Best Practices for Negotiating Repairs When Purchasing a Home

Real Estate Agent with Value Added Service, 602-620-2699 SA5376460000

 Best Practices for Negotiating Repairs When Purchasing a Home


You’ve signed the contract and all terms are agreed upon in order to buy your new home.  The price is set, the close of escrow negotiated, and now you’ve just completed the home inspection and other related inspections. 


The home inspector(s) creates a report provided to you with possible “defects,” items that need repair or some sort of attention to make them functional.  The inspector suggests consulting professionals to verify findings that might require a secondary review, ie a furnace or air conditioner. Reviewing the entire report, you then create a list of must-have repairs that you feel are required to move forward.


The repair “list” is given to the buyer’s agent who shares this information with the buyer.  In Arizona, the inspection report is also shared with the seller’s agent, along with any other findings that the buyer deems important to relay the message toward getting a satisfactory response from the seller.


But what if the list of repairs is so extensive that the seller becomes anxious and suddenly doubts that the sale is worth maintaining with the current buyer?  In this instance, a credit to the buyer toward repairs might be wise, in order to reduce tensions that occur during repair negotiations.  


Oftentimes, sellers aren't prepared for a lengthy list of repairs.  If a homeowner has been in a home for more than 10 years, it's wise to get a home inspection and work on those items from the beginning.  Managing those expectations up front in a listing appointment can help ease those concerns and keep a contract together.  Each home is different based on age, habits, and maintenance. 


But what if the buyer receives a credit (price reduction) and has no funds to pay for the needed repairs after the sale closes?  In that case, a credit can be withheld by the title company so those items can be repaired after the sale closes, except in the instance that the needed repairs might affect a mortgage completion.  Moneys held at the title company are typically called “escrow holdbacks.”


Health and safety items are typically required to be repaired prior to close of escrow for a FHA and/or VA mortgages.  Sometimes they are also required for a conventional mortgage, depending the severity of the damage.   These items must be completed in order for a home purchase to finalize.  


As a professional educated in energy efficiency, it's always my policy to ask if a home buyer would like to add energy efficient improvements to a home.  If so, they can be added to the mortgage so there is little or no out of pocket expense.  In that case, an energy audit is needed so that the report can be provided to the lender.  


For more information about purchasing a home in Arizona, give me a call!  

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Endre Barath, Jr.
Berkshire Hathaway HomeServices - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Great post, in my market we just like to get the reduction in the price and we do not care if the new owner fixes the issues or not... just makes life smoother after the deal is done, Endre

May 17, 2018 10:41 PM #1
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good morning Jan - it certainly would make senile to negotiate a credit or a price reduction 

May 18, 2018 07:56 AM #2
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Jan Green

HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN
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