credits are always the better option.
If you leave repairs up to the homeowner, they could hire a cheap contractor that does a subpar job. Since you’ll be living in the home, you want to make sure the repairs are up to snuff.
In addition, both parties enjoy the fact that seller credits lead to a faster close. It’s better than waiting on a lengthy repair job.
3. Don’t Sweat the Small Stuff
Any home inspection will likely reveal a ton of issues big and small. It might be tempting to request the seller account for every blemish on the list.
But any homebuyer should expect a house to have a slew of small problems. When negotiating, don’t focus on the minor details. Doing so could actually hamper your negotiations if the seller feels you are trying to nickel-and-dime them.
Seek seller credits for the larger, serious repairs. You should only request recompense for tiny issues if the home inspector doesn’t find any severe damage.
4. Know the Market
Every seller pays heed to the local market when determining their listing price. And as a buyer, you can use this market information to get more leverage in your negotiations.
For example, if the home was recently listed and in a hot market, you probably aren’t the only one eyeing it up. When a seller has many options to choose from, they don’t have to worry about individual buyers. If a deal falls through, they have other options.
This means that if you want the home, you’ll need to pick your battles. You might only be able to bring up one or two details from the home inspection and you’ll probably get fewer seller credits for it — if any.
But if the house has been sitting for over a month, you can use that to your advantage. The buyer will be more willing to take care of most of your concerns, since you may be their only option.
Get a Better Deal With a Home Inspection
A home inspection can change the power dynamic of any house negotiation. And even if the inspection doesn’t discover anything in need of major repair, it’s a great way to safeguard your purchase.
A home is one of the most expensive things anyone can buy. Why put yourself at risk of buying a potential money sink?
Are you buying a house in northeast Ohio? Schedule an inspection and get the bargaining power you need to save big.