In most states, the offer to purchase real estate says the purchase is “as is." However, purchase offers typically allow for buyers to inspect the property, review reports and seller's disclosures and cancel the agreement if the buyers are not completely satisfied with what they find.
Since repair requests come after the inspection period, they usually aren't included in the initial offer. Instead, repair requests play a key role during the negotiation period, while the house is under contract.
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Request for Repairs After Home Inspection Timeline
- Buyer and seller agree on an offer price & terms.
- Buyer performs inspections and reviews disclosures as part of buyer's inspection contingency.
- Buyer learns of items in the home that are not up to current code, are not working and/or deferred maintenance.
- Buyer submits to seller a list of repair items via a request for repair form or amendment to the purchase contract.
- Buyer sends an explicit message: “Fix these things or I'm canceling the contract.”
- The seller agrees to the fix-it list, counters it or rejects it.
- If the buyer doesn't like the answer from the seller, they can cancel the contract and receive an earnest money refund.
Should You Request Repairs?
If the repair request is reasonable, sellers usually agree to make repairs. This decision is typically wise because it can be costly for sellers to begin marketing again and find a new buyer.
Plus, now that the seller is aware of issues, they may have to disclose those issues to the next buyer per applicable disclosure laws. In addition, the repair list dollar amount is usually relatively small in the scheme of the total transaction.
Credit in Lieu of Repairs
Sometimes the buyer submits a list of things to be repaired, and other times, buyers ask for a cash credit in lieu of repairs. From a seller's perspective, a request for cash credit is usually preferred to making the repairs as long as the amount requested is reasonable.
When you offer cash, that means you don't have to deal with the hassle and stress of dealing with the repair process prior to closing. Even if the buyer has requested repairs be done, it can be a smart move to counter the repair list and offer the buyer a cash credit.
A cash credit in lieu of repairs can also eliminate any concerns/disputes regarding the quality/craftsmanship of the repair (i.e. a seller completing the repair vs a licensed professional).
How Sellers Can Minimize Repair Requests
If you're a seller, it's smart to complete your seller's disclosure packet and to get your own inspection done before you list to help expedite your sale. By providing buyers with disclosures and your inspection report before they even put in an offer, you have the potential to increase your chances of a smooth and successful transaction with minimal surprises or unexpected turns.
You can also get more well-thought-out offers since the buyers have a better idea of the condition of the home when they put in an offer (less change of additional repair or cash credit negotiations).
Having inspections done in advance also allows the seller to repair anything that needs fixing before they go into escrow. For example, if an inspector notes a leaky roof, a wise seller would know that all buyers are going to want the roof fixed and can have that work done.
By contrast, if an inspector notes that a water heater is nearing the end of its useful life, the seller can simply inform potential buyers to factor this eventual water heater replacement into their offer.
However, you don't want to make major repairs if they aren't going to change the sales price that much, or if you don't have enough cash on hand. In some instances, it's smarter to price your home accurately to reflect the home's condition and try to stick to that price during the negotiation period.
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