In last week's blog post, Negotiations after the inspection, part 1: Options for the buyer, I discussed four options that a home buyer has after receiving a written inspection report.
- Cancel the purchase agreement
- Do nothing
- Renegotiate price
- Ask the seller to perform repairs.
The first two options are pretty straightforward, but the last two items involve negotiations. Today, I'll discuss common home inspection negotiation items that I believe should not be negotiation items.
I'm not a real estate agent or attorney, so this is not real estate advice or legal advice. These are my opinions. I don't share my opinions on negotiations during home inspections, and I do not share them in my inspection reports. This is completely outside the realm of a home inspection, and honestly, it's outside of my area of expertise. However, I (like most people) certainly have an opinion about this stuff. If you don't agree with my opinions, comments are always welcome.
Here's how the Inspection Contingency works in the State of Minnesota: first, negotiations may take place between the buyer and seller before a purchase agreement is ever signed. Once all terms of the Purchase Agreement have been accepted by both parties, including the Inspection Contingency Addendum, the home buyer will have a specified number of business days to have a home inspection performed. The number of days will vary, but we typically see a three to five day period. The number of days can vary further based on the volume of home sales in the market, and can be dependent on the availability of an inspector. Once the inspection period has expired, the buyer will typically have one to two business days to respond. It's during this period that the above listed four options come into play.
Side note: The Inspection Contingency is a period of time in which a buyer can have inspection(s) performed. The parenthetical plural in the contract means that a number of inspections could be performed during this period. If the home inspection is performed on the second day, there may be electrical issues that need to be further evaluated by an electrician. Buyers can also take the opportunity to have Level II chimney inspections performed and sewer lines scoped. More on those two inspections next year.
Without further ado, here's my list of items that should typically not be negotiated after the inspection.
Known conditions = no negotiations. No price or repair negotiations should take place regarding conditions that were known prior to the home inspection. If a condition is readily visible or apparent, it's not something that was "discovered" during the home inspection. A few examples of known conditions include:
- Peeling paint
- Damaged interior walls
- Damaged floor coverings
- Deteriorated driveways or walkways
- Any conditions listed in the Seller's Property Disclosure Statement
If any of these are going to be negotiation items, they should be negotiated before the inspection.
Old = no negotiations. I frequently hear discussions of old components, or components that are at or near the end of their service life expectancy. This shouldn't be a negotiation item. If a water heater is 20 years old and still functioning properly, should the buyers ask for a new one? I say no. Technically, the buyers can ask for anything, but to ask for replacement of a fully functioning used or old component in a fully functioning used or old house is a bit much. Here are a few things that need to be periodically replaced on homes:
- Air Conditioner
- Water Heater
- Garage door opener
On the other hand, if a home seller advertises a "new" feature, but that information is not accurate, that would be a completely different story. For example, I was recently involved in a transaction where the seller had mistakenly listed a 30-year-old water heater as "new." The buyer negotiated for a price reduction after the inspection. No problem there.
Also, if a first-time home buyer finds out that a bunch of these items are at the end of their life and they know they won't be able to afford replacements soon, they might decide that the home they're buying isn't the right one for them ... unless perhaps the seller would like to help out. It's not unreasonable to renegotiate at this point, but a price negotiation typically won't help a buyer, because this doesn't give the buyer any more cash to deal with repairs or replacements.
Minor defects = no negotiations. Used houses aren't perfect. Part of being a homeowner means spending time and money on the house. This is something that home buyers should expect, and something to be budgeted. Anyone not cool with that might be better off renting. Here are some small, petty things that home buyers shouldn't ask sellers to address:
- Missing cover plates at outlets, switches and junction boxes
- Missing caulk
- Dirty furnace filter
- Dirty AC condenser
- Damaged insect screens
Code changes / safety upgrades / energy upgrades = no negotiations. While a home inspection is not a code compliance inspection, home inspectors often recommend safety upgrades due to changes in building codes. It's bad form to ask a seller to make these types of upgrades. That's not to say these safety and energy upgrades are not important, but I think they make for somewhat petty negotiation items. A few of these conditions include:
- Lack of AFCI devices
- Lack of GFCI devices (I know my opinion isn't popular, as this seems to be a fairly universal negotiation item)
- Lack of safety glazing in hazardous locations
- Anything related to stairway safety, including wide spacing on stairway balusters
- Protection of the municipal water supply against backflow
- Minimal attic insulation
Of course, there are always exceptions. If new work was performed at a home and advertised as such, it's only fair to expect the work to be done to code. Code is sometimes known as "current safety standards." Immediate safety hazards might also be a good point of negotiation. More on those next week.
In closing, if a home seller is already upset because they're selling their house for less than they wanted, they won't be happy to receive a list of small chores from a home buyer in the form of a purchase agreement amendment. This can be the straw that breaks the camel's back, leading to the deal falling apart. I hate to see this happen, because items that cost hundreds of dollars to fix should never hold up the sale of a property that costs hundreds of thousands of dollars. If you're a home buyer, my advice is to not put yourself in this position. Treat the home purchase like a relationship; do you want to be right, or do you want to be happy? Let the little stuff go.
In next week's post, I'll cover a number of home inspection conditions that I consider to be reasonable negotiation items.