When the Home Inspection Report Raises Concerns: Your Next Steps

September 14, 2020 | 
problems in inspection report

Unless you’re buying a brand-new home in some alternate dimension where everything is always perfect, odds are good that your home inspection won’t come back blank.

Even the best houses usually have some defects listed on their home inspection reports — which means you’re then faced with a decision: what should you do with that information?

As a home buyer, you’ll need to have a solid understanding of the common problems found in home inspections so you can have a good frame of reference for your own home inspection. And once those issues are found, how will they affect the rest of the negotiations? Are sellers required to fix certain items, but not others?

In this post, we’ll answer these questions and give you a few tips and tricks for negotiating with sellers once your home inspector has found items that need to be repaired for the house of your dreams.

Common problems revealed in a home inspection report

Unlike an appraiser, who evaluates the market value of a home, a home inspector’s job is to check the home’s structure and components in order to compile a thorough report of any visible defects or safety issues with the physical property.

The inspection is almost always paid for by the buyer, and it’ll typically take 2-3 hours, depending on the size of the home and whether the inspector does any special tests or inspections, such as a termite inspection, chimney inspection, pool and spa inspection, or radon test.

It’s a good idea to attend the inspection to get a first-hand account of issues the inspector might discover. They’ll deliver an electronic report detailing everything they found, but there’s still no substitute for being present to hear the inspector’s findings in person.

Problems that commonly appear in a home inspection report include:

  • Roof problems (leaks, missing shingles, damaged fascia board, etc.)
  • Old or damaged plumbing
  • Faulty or outdated electrical wiring
  • Damaged furnace
  • HVAC issues (damaged insulation, dirty air filters, disconnected ducts, etc.)
  • Foundation issues (sloping floors, foundation cracks, etc.)
  • Water damage and drainage issues (poor grading; moisture stains on the ceiling, windows, or walls; mold; etc.)

How can the appearance of problems on your home inspection report affect the home-buying process?

A home inspection is an essential step in the home-buying process. But what do you do if (and when) the inspector discovers an issue with the physical structure or a component of the house?

After the home inspection report reveals problems with the property, you have several options as the buyer. You can:

  • Do nothing (by accepting the house ‘as-is’)
  • Request that the seller make repairs on certain issues before the sale is complete
  • Ask for a discount on the sales price
  • Request a credit towards your closing costs
  • Back out of the sale (if an inspection contingency is included in your purchase agreement)

It all comes down to how significant the issues are, what kind of market you’re in, and how strongly you feel about the house. If you’re absolutely in love with the property, you probably won’t back out unless the inspector discovered something major.

Odds are good that if you still want the house — and you’re not in an extreme buyer’s market that gives you the leverage to ask the seller to accommodate every request you have — you’ll end up making a few requests of the seller to fix the biggest issues (or give you a credit to make up for the cost of fixing them) and leave the rest of the issues unaddressed or take care of them on your own.

If your inspector is using HomeGauge software to deliver your inspection report, you’ll have access to the Create Request List™ (CRL™) feature, which lets you and your real estate agent create the repair amendment directly from the inspection report. It can be so helpful to have this time-saving function, which lets you consult with your agent, add your items with a few clicks, and send the finished request list directly to the seller.

What types of fixes and repairs are the seller’s responsibility?

Keep in mind that an inspection report isn’t a to-do list for the seller. As a buyer, it’s not helpful to go into the inspection expecting to make a long list of repairs the seller needs to make to bring the home up to like-new status. If you take this approach, you’re likely setting yourself up for disappointment.

Some major items your professional home inspector finds will need to be fixed before a lender agrees to release funds for the purchase — and those are usually related to building code violations, expensive structural problems, or safety concerns. Sellers should also check their local ordinances to ensure they know which problems they might be responsible for.

Examples of required fixes might be excessive radon, termite damage, a roof that needs to be replaced, or significant defects in the HVAC, plumbing, or electrical systems.

It’s usually in the seller’s best interests to accommodate the requests for major repairs in one way or another. After all, if the deal falls through, the problems will still be there the next time someone is interested in buying the house. And if the buyer backs out of the deal, the seller might be legally required to report any issues found in the home inspection to future buyers.

Other issues discovered by a home inspector, like normal wear and tear or minor cosmetic problems, may not be fixed at all. In fact, some contracts even stipulate that cosmetic issues won’t be addressed.

And the “in-between” items — ones that aren’t major but are a bit more significant than cosmetic damage — come down to the specific circumstances you’re in. Is it a seller’s market right now? The seller might feel more comfortable denying the buyer’s requests for repairs.

On the other hand, if the seller is desperate to get their house sold, the buyer might have a bit more leverage to request that certain items be added to the repair list.

Often, sellers will offer to cover the cost of repairs in the form of a credit (or a discount on the purchase price) so that the buyer can take care of the fixes themselves. This solution may be preferred by both parties, since the buyer will want to make sure the repairs are up to their standards, and the seller won’t want to delay the home sale process.

How to negotiate repairs revealed in a home inspection report

Often, when a sale falls through after the home inspection results, it’s not necessarily because of the home itself or the home inspector. It’s usually because the home inspection revealed that the buyer’s expectations didn’t match reality.

The first step in a negotiation process is to take stock of your own situation. Consider the following factors:

  • The cost and severity of the repairs: Start by hiring a local construction professional or contractor to give you an estimate of the cost of repairs. Your real estate agent should be able to help you get an estimate from a highly-rated local professional.
  • Your budget: How much real wiggle room do you really have? Are you able to cover the cost of these repairs if the sellers refuse to pay for them or give you a credit?
  • How much you want the home: Odds are pretty good that you’re serious about buying the house, since you’ve come this far. But if the seller refuses to budge, are the repair issues big enough for you to walk away over? It’s best to get an idea of how much you’re dedicated to the deal before starting negotiations.
  • Your local housing market: Are many houses for sale right now, or is the field pretty thin? Whether it’s a buyer’s or a seller’s market will affect whether the buyer or seller has more leverage going into negotiations. The seller might be more willing to work with you if they’re afraid you’ll back out in favor of another option.

Once you’ve settled all these questions, it’s time to contact the seller. Make sure you have copies of the repair estimate and inspection report on hand to use as leverage when negotiating with the sellers and their agent.

Tips for negotiating with sellers

Often, first-time home buyers assume their real estate agent will take care of negotiating creatively and extensively on their behalf, but that’s not always true.

However, if you ask your real estate agent to request something, like a percentage of closing costs paid or a home warranty, they’ll ask for it. So it’s sometimes up to you to know what to ask for and what tactic to choose.

Here are a few insights into negotiation strategies to get you on the right track:

  • Don’t ask for every little thing to be repaired. The post-inspection negotiations should be for major issues or things you weren’t aware of before the inspection. Saving little items you already knew about (like a cracked tile) for after the inspection and then creating a long to-do list for the seller is a surefire way to make negotiations go sour.
  • Take the severity of the repairs into account when deciding what to ask for. If the problems are negligible (like replacing a broken light fixture), you might be better off asking the seller to just fix it themselves.
  • Sellers are usually more willing to negotiate on aesthetic or visible issues if their home has been on the market for a while. Otherwise, they probably won’t want to budge on small fixes. After all, if the issue is in plain sight, they probably already knew about it and already made the decision not to fix it.
  • Sellers usually prefer to give a credit towards closing costs rather than reducing the price. It’s often harder to get the seller to agree to a reduced price unless they’re really desperate or the repairs are extensive.

Problems in a home inspection report are par for the course

While discovering a defect in your dream home isn’t fun, it’s definitely far from unusual.

Every house, no matter how amazing, is going to have a few issues that could be repaired. The trick when going through the home-buying process is to decide which items are absolutely necessary before the sale becomes finalized.

The best strategy is to ask for the most vital repairs, like anything that could be a safety concern or a building code violation. Everything else becomes a matter of personal preference and negotiation strategy.

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