Who Pays For Repairs After A Home Inspection?
A major requirement that determines the sale of a home is the home inspection. It’s the deciding factor in the sale of the property before the buyer and the seller close the deal. A home inspection is also the buyer’s last chance to identify if the house needs any repairs and who will be paying for it.
Once the deal is closed, there’s little that a buyer can do other than pay for the repairs themselves. That’s why it becomes important to address this issue as soon as the home inspection report lands in the hands of the buyer. Before we dive into understanding who pays for repairs after a home inspection, let’s understand what a home inspection exactly is:
What Is A Home Inspection?
There are many repairs a home needs that cannot be identified by merely glancing around the property. There should be a thorough home inspection so that the buyer doesn’t end up buying a property in need of major repairs.
Often sellers are unaware of the damage to their house and can be living in a home with damage to the foundation without their knowledge. This property gets passed on to the buyer and if the buyer isn’t aware, they can end up spending a fortune on a home that’s in poor condition.
The buyer or the real estate agent of the buyer arranges for a home inspector who inspects the property thoroughly. The inspector visually examines the house in terms of physical structure and systems fitted from the roof of the house to its foundation. The HVAC systems, structural components, plumbing, electricity, etc are inspected. The inspector also goes through the attic and basement to see if there are problems with humidity or if there’s mold in the damper areas of the house.
It’s always recommended that the buyer be present during the home inspection because it’s the only chance to explore the property closely and identify any repairs. The sellers are expected to stay clear of the property during the home inspection and not interfere with the inspector’s work.
A buyer should schedule the home inspection early in the buying process to buy time to identify issues, negotiate with the seller, and take care of repairs. After the home inspection, if the buyer realizes that the home isn’t for them, they can opt out of the purchase contract. But the buyer should inform the seller of their decision before the deadline and in a manner that’s specified in the contract. Buyers also hold the right of getting their earnest money back in most cases.
If the buyer decides to go ahead with the purchase, the next step is the repairs and who will pay for it. This is more of a negotiation than a quick decision because repairs before the sale of the house can cost a good buck and nobody wants to lower their profits!
Also See : Attic Remodeling Ideas
Factors That Determine Who Pays For Repairs
Contingencies In The Offer Contract
To know who’s liable to pay for the repairs that arose after the home inspection, both parties should look into the contract. One should check if there is room for bargaining or are the contingencies strict. These contingencies lay out the instances under which the buyer or seller can opt out of the contract without paying any penalty.
The contract often specifies the scenarios under which the seller is liable to pay. It’s often in case of major repairs to the structure or systems. In any case, both parties have the right to negotiate and stand their ground depending on whether the market is in their favor or not.
Some contracts have clauses that make it mandatory for the seller to pay for health or safety repairs that arise after the home inspection. That’s why the seller should read the contract carefully before signing it. Even when the seller is under no contractual obligation to pay for repairs, there can arise an issue where repairs are demanded by the buyer’s lender or financier. If the seller refuses to pay for repairs it can lead to termination of the contract by the buyer.
Whether The Contract Is ‘As Is’
If the contract is ‘as is,’ there’s no way the seller is legally bound to pay for any repairs to the house. A property that’s sold ‘as is’ will be sold in its current condition without any repairs. It’s up to the buyer if they want to take the property and do the repairs themselves or not accept the contract at all. The buyer cannot claim any repairs from the sellers in this case because it was specified in the contract.
An ‘as is’ contract is disclosed to all potential buyers so it always influences their decision to buy the house. While an ‘as is’ contract can seem appealing for the seller since they don’t have to shed any bucks, it has its own drawbacks. Buyers view homes sold as ‘as is’ to have major issues and thus tend to avoid such properties. If you do get buyers, they will be looking for cheap quotes since all repairs fall upon them. That’s why properties sold as ‘as is’ tend to attract fewer buyers.
Extent Of Repairs Required
If it’s not specified in the contract, it’s usually the seller who ends up paying for major repairs. When major damages pop up in the home inspection, the seller will be willing to pay for their repairs so as to move ahead with the sale or lose the buyer.
The buyer, on their part, should know to analyze what they demand. Just because the seller is ready to pay for repairs doesn’t mean the buyer can send a long list of repairs. The seller should ideally pay for major repairs like cracks in the foundation, issues with the roofing system, or the replacement of HVAC systems. On the other hand, small repairs like cracks in windows, worn-out carpets, or normal wear and tear can be handled by the buyer once the sale of the house is complete.
If you’re a buyer who’s confused about which repair requests should you make to your seller, you can ask for your real estate agent’s opinion. Most agents suggest that rather than asking for many repairs, you should only ask for the ones that cost the most.
If you’re a seller, remember that the repair request isn’t a to-do list you must stick to. As long as you pay for repairs that affect the livability or structure of the property, you’ll be fine. It’s completely okay to spend 1% or 1.5% of the value of your property over repair works.
Whether It’s A Buyer’s Market Or Seller’s Market
The state of the market matters a great deal when determining who pays for repairs after a home inspection. If it’s a buyer’s market, then the seller has to compromise. By that, we mean the seller has to give in and agree to the repairs requested by the buyer. If the seller doesn’t do so, the buyer can walk out of the contract before closing. In such cases, sellers often agree to the buyer’s conditions provided the buyer has requested the repairs in writing within 5-10 days after inspection.
If it’s a seller’s market, the seller will have an upper hand while negotiating repairs since they already have backup buyers. The seller can refuse to pay for the repairs and the ball bounces in the buyer’s court. Usually, in such a scenario, buyers think carefully before making repair demands and ask only for the major ones.
Laws In Your State
There’s no room for compromise or negotiation when it comes to state laws. Turn to your real estate agent as they can guide you better in this instance. Generally, sellers are under obligation to fix water damage, mold issues, broken smoke detectors, violated building codes, etc.
Another instance wherein a seller is legally liable to pay for repairs is when damages pop up after the closing of the sale. If there arises a material defect that the seller had knowledge of and still didn’t disclose to the buyer, the buyer can file a lawsuit against the seller for non-disclosure of material defects. After this, the seller has no option but to pay for the repairs.
Issues That Must Be Fixed
When the inspection is complete, buyers can give a list of ‘must have’ repairs and ‘like to have’ repairs. This indicates that if the seller does not comply with the ‘must have’ repairs, the buyer will terminate the contract and back out of the transaction. Sometimes, the buyer’s lender will have a list of repairs; this is laid out so that the home appraises to the appropriate amount so as to finalize the financing. These are the repairs that can go in the ‘must have’ list:
Violation Of Local Building Codes
Before closing the deal, the seller should fix any issues with their property that violated the local building codes. This can change from one jurisdiction to another.
Potential Fire Or Structural Hazards
Any potential fire hazards should be fixed so that the property is safe for the buyer to move in. This is a necessary repair as it concerns the safety of the buyer and their family.
Cracks In The Foundation
Often, sellers stay on their property without knowing that there are cracks in the foundation. But if this is identified in the inspection, it must be fixed before the closing of the contract.
If the inspection report states that there’s an issue of chemical contamination in or around the property like toxic chemicals in the soil or water resources, it must be attended to.
If there’s a termite or bug infestation in the house, the seller should arrange for pest control before selling the property. You can know the Cost of Pest Control on our blog.
Repairs That Buyers Can Ask Seller To Fix
Apart from the essential repairs that a seller should fix, there are many other repairs buyers can request. Usually, buyers ask for fixes that affect the livability of the home as most buyers don’t want a load of repairs waiting when they move into their new home. These are some come requests that buyers make:
Missing shingles, damaged flashing and gutter issues can cause serious problems if they aren’t addressed in time. That’s why buyers ask for repairs to the roofing as ignoring it can lead to major problems down the road.
When it comes to electrical systems, any issues that pose as a fire hazard or a threat to safety must be addressed. If the house is old and has outdated wiring and electrical panels, a replaced system can be requested. If there are no GFCI outlets in wet areas like bathrooms or in the exterior of the house, the buyer can ask the seller to install them.
Plumbing can be a ‘must have’ repair if the entire house has faulty plumbing. Buyers can also ask for a faulty water heater to be replaced. Slow drains that can lead to flooding or water damage should also be fixed. The buyer can ask the seller to install a pressure-reducing valve so as to keep the water pressure below 80 PSI. This ensures that there are no problems with the water pressure after the house is sold.
If the home inspector states that the HVAC systems have not been serviced or cleaned recently, the buyer can ask the seller to have it serviced or replace it fully. Most buyers want to move into a home that has a working HVAC system so it’s okay to ask for it! If the property is in a cold place where temperatures drop to extremes, the furnace too should be fixed.
If appliances are included in the sale of the house, the buyer can ask the seller to fix the appliances that affect the livability. This can include a leaking dishwasher or a broken refrigerator.
See Also: Monthly Home Maintenance Tips
Repairs That Buyers Can Handle
Buyers should restrain from asking the seller to fix minor issues because a long list of repairs can often ruin the deal. If the buyer wants a fresh coat of paint, they should get it done after moving in.
Normal Wear And Tear
Normal wear and tear that come with an old home aren’t something a seller should pay for. If the carpets are frayed or the polish on wooden flooring is faded, the buyer can take it up themselves.
The buyer should take responsibility for small replacements and minor fixes on the property because asking the seller to do something like this can sour the relationship and thus risk the contract!
Also Read about the Mandatory Fixes needed after Home Inspection.
Tips To Negotiating Repairs
You must have observed that the entire post-inspection process is majorly made of negotiation and compromise. Here’s how you can make the most of it!
Talk To A Contractor
As a buyer, when the home inspection is done, you’ll see the major issues that need fixing. Ask the inspector or real estate agent to put you in touch with a general contractor. Run the contractor with the repairs and ask them for a ballpark, then you know which repairs you should request the seller for.
Offer Money For Repairs
As a seller, it’s better to pay the buyer for the repairs rather than get it done yourself. When you do the repairs, the buyer will keep asking for updates on the work. So it’s better to give them credit so they can get repairs done according to their wishes.
Consider A Warranty Or Offer Furniture
The seller can give a home warranty to ease out the concerns that arose during the home inspection. This can cover the concerns over an old HVAC unit or an outdated electrical system. The seller can also offer to leave behind expensive furniture like a pool table or a grand piano in place of paying for the repairs.
Both buyers and sellers want to make the most out of a house sale deal after a home inspection. A little back and forth in the process is normal. What both parties must remember is to maintain a written record of all the agreements so as to avoid any problems later on!
FAQs On Repairs After A Home Inspection
Which Are The Common Repairs Required After Home Inspection?
Repairs to the foundation, roof, electrical system, plumbing, HVAC system, etc are the common repairs required after a home inspection.
Who Pays For The Home Inspection?
It’s usually the buyer who arranges for the home inspector and pays for the inspection. It costs approximately $300 to $500 to conduct a home inspection. The overall cost is also determined by the location and size of the home.
How Much Time Does A Home Inspection Take?
A home inspection takes approximately 2-3 hours. It’s suggested that the buyer stay through the inspection and get their doubts cleared from the inspector. Children and pets should be kept out of the home when an inspection is underway.