When you're ready to buy your first home, you and your spouse may want to find a property in perfect condition to move into right away. After you sign a sales contract, your home inspector might find a list of needed repairs that catch you off guard. You may be able to pull out of the purchase after the inspection and receive a full refund of your deposit. Sellers motivated to complete the transaction will make the necessary repairs, especially if they are not too costly. If the seller refuses to absorb this expense, there are options to explore to keep the deal alive.
A home inspection is performed by a contractor or other company to look for defects in a house you have under contract. The buyer usually pays for this service, and the sales agreement should contain a clause that specifies when the inspection must be completed. Old homes are not the only ones that may have areas in need of repair. Inspectors may uncover defects in brand new homes, too. You can proceed with the sale without asking the seller to make any fixes, require only some items to be corrected or cancel the purchase contract before the specified deadline to do so. If the seller agrees to make the repairs, ask for proof, such as a vendor's invoice, and inspect the area carefully before signing the closing documents.
The seller may not have the time or funds to make the repairs listed on the inspection report, but may agree to a credit to you at the close. The money comes out of the amount the seller receives at the end of the transaction and can be placed in an escrow for the repairs or given directly to the buyers to reduce the out-of-pocket amount due at the time of purchase. If an escrow account is opened, the buyers will receive the money when they incur costs to repair the property.
If you determine that the result of the home inspection lowers the property's perceived value, you can renegotiate the price with the seller. Obtain an estimate for repairs from a contractor, and ask the seller to adjust the sale price. Start your negotiations by requesting a reduction in the price for the entire amount required to bring the property to satisfactory condition. If the seller doesn't agree, choose the items on the list that will force you to cancel the contract and request a reduction for those amounts only.
Most real estate transactions involve a list of disclosures from the seller. This information includes any defects to the property that the seller will not repair and the buyer must accept as part of the transaction. Some purchase contracts include a clause stating that the house will be sold "as-is," which means that it is being transferred in its present condition. The seller assumes no liability for any defect the buyer finds after the close of the sale. In this situation, it's wise to hire a home inspector to ensure that the seller's disclosure is complete and you are aware of all issues with the property. Retain the inspection clause in the contract because, even though the seller made it clear that no repairs will be performed, you can cancel the contract if the report uncovers unknown problems.
- Comstock/Comstock/Getty Images
- Does Mold Affect the Value of Your Home?
- Can Smart Home Wiring Increase the House Value?
- How to Protect Founders' Equity
- What Is a General Appraisal?
- What Things Are Appraised on a Home?
- How to Estimate Home Remodeling
- Advantages & Disadvantages of Taking the Equity Out of Your Home
- What Is My Out of Pocket Expense When Selling My Home?
- Pros & Cons on Motor Home Ownership
- What Decreases the Appraisal of a Home the Most?