It ain't over till the Home Inspection

I need to write something up to give to every one of our buyers & sellers about how to handle the home inspection negotiation and the emotions that hit both the buyer and seller when they first see the report.

For now though, a blog post will have to do as a start.

We are currently selling one of our investment homes, a summer rental in Salvo where we have another couple as partners.  It's an older home, and with all older homes exposed to the beach environment, it is inevitable that there will be water intrusion around windows, HVAC equipment on it's last legs, and a laundry list of minor items  that you just don't think about until a skilled inspector labels each one on a report in red ink.

For the buyer, it's a shock to realize that a home that looks so nice has one thing after another that will need repair.  It's enough to knock away all the warm fuzzies they had when they made an offer, and seriously reconsider whether they want to buy a home that's less than perfect.

For the seller, after negotiating away a good portion of the equity you thought you had, it's a shock to see another big chunk of it disappear for repair allowances.  Also, it's easy to think the buyers are being nitpicky when you've lived with the bi-fold door that falls off the track occasionally, a frosted window pane or two, and the termite damage that was there when you bought the place, the bugs themselves poisoned long ago.

To the buyers though, every little item in red is a huge red flag... and phrases like "maybe it wasn't meant to be" start making their way into the conversation.

I think a lot of this can be avoided if we stress over and over to the buyers to expect a long list of items, and how fortunate we are to have outstanding professional home inspectors who find all these hidden problems before closing, when they can be addressed as part of the sales negotiation.

Which leads me to my point - negotiations are not over until the home inspection report is done and repairs decided upon.  Too often both parties breath a sigh of relief after the initial price negotiation is done, and are blindsided when a much tougher negotiation starts over the repair request.  The contract price should be viewed as a starting point, but the real negotiation is after the home inspection.  It is at this point that both parties are fully informed about the property, and can make rational decisions based on that information.

So, my advice to sellers is to keep some good will and money in reserve during the price negotiations to get through the repair requests, and to buyers, don't be scared by the items in red, but expect problems to be uncovered, and be happy that you are fully informed about the property before closing, in time to negotiate a fair settlement with the seller.