Negotiating the Repairs

Many home sellers want to know what repairs that buyers will want done before closing.  The answer to this one, however, varies.  Some buyers will request very few things, while others will ask for everything imaginable. 

When going through this stage in the selling process, here are some things to consider before the wheeling and dealing begins. 

Consider hiring a licensed Massachusetts home inspector before listing the home.  Some REALTORS, like myself, will cover this expense as a value added service for listing with them.  Regardless, it's a good thing to do, because it can identify potential problems before going to market. 

Home Value.  Everything sells at a price.  Does the price of the home factor in repair costs?  Or would repairs make the home be worth a lot more than the asking price, based on recent sales of similar homes.  This is something to evaluate when determining how to proceed in negotiations. 

Cash Credit.  Personally, I recommend that home sellers provide cash credits to pay for repairs, and let the buyer be responsible for making the repairs after closing.  

For example, suppose  Jill buyer originally offers to buy  "Joe Sellers"  home for $300K, but then the home inspection report arrives with a recommendation that the Chimney be repointed. 

The Market Analysis on the home, prior to listing reported the home to be valued between $290K and $300K, and the estimates for the chimney work averaged about $1500. Jill Buyer asks Joe Seller to make this repair, and he agrees to a $1500 credit for the Buyer to use for chimney repairs.     

Listen.  The best outcome, in any negotiation, is when both sides "win."  When a Buyer makes a request, ask him/her to justify their reasoning for it. 

Suppose, for example, that a Buyer offers $270K on a home priced at $320K.  In this case, I would recommend asking the buyer to justify why he/she feels the home is valued so low. 

Perhaps he/she can provide sales data of comparable homes sold at the $270K point, and the Seller then sees that his/her home is overpriced.

Don't be Afraid to Walk Away.  Perhaps, the home is priced correctly, but the Buyer simply feels that the home was than he needed, and priced more than he wanted to pay. In that case, it's ok to walk away.   There is no need to get emotional.  Just say "no."

Not every deal closes, and that's ok.  If the transaction works for both sides, move forward.  If it's a one-sided deal favoring only the other party, then it's time to say "no deal." 

The example I mentioned above, is common, although there are many other results that could've occurred.  Seller may have refused to provide a cash credit and Buyer decided she wanted the house anyway.  Or Buyer could've walked, or the two buyers agreed to split the cost. 

Outcomes depend on the people involved. Many people, unfortunately, let emotions take over, and that's something to keep in mind whenever entering into a negotiation.  

Use Data to Make Your Case.  If a Buyer makes demands resulting in an offer that is below market value, show him/her the data to justify why your home should be valued higher than the buyer's offer.  

Being able to back up your points improves the chance that the negotiation process will end successfully.

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John P.Kreiss,REALTOR®,CBR®,SRES®,e-PRO®
Certified Real Estate Divorce Specialist
Prudential Prime Properties
125 Turnpike Rd. #7
Westborough, MA 01581
Direct: (508) 826-6920
Fax; (508) 329-1303
http://www.johnpkreiss.com

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