The Last Hurdle

by James Stefanile, ABR, GRI, SRES, QSC, REALTOR/Salesperson, Prudential NJ Properties, Montclair, NJ

One of the last steps in any residential transaction is the resolution of any home inspection issues.  Here are some guidelines for both buyers and sellers that may make the process smoother and a bit saner:

For Sellers:

Don’t be stubborn:

The buyer has the right, not only to the home inspection itself, but to request repair, remediation or credit for issues of concern.  You, of course, have the right to say “no” to any request but you should evaluate whether your refusal will derail the transaction.  If you’re ready to reject this buyer’s requests (and probably the entire transaction) you need to think ahead to the next buyer who will probably bring up the same issues.

Preemptive action is best:

You should consider having  a home inspection of your own, paid by you, before the house is on the market.  It’s an expense that will pay for itself in value.  You will know of any issues before the property is exposed to the market and you can, either, have them fixed, or, quantify the dollar amount and have that information ready before any buyer brings it up.  Isn’t it better to have this information beforehand rather than scrambling in the middle of a transaction?

Quantify:

Obtain contractor evaluations and estimates of your own for any issues you discover or for those discovered by the buyer.  You  may need these to counter a buyer’s contractors’ high-priced estimate.

Consider a home warranty:

A home warranty is like an insurance policy that you, the seller, would buy.  You are insuring selected systems and appliances which protect you up to the closing and it covers the buyer for 1 year from the closing.  The cost is usually $400 or so.  It can be good leverage in negotiating home inspection issues.

Entrance at your pleasure:

Anytime the buyer wants entry to your home it’s your right to grant or refuse.  The buyer does have the right to call in contractors to evaluate issues brought up by the home inspector.  Refusing entry to your home is a good way to blow up the transaction.

Negotiate:

Seems simple enough, right?  But it’s a major temptation to stone wall the buyer’s requests.  Might work, might not.  You feelin’ lucky today?

REALTORS are not a source of discount:

I am astounded when I hear about sellers asking for a reduction in REALTOR commission because their dollar expectations were not met in the transaction.  How are the two possibly linked?  Fortunately, it has happened to me only very rarely and the answer has always been “no”.  Just because your house wasn’t worth what you expected or it has defects that you must grant relief to the buyer for, doesn’t mean I and my colleagues haven’t worked as hard as possible to market the house and manage the transaction.  We’re already taking a pay cut if you get less for your house.  No one likes to get less but it’s not my responsibility to make up the difference.

For Buyers:

Maintenance vs. Defect:

Sometimes there’s some confusion between the two.  A defect is something broken or in need of repair or replacement.  A maintainance issue is an ongoing responsibility to keep something in working order by proactive attention.  The seller does not owe you any responsibility for maintenance issues.  You are assuming that responsibility when you own the house.  The seller is responsible when something is broken and/or in need of replacement.

No upgrades included:

You can’t ask the seller for credit or remediation because there aren’t granite counters in the kitchen.  You don’t have a right to a better house than the seller is agreeing to sell you.  You saw the dated kitchen when you previewed the house and, probably, submitted an offer with a dollar figure in accordance with the upgrades needed.  There’s no good reason to re-open that discussion in the home inspection process.  Broken is one thing, old or dated is another.

Don’t withhold:

Don’t withhold your additional deposit if it’s due before the resolution of home inspection issues.  That’s a potential breach of contract and you must honor not only the terms of the contract but the schedule set forth in the contract.  If there is no resolution of home inspection issues the contract can be voided if agreed by all parties and your deposits will be returned.

Get estimates:

A good REALTOR will probably provide you with contractors who can quantify and evaluate further the issues raised by a home inspector.  Use these estimates and evaluations in your negotiations with the seller and understand the seller has the right to obtain competing estimates and evaluations.

Don’t personalize the process:

This one’s for both buyer and seller.  Don’t take a buyer request personally and don’t take a seller response personally.  This is a negotiation in a financial transaction, not a personality judgment.  It’s easy to lose track of the impersonal aspect since the negotiation deals with a home lived in and about to be lived in.  Your REALTOR should be able to be a dispassionate advisor.  Take their advice to heart.

We all approach real estate transactions with all of our past baggage on display.  Our view of the world will, sometimes, hinder our clear judgment in the process.  You can’t undo the lessons learned over a lifetime but you can step back and ask: “Am I reacting to the facts or to my perception?”  It’s a fundamental question in order to succeed and feel good about what you’ve accomplished by buying or selling a home.