The hidden pressures of a home inspection negotiation

Setting expectations with a client for the outcome of a home inspection negotiation can be a challenge, that’s true whether the client is a buyer or a seller. A proactive seller can get more control over the process. Similarly, a buyer with the right approach can also help their outcome of the inspections and negotiations.

The standard Oregon real estate sale agreement allows for a buyer to approve or disapprove of the home inspection within a specified time period, usually 10 business days. Often, instead of an approval or disapproval, there’s a negotiation.

However, that’s not always true. We recently experienced a super strong seller’s market and in order to compete, many buyers didn’t even include a home inspection contingency in their offer. Furthermore, when buyers did have an inspection contingency they often had no right to ask for repairs.

That wasn’t a normal market. Typically in today’s market there’s an expectation the seller will need to concede to some degree, the inspector inevitably finds issues and the seller feels compelled to address them, if they don’t the buyer will often walk away even over minor issues. While that may seem unreasonable, keep in mind that buying a home is an emotional process.

There’s certainly no requirement that the seller address the items, they could put the home back on the market and seek a new buyer. However, they will normally need to fix the issues anyway before putting it back on the market and change their property disclosure. People often ask “do I need to disclose it if I fixed it?” and the answer is yes, you do, and then you need to disclose how it was fixed.

The need to fix and disclose often messes with the seller’s timeline and putting the house back on the market often doesn’t go as well as the first time the home hits the market. When the listing agent brings up these points the seller often understands how much better things will go if they simply address the issues with the first buyer.

An exception to this is if a back up offer is waiting in the wings, more likely in a strong seller’s market. The listing agent can go to that other buyer’s agent, tell them the items of concern, and sometimes the second buyer is willing to accept the issues the first buyer is uncomfortable with. The second buyer will have other sets of issues such as unique loan qualifications so switching to a back up buyer should only be done after careful consideration.

At the outset of the transaction a seller often thinks how they don’t need to do the repairs the buyer asks for. While that’s true, the realities of additional disclosure, a longer timeline, and putting the home back on the market usually results in a bit of compromise.