When Buying a House, Who Should Be Responsible for the Repairs?

One certainty with homeownership is things will break. Plumbing systems fail, roofs leak, floorboards weaken, and paint cracks. It is difficult to keep up with home repairs and maintenance. Many home defects go undetected because it takes an expert eye to discover them.

In the home selling process, the home inspection can make this painfully apparent. A home inspector’s main duty is to find the largest possible number of defects. Escrow cannot be finalized until the repair issues are taken care of. As a buyer, you will need to determine which repairs you are responsible for and the best way to take care of them.

Mandatory Repairs

Before a lender releases funds for a home purchase, certain repairs must be completed. These repairs involve safety issues, code violations, structural integrity and homeowner association rules. After the home inspection, these mandatory fixes typically become the seller’s responsibility. Before putting a home on the market, the seller should prepare a budget to cover the expense of any repairs and the cost of home inspection. Sometimes, sellers will attempt to pass the mandatory expenses over to you. They will get cost estimates for the repairs and offer you a repair credit. This kind of deal can free them up to focus on other things; however, you must agree to this arrangement. This gives you, the buyer, more bargaining power.

Optional Repairs

Optional repairs usually fall under the categories of reasonable wear-and-tear and cosmetics. Except when stipulated by state law, the seller is only responsible for the mandatory repairs. However, to be on the safe side, it is a good idea to check the law in your state.

The Role of Negotiation

Like in most markets, the negotiating power balance depends on market conditions. If the demand for homes is high, the seller has more leverage. Low demand gives you an advantage.  If you are facing stiff competition from other buyers for a particular home, you may forego a request for repairs. During high demand periods, the seller may be able to market the home with an “as is” clause in the purchase contract. This kind of contract relieves the seller of all repair responsibilities. With this type of agreement, you will have to be careful. In certain states, this type of agreement restricts your ability to hold the seller responsible for undisclosed defects after the sale.

Under normal market conditions, the seller has less power to push back on your offer. You can be less flexible; however, it is best to let an experienced real estate agent negotiate the repair deal. The agent has experience in knowing how far you can press on this type of agreement. Sometimes, a seller will smooth over a buyer’s reservations by offering a home warranty policy that will cover possible repair cost after the sale. This type of deal is worth considering.

Final Thoughts

After the home inspection, unforeseen repair expenses are bound to surface. Parts of the floor may have dry-rotted. The gutters may be shot. Branches might have grown into sewage system pipes. The buyers may not be willing to budge on sharing repair expenses.  Even if the seller backs away from the initial buyer’s offer, the home inspection has already revealed the defects. The seller is legally responsible to disclose the defects to the next buyer.  This will give you more bargaining power. At this stage, both the seller and you are motivated to close the deal. You’ve found the house you want, and the seller has found a qualified buyer. Knowing these key facts will help you reach a mutually satisfying agreement with the seller.

It is important for the seller to develop a budget for repairs and the inspection long before putting the home on the market. In some cases, however, unforeseen repair expenses could arise post-inspection for issues such as floor damage and major pipe blockage. You may decide not to share such expenses; however, with these potential problems, it is best to be proactive.

Conclusion

A house is just a house until you make it a home. Try hard not to have an emotional attachment until after everything has checked out. This should help you stay focused on your investment!

Some states don’t even require a home inspector to be licensed. You should not rely solely on just their observation and skills. Consider hiring a licensed Contractor to do a walk through. this approach might cost a few hundred bucks with a reward of saving thousands in the end. If you don’t know of a trustworthy Contractor, each state will have a Department of Labor and Industry. This will be a good location to start!