Almost all buyers request a home inspection when they submit an offer on a house. And many end up requesting repairs or concessions after getting the inspection report back.
As a seller, it’s important to prepare yourself for the home inspection process, and to know how to negotiate after a home inspection if it comes back with some not-so-great news. After all, among sellers who had a sale fall through, 15 percent were due to the buyer backing out after the inspection report.
FAQs: Home inspection for real estate
What is a home inspection?
Performed by a licensed professional home inspector, a home inspection is a comprehensive review of the home that’s for sale, based on a visual evaluation and testing the home’s systems and components. The result is a home inspection report, which details the current condition of the home and alerts buyers to any major issues. Most buyers request a home inspection when buying a home so they can avoid spending thousands (or more) in unexpected repairs after closing, and to protect themselves from overpaying for the property.
What is a home inspection report contingency? Is it common?
A home inspection contingency is an addendum to the offer contract that allows the buyer to conduct an inspection and then back out of the deal if they are unsatisfied with the findings. Occasionally (and most commonly in a very competitive sellers market), buyers may waive their right to an inspection in order to make their deal more appealing to the seller.
What’s included in the home inspection contingency?
The language in each contract varies, but usually it states that the inspection must be satisfactory to the purchaser, and if it’s not, they can renegotiate the terms of the deal or call the deal off and receive any earnest money back in full. If you have questions about the terms of the home inspection contingency your buyers are presenting, ask your real estate agent — before you sign.
Who pays for a house inspection report?
Typically, the buyer pays for their own inspection, and can use a licensed home inspector of their choosing. However, sellers who may be concerned about what might be found in an inspection sometimes opt to pay for their own pre-inspection. Based on the results, you can price your home accordingly, and you won’t be surprised by the results of your buyer’s inspection. Do note that any problems revealed in your pre-inspection have to be disclosed to your buyer.
How long does the buyer have to conduct a home inspection?
The timeline depends on the market and the contract, but within 5-10 business days of both parties accepting the deal is standard.
How long does a buyer have to request repairs from a home inspection?
Again, it depends on the market and your specific contract. Usually, the 5-10 business days allowed in the contract includes both conducting the inspection and requesting any repairs in writing. In a buyers market, buyers sometimes have more time, but in a sellers market, they usually have to act quickly.
Should sellers attend the home inspection?
If you’re selling your house on your own, then it makes sense for you to attend the home inspection. If you’re working with an agent, it’s best to have them attend on your behalf.
Top reasons home inspections fail
Sellers are often caught by surprise when a buyer’s inspection report comes back with a long list of repairs, even if the home isn’t very old. Here are some of the most common major issues that come up during inspections.
- Roofing issues: Roofing troubles can range from a few missing shingles to leaks or soft spots, or even a full roof replacement if the roof is old or failing.
- Electrical problems: The most common electrical issues include wiring that’s not up to code, frayed wiring, or improperly wired electrical panels.
- Plumbing issues: Leaky pipes (and resulting water damage), failing water heaters, and sewer system problems are some of the most expensive.
- Foundation problems: Cracking foundations, settling, and basement water damage can be costly fixes.
- Termites and pests: Termite damage, as well as the presence of other pests or vermin, can be a big red flag for buyers.
- Mold: Mold issues are a common problem, especially in wet or humid climates, and repairs can be extensive.
- Window and door issues: Failing window seals, windows and doors that don’t open and close properly, or broken panes are commonly found by inspectors.
- Asbestos or lead paint: This is a serious issue, and something you should be especially cautious of if you’re selling an older home. Many contracts have specific requirements related to asbestos and lead paint, so be sure to disclose everything you know.
- Chimney damage: Old chimneys can be a safety hazard, and they often need to be removed if not in working order.
While a bad home inspection report isn’t what any seller is hoping for, the good news about the process is that as a result of the inspection, the buyer knows what they’re getting into and has the chance to ask for repairs or walk away — both actions that protect the seller from future liability.
Photo from Shutterstock.
Buyer action: What happens after a home inspection?
Depending on the terms of your contract, the buyer may do one of three things after receiving the inspection report on your home:
- Request repairs: The buyer may request that the seller complete a list of requested repairs, as a condition of the sale moving forward.
- Ask for a credit: The buyer may request a credit (also called a concession), in an amount that’s enough to cover the repairs. They request a dollar amount they want back as a closing credit, which won’t change the purchase price, but will lower your net profits. This is a common option for buyers who want to do the repairs on their own terms, or if sellers are refusing repairs.
- Back out of the deal: A worst-case scenario, the buyer can usually back out of the deal as a result of a bad inspection. Note that buyers who are getting cold feet will sometimes use the inspection as an excuse to back out, even if the report only finds minor issues.
Questions sellers should ask themselves (and their agent) after the home inspection
- Which repairs are mandatory? You’ll want to prioritize repairs that are a safety concern or legal issue.
- How much will repairs cost? If you’ll be taking care of the repairs, you’ll want to get at least three quotes from reputable contractors.
- Do you have to hire a professional or can you DIY the repairs? It depends on what your buyer requests, the type of repair, and your own skill level.
- How much credit will you have to offer if you don’t opt to do the repairs before closing? The amount and type of credit you offer to the buyer varies based on the level of repairs needed, but you’re in good company — 83 percent of sellers make some sort of concession to close the deal.
- How can you negotiate repairs? Your real estate agent is a big resource here, as they should have negotiation strategies that help buyers and sellers meet in the middle on repair requests and come up with reasonable solutions.
- Should you even bother with repairs? In some cases, it may make sense to consult with your agent and weigh the pros and cons of the costs of repairs versus letting the buyer walk and re-listing your home as-is.
Bad home inspection recourse for sellers
Don’t panic if you receive a bad home inspection. Reasonable buyers will understand that no home is perfect — not even new construction. And remember, they want to buy your house! So, they should want to move the deal forward as much as you do.
You have a few options, and should pick your course of action based on what makes the most sense for you financially and for your local real estate market. Here are some options:
- Make the repairs: If you feel that the repair requests are reasonable and you can afford to complete them, this is usually the best course of action. You’ll want to keep the deal moving forward if at all possible, since if the deal does fall apart, you’ll have to disclose the findings of this first report if you re-list your home, and you could risk scaring off a future buyer. According to Zillow Research, 36 percent of buyers have the seller correct the problem before purchase.
- Give a credit: As we mentioned above, buyers are often amenable to a repair credit. But, even though you won’t be completing the repairs, you’ll still want to get quotes from a contractor so you don’t offer a credit that’s way too high.
- Sell as-is and lower the sale price: Selling a home as-is with a lower sale price can be a practical solution if you can’t afford to do the repairs or if you’re in a hurry to sell.
- Offer a one-year home warranty: Purchasing a home warranty for the buyer can be a nice olive branch to offer. It will only cost you a few hundred dollars, and it gives the buyer peace of mind in case any issues come up in the first year after closing. This is especially appealing for inspection findings that aren’t necessarily failing items, but aging systems that will need to be replaced within the next few years.
- Barter in other ways: You can always offer to barter with other items, like furniture that wasn’t originally included but the buyer might want, or appliances you weren’t planning on leaving behind.
Home inspection problems: What to do if you don’t trust the inspection report
Knowing what to do when a home inspection is bad can be tricky. Buyers choose their own home inspector, and occasionally a seller will feel like the report is incorrect or exaggerated.
Regardless of the inspection results, home inspectors should not be advising buyers as to whether they should move forward with the purchase. Their job is simply to inspect and report their findings, and then let the buyer come to their own conclusion.
Home inspectors have been sued before by sellers who believe a deal falling through was the fault of the home inspector and their incorrect reporting. Whether you’re able to sue the inspector depends on state laws. However, it can be difficult for sellers to challenge the inspection as a third party, since the relationship in question is between the buyer and the inspector.
What to do if the buyer backs out
Remember, if a buyer backs out and you re-list, you’re going to have to disclose whatever was found in the report to future buyers, so the best thing to do is go ahead and complete the repairs and hold on to documentation from your contractor that proves the work was done.
You could also add a mention of the repairs to your listing description. Buyers and their agents will know your home is back on the market after being under contract, and being forthcoming about why — and letting buyers know that all issues have been fixed — can be a good strategy. Here’s an example: “Seller has fixed every item from previous inspection report, including a new roof and electrical panel.”
Common seller repairs after home inspection
Before you go too far down the path of arranging for seller repairs after the home inspection, it’s important to separate reasonable buyer requests from unreasonable ones. Buyers shouldn’t expect the house to be flawless.
Reasonable requests after a home inspection
- Major electrical issues that are safety or code issues
- Plumbing, drainage, sewer, septic, or water issues (or well water issues, if applicable)
- Mold or water damage
- HVAC problems that affect home comfort
- Leaking roofs or missing shingles
- Termite and pest damage
- Building code violations
- Lead paint or asbestos
- Elevated radon levels (a common issue in homes with basements)
Unreasonable requests after a home inspection
- Anything under $100 that the buyer can reasonably fix on their own (especially in a sellers market, where buyers shouldn’t want to come off as overly picky)
- Cosmetic issues, like paint touch-ups or older tiles
- Minor water damage, like a leaky toilet
- Renovations — you’re not responsible for turning the home into your buyer’s dream home
- Loose fixtures that can easily be fixed with a few tools
- Minor electrical fixes
- Basement floor cracks that have no structural impact
- Cosmetic landscaping or garage cleaning