Negotiating for Repairs

After a home inspection, I often have Buyers ask me if they should ask for a reduction in the price or if they should have the Seller fix some of the deficiencies. Every situation is different, but I usually advise my clients to ask for a reduction in the price. The biggest reason I suggest this is because there is no easy way of ensuring the Sellers do as good of a job with the repairs as you would as the new owner.  

Example: Upon the investigation of the heat exchanger of a furnace, a home inspector was able to visually see cracks. This is dangerous due to carbon monoxide leaks. At this point, it is best to opt for a new furnace. My Buyers asked if we could instruct the Sellers to replace the furnace. I advised them not to, in this situation, because as a prudent home owner, you would do your research and find a good quality furnace so that it will last many years. If you put yourself in the shoes of the Seller, who is now instructed to replace their furnace; do you think quality is going to be their driving factor, or will it be the price? Asking for a price reduction is the better option, in my opinion.  

You may be thinking "well what if the Buyer doesn't have the cash to purchase a new furnace right away after all the fees of purchasing a home." Well, we have a solution to that! Most lenders will not approve of a 'cash back incentive' on a purchase. That means, if you write in a contract "Seller to give $5000 cash back to the Buyer in order to replace furnace", the Lender will typically reject it. What CAN be done, is to word it "Seller to give a $5000 credit at (insert furnace retailer here) for purchase of new furnace". That way the Lender knows that the money is actually going into the house, rather than cash, which could be used for non-home purchases.

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