Buyers: Don’t Freak Out When You Get Bad Inspection Results

What’s a homebuyer to do if your home inspection has bad results? Drama-Free Real Estate expert Tara-Nicholle Nelson shares her tips and tools.

Aaah, INSPECTIONS. One word that fills homebuyers with a strange mix of excitement (at the prospect of spending more time in the house and squeezing the inspectors for advice on their HGTV-inspired remodeling plans) and dread (at the possibility that some big, bad deal-killing problem will come between them and their dream home).

Though most inspections are not technically pass-fail, when your pest, property and roof inspections collectively come out either squeaky clean or tragically terrible, the decision to move forward or back out is easy-peasy lemon squeezy. Similarly, when you get the place at a discount because it “needs TLC,” negative inspection findings are much easier to swallow.

I Know the Feeling. But, when you get surprising inspection results that are not automatic deal-killers, but still bad -- relative to the price and age of the property and to your threshold for doing repairs -- things are not quite so simple. So you end up with a $30,000 pest repair bid in your hand plus a day or two to remove your contingencies on your absolute dream home. Panic sets in. Add the disappointment that you might lose your dream home with a little dash of desperation to find solutions. Can the sellers come up with that cash? If you buy it, where will you come up with the repair money? Lots of questions, fewer immediate answers and even less time to figure it all out. Some tough cookies have definitely cracked under less pressure.

Your Mindset Reset. Don’t freak out. Save the knee-jerk reactions for your BFF’s new haircut (do consider keeping them to yourself). Instead, get systematic and take the following steps to gather all the information you’ll need to make a reasoned, deliberate decision whether to buy or back out when you get bad inspection results.

Your Drama-Free Real Estate Rx. Have your Realtor request an extension of your contingency or objection period to take some of the pressure off while you collect more information.

  1. Immediately assess, in your own head, how much work you are willing to complete after close of escrow, considering both cost and inconvenience.
  2. Collect at least three contractors’ bids for the repair(s) at issue -- for your own information and to increase your credibility in your renegotiations with the seller. If the pest company bid on wood or plumbing repairs, get competitive bids from a general contractor or plumber. Cutting out the middle man will almost always cut down the costs. Ask your property inspector whether any of the repairs can be done over time or legally completed by an unlicensed handyman. You can reduce the costs of repair bids by sometimes 30 percent or 40 percent this way.
  3. Through your Realtor, approach the sellers with a request for them to pay a closing cost credit to free up some of your cash for post-closing repairs, to complete some repairs or to reduce the price -- in that order. Prioritize the strategies that would result in the repairs actually being completed, saving a price reduction as a last-ditch effort.
  4. Once your renegotiation with the seller is done, assess whether you are satisfied with the condition of the property given the final terms of the purchase, including any credits, repairs or price reduction agreed to by the seller. This will direct your decision on whether to move forward with the deal, assuming all the other elements of your decision are in favor of removing contingencies.

Often these days, the seller simply isn’t in an equity position to budge at all. If this is the case, you may or may not still be willing to move ahead, having gotten reduced bids or a better understanding of how you can schedule the repairs over a long period of time. Whether you move forward or decide to find another dream home, you will be able to rest easy knowing that you maturely and rationally worked your way through the bad inspection results.

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