Author Topic: Renegotiating after home inspection  (Read 801 times)

Nola584

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Renegotiating after home inspection
« on: August 21, 2020, 07:37:43 AM »
Weíre in the tail end of our inspection period to buy a 100+ year old house, which would also be our first home. How would you handle post inspection negotiations in our shoes?

For context, old houses are the norm in this area, and I realize all come with a different set of issues to address. We like this house a lot since itís one of the smaller homes in the area (and priced accordingly), and overall the last owner (of 40+ years) seemed to take decent care of it. We also have no pressing need to move other than trying to capture low mortgage rates- current renters with plenty of time left on lease.

Given the age of the home, we had 2 general inspectors, a sewer scope, a chimney inspection, and an electrical inspection/estimate of recommended work. Based on the issues found, it looks like weíll be requesting repair or a large credit for the major necessary items including:

- sewer line repair- crack found and were unable to scope last 25ft of line due to broken line in the way
- electrical work- new panel, replacement of some live legacy K&T, some misc smaller fixes
- repair of basement wall - not foundation thankfully- the wooden wall portion above which is currently more or less open to the outside in one portion
- some kind of credit for roof- we knew it was around 10 years old going in, but discovered there are multiple layers (3-4) of shingles and inspectors are saying it likely just has a year or two left at best due to this

Thereís also a whole laundry list of deferred maintenance type items weíll need to tackle (eg mortar repair in the basement, removing ivy and tackling whatever is beneath, redoing some plumbing to remove galvanized and hopefully fix water pressure issues, etc etc) but donít view as critical enough to require credit.

Overall, I felt like the inspections went about how I expected, and both general inspectors felt the overall home condition was middle of the road for a home of this age.

What issues would be most concerning to you, and are there any we should push to have repaired before close (vs credit/price reduction and doing it ourselves after)?

We were thinking of requiring the sewer repair prior to close, since the last 25ft are unknown and could substantially increase the current cost estimate of $6k if damaged. Otherwise weĎd prefer to do most everything else ourselves, assuming appropriate credit. Are we thinking about this the right way?

former player

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Re: Renegotiating after home inspection
« Reply #1 on: August 21, 2020, 08:33:00 AM »
The broken sewer line basically makes the house uninhabitable.  So that needs to be fixed before you move in.  If you need to move in immediately after purchase then it needs to be fixed before purchase.  If you don't need to move in immediately then you could give the sellers the option of either mending it themselves or taking enough off the price to cover your estimate of the likely costs of replacing the whole 25 ft.

As to the rest how you approach negotiations depend on too many factors to say over the internet - the price you've already agreed might be relatively high or relatively low (eg compared to prices per sq ft in the neighbourhood generally) and that would factor into negotiations, as would demand for houses and this type of house in your neighbourhood, the likely attitude of the sellers and what you think your chances are of getting another house in the neighbourhood that you like as much.  Which is to say, negotiating is both an art and a science, and good luck.


Jon Bon

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Re: Renegotiating after home inspection
« Reply #2 on: August 21, 2020, 09:27:14 AM »
As a proud owner of multiple 100+ year old homes I feel your pain.

The sewer line is an issue for sure. However it might be ok for a while.

Is the house currently occupied? and are their big trees between the house and the main? If its currently in use with no trees it might be OK for a while yet. Sewer scope is usually above and beyond standard inspection but good on you to catch it. It also sounds like you are taking this in stride, as I always say all houses have warts.

Yes I think you have enough wrong with this house to ask for some moderate credits. However most sellers view things in whole and not itemized. So yes if you asked for 5 things x 2,000 each they might give you 4k because that is the max they are willing to give back no matter how many things are wrong with the house. If that makes sense.

Furthermore, the thread right above this is talking about how houses have 15 offers by the first day, so if you ask for a bunch the seller might just pass on you because the market is so crazy right now. AKA they have a great BATNA*

*Best alternative to non-agreement




Nola584

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Re: Renegotiating after home inspection
« Reply #3 on: August 21, 2020, 10:42:39 AM »
The sewer line is an issue for sure. However it might be ok for a while.

Is the house currently occupied? and are their big trees between the house and the main? If its currently in use with no trees it might be OK for a while yet. Sewer scope is usually above and beyond standard inspection but good on you to catch it. It also sounds like you are taking this in stride, as I always say all houses have warts.

This is the piece weíre having a hard time judging the urgency of. The house in unoccupied (at least for the last couple months), and there are two moderate size mature trees in the pathway of the line. The broken/blocked bit is just at the outer reach of the 2nd tree, judging by canopy size. The final 25ft run under the street. The plumber wasnít overly alarmed by the state of things, but he did say it will only get worse and should be repaired.

Good comments to both on the art of negotiating. This is also where weíre struggling a bit- we know there is a good bit of interest in this home and our accepted offer was ~$10k under asking, so it feels like weíre getting a decent deal and I wouldnít be surprised if they already have some backup offers in the wings. The next buyer might not find the sewer issue, but likely would have similar findings on the roof/electrical/basement wall- all were easily caught by both our general inspectors.

My guess is that they were targeting ~$5k less than our accepted offer, based on comps in the neighborhood, so Iím thinking thatís what they might be willing to give in the negotiations. Weíll just need to decide if weíre happy with that too. Guess weíll see soon!

lhamo

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Re: Renegotiating after home inspection
« Reply #4 on: August 21, 2020, 06:43:10 PM »
We had a blocked sewer line when we purchased our home.  We required the seller to fix it, which cost about $10k (awkward location required a very deep hole and 6 ft of new pipe.

What we neglected to ask for was a copy of the video of the complete cleared line after the repair was made.  Three years later we discovered (due to additional breaks/blockages in the line) that the condition of the pipe was so poor it should have been lined when we purchased the house.  We ended up spending another $20kish to get the new blockages repaired and the pipe lined from our house to the city mai.  The repairs were roughly half of that cost.  I doubt the sellers would have paid for the lining, but we could have had it done earlier and saved ourselves 10k.

Villanelle

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Re: Renegotiating after home inspection
« Reply #5 on: August 22, 2020, 02:48:52 PM »
These are tough questions to answer as they depend a lot on the market you are in, and even more on how much you want the house.

You can ask your agent for advice, keeping in mind that they have a vested interested in seeing *this* sale through so their advice will likely tend toward you asking for less.  If the sale falls through, they've put in a lot of work for nothing.  It's in their best interest for you to ask for nothing, as that pretty much ensures the sale goes through and they get paid.  But it is probably still worth asking.  They can even reach out to the other agent to perhaps get a feel for the seller's willingness to budge on credits.

I'd likely ask for the repair of the line before closing (and that would mean changing the closing date), and then the rest would depend on how devastated I'd be if they walked.  (However, although it's possible, having them walk instead of at least countering seems unlikely.  Just like the agent, they have some interest in seeing this deal though so at a minimum, they  would most likely counter, even if that counter is that they will do nothing.)  If you don't think you will find a better deal (even factoring in these costs out-of-pocket for you) and you need or really want to buy, then start with w moderate amount but one that leaves a bit of room for them to negotiate down and you still be satisfied.  If you would be disappointed but fine if the sale falls through, start with a higher number and negotiate more assertively. 


Cb1234567

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Re: Renegotiating after home inspection
« Reply #6 on: August 23, 2020, 08:05:53 AM »
You sound like a very reasonable buyer, going in with your eyes wide open.

Iím assuming the house isnít being sold as-is. In your shoes, I would look at the eventual cost for these repairs (you might not need it all completed to move in, but itís coming...) plus the price youíre paying for the house.
Ask 2 questions:
1. Together, does the whole cost suit the selling comps in the area? (I.e. do you think itís worth it).
2. Can you afford it all in the end on your own?

These two give you a high and low range (best case, seller pays all, worst case, you pay all). Youíre going to end in the middle, itís just a good exercise to know your own limits for this to be feasible - whether in terms of ultimate value of the property and/or your own finances.

Because you still have the rental, you have flexibility to fix things yourself, after purchase, assuming a lender isnít requiring anything. The time not occupied isnít important to keep in mind. Old houses donít do well vacant... likely youíll also see things crop up because you wonít live as lightly on the house as the long-time owner did. As in, you start using the extra shower twice daily, and the massive hair ball in the drain rehydrates, expands, and suddenly you get to shower at your apartment while the old, fragile drain gets replaced via a hole in your living room ceiling ;-) ...even if the main plumbing is ok for a while.

We probably would put a number on all of the repairs and ask for a credit at closing. That means the house still has to appraise at the offer amount, and it will reduce your cash out of pocket so you can hand it over for repairs instead :)

Sewer - keep that plumber. Heís not trying to scare you into spending 40K. Fix it later.
Electrical - get a credit for this.
Basement - get a credit for this. You canít have your basement opening to the outside.
Roof- depends on the dollar amount weíre at so far. If itís not leaking, they donít have to fix (but you will). Has it rained lately in your area?

Iím wondering how this turns out??

Nola584

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Re: Renegotiating after home inspection
« Reply #7 on: August 24, 2020, 04:01:07 PM »
Thanks everyone, really appreciate all the thoughts and input. After talking it over with our agent, we decided to somewhat split the difference and ask for only credit at closing (even though this is riskier on the sewer front). We settled on $15k, which is less than the estimated cost to repair the 4 main defects, and also a bit higher than weíd ultimately be satisfied with.

We realize thereís some risk the seller might back out, or just counter with no repairs/credit, but weíre willing to see where it goes. Hopefully they wonít balk and will at least counter. If not- there are other houses!

Iíll give you guys an update when we know more.

Nola584

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Re: Renegotiating after home inspection
« Reply #8 on: September 26, 2020, 08:06:04 AM »
For those following along at home, we ended up closing on this home earlier this week.

Final stats:
$469 list, $455 purchase, $6k repair credit

The $6k credit was ultimately less than we ideally thought fair ($10k) but in the end we didnít want to scratch the deal over the difference of a few thousand when it wouldnít make or break us.

Now the real fun begins!

Cranky

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Re: Renegotiating after home inspection
« Reply #9 on: September 26, 2020, 08:45:49 AM »
I think it really does depend on the market and the motivation of both buyer and seller. For the house we close on next week, the seller has replaced the furnace and had the chimney and fireplaces repaired. The house is in a relatively hot market (for the midwest), we made a full price mostly cash offer before the house had really been listed.

The seller wants to sell, we really want to buy, and the real estate agent agreed that pretty much anyone would want the furnace replaced after the inspection report, so we're all good.