Loose Door Knobs and Caviar-Stocked Fridges
Test your knowledge of today’s housing market, and answer the following question:
Which of the following issues are properly raised by a Buyer’s home inspection, and resolved either by a Seller price concession, or the Seller assuming responsibility for repair(s)?
A. The dated Kitchen;
B. A concrete driveway with multiple cracks;
C. Peeling paint on the outside of the home;
D. The old-but-still-working boiler or forced air furnace;
E. A plainly visible scratch in the middle of the Dining Room hardwood floor;
F. The dilapidated (but structurally sound) detached Garage.
Answer: none of the above (unless the Buyer is getting an FHA loan, in which case “C.” may be correct).
In each case, the “issue” was plainly visible before the Buyer made their offer.
By contrast, a legitimate inspection issue is typically: a) not apparent prior to the inspection; b) pertains to a genuine home defect and/or safety issue; and c) material to the value of the home (more than a couple hundred dollars, assuming an average price home — about $260k in the Twin Cities now).
Something that”s old but still in working condition (like mechanicals), or has useful life remaining (example: roof), is also out-of-bounds for the Buyer to raise on inspection.
Doesn’t Condition Count AT ALL??
Before I seem unsympathetic to Buyers, let me assure you, many of the above issues do factor into a home sale ” just not at the inspection stage of the deal.
So, a home with aging but working mechanicals may scare off many Buyers, especially first-time Buyers who are leery of big capital outlays.
To alleviate that concern, many savvy Sellers today include a home warranty as part of the sale (cost: around $500).
At the same time, a home that’s clearly suffering from deferred maintenance is hardly going to fetch top dollar.
In fact, if it’s sufficiently run down, it may ultimately need to be deeply discounted and even sold “As Is” (contrary to popular perception, Buyers are still well-advised to do an inspection in such situations ” make that, especially well-advised).
But, a home’s poor condition is (or should be) addressed in the home’s listing price, marketing, and subsequent purchase negotiation.
Once the Buyer and Seller have agreed to terms, the subsequent inspection is properly limited to new information.
“But,” I can just hear some Buyers complain, “why is it fair for the Buyer, not the Seller, to fix something everyone knows is broken, even if it’s only $50?”
Answer: because it’s only $50.
And once $50 items are on the table, soon $40 items are, then $30 ” and suddenly, the Buyer and Seller don’t like each other (or their agents) very much and the deal is on the rocks.
Of course, by the time there are ten $50 items, the cost is suddenly not so trivial.
In such a situation, a good Buyer negotiating strategy is to “batch” the items, and ask for an allowance of $500 or $1,000 for an electrician, plumber, etc. to correct.
But every deal ” and situation ” is unique.
Exhibit A: the house I sold in multiple offers by Minneapolis’ Cedar Lake for WAY over the asking price.
After doing the inspection, the Buyer produced a list of several, frankly, petty items they demanded the Seller fix to preserve the deal.
My advice to my (initially protesting) client: “given the purchase price, if the Buyer asked you to stock the fridge with caviar . . . you should do it.’
See also, “The Difference Between “Negotiating’ and “Haggling.“”