Some buyers and sellers believe that once they have negotiated and reached an agreement on the price and terms of the Offer to Purchase, they are done, and they are on the way to closing. While this first negotiation is important and can actually set the stage for the second negotiation that can be the toughest and can cause a contract to FALL APART.
What is the second negotiation? Shortly after you are under contract, the buyer will most likely hire a home inspector to thoroughly inspect the seller’s home. The buyer will present the seller with a list of items they want to have repaired and often will share the entire inspection report, complete with pictures, with the seller. This is the point when the seller must decide how to respond. Now you are in the second negotiation phase. Here are some points for buyers and sellers to consider at this phase.
BUYERS: Buyers can set the stage for a successful second negotiation. Make it easier or more palatable for the seller to agree to repairs. You can do this by offering a fair price and terms in the first negotiation. If the seller feels like she has given up too much in the price and terms negotiation, she/he will be less likely to agree to repairs. So, buyers, do not expend all your “capital” in the first negotiation. Preserve some good will for the repair phase – the second negotiation.
Next, concentrate on major issues – termite infestation, moisture issues that have created structural issues, HVAC components not operating propertly, leaky roof, foundation issues, electrical safety issues, faulty plumbing, etc. Do not expect the seller to make the home “new”. Do not ask for small insignifciant items – an interior door latch not matching the strike plate, filling a crack in a sidewalk, clearing debris from a roof, caulking small cracks, installing updated smoke detectors that you can easily purchase and install, or asking the seller to have an electrician determine if a non-working light is due to a burned out bulb. Try to refrain from passing along nickel and dime items that you can easily repair.
SELLERS: First, realize that almost every home has something to repair so do not be shocked when you get that inspection report. Read through the report, put it down, take a deep breath, and go back to it later – even the next day. You will find that the second reading is much easier to take. Now, try to sift through the insignificant things and get to the more serious matters. Hopefully, the buyer has taken the same approach and has made reasonable repair requests. You are going to want to make sure that the components of your home functin as intended for the new owner. Agree to those important items that have a huge impact. Both parties need to remember that a seller has options. She/He can agree to all, some, or none of the repairs. The seller an also offer the buyer an allowance or reduce the price of the home in liew of making the repairs.
Sellers may be convered about the price of the repairs, finding people to perform the repairs, or having time to get the repairs done. Your real estate broker can help you with all of this. Repairs must be completed before closing. If the buyer is planning to do a final walk-through or to have a re-inspection, repairs should be completed at lease a couple of days prior to closing. Re-inspections are frequently requestd if repairs are in a hard-to-reach areas such as a crawlspace or attic. If you are concerned about having the funds to pay for the repairs because you need to sell the home in order to have the funds to pay for the repairs, there are a couple of creative solutions that may be available to you. Ask your real estate professional to help you with this.
This article was written an approved for republishing from Belinda Faulkner, Broker