I get this question a lot as a Denver real estate professional, buyers will get a house under contract, get the home inspected and then they proceed to freak out. Inspectors will inevitably tell the Buyers that the home is going to catch fire, flood and implode. I usually have to calm them down and tell them to sleep on it. Somehow the next day the house is still standing and we proceed with the next phase of negotiations. New first-time buyers in don’t realize that negotiations actually begin once you have the home inspection not necessarily when you just get it under contract.
Inspectors go over to the subject property with the full intention to find a bunch of problems. Then the buyer’s agent creates a Buyers Inspection Objection. It’s called an inspection objection because that’s what we are going to do. We are going to object to some items found on the inspection report. I try and address the safety issues immediately and then let some of the cosmetic issues slide, that way we do not appear completely unreasonable. You also have to take into account the market you are in. If you are in a sellers market they don’t fix anything. If you are in a tight buyers market you can ask them to fix everything, and they often will.
The buyer’s agent will create the documents next, the buyers sign and then the buyer’s agent presents it to the seller’s agent who then presents your argument to the seller. When I say present the inspection objection. I mean that a good buyer’s agent will formally present the inspection objection with the inspection report attached and defend the position of the Buyer. The goal being to try and get some of the items funded or repaired. The inspection report gives the buyer agent sufficient evidence and support from a qualified third party view, on what is wrong with the property. This will support their stance and encourages the seller to fix some of the issues. On occasion, the buyers don’t want to give the inspection report to the sellers. The inspection report is their property therefore the buyer’s agent has to ask permission to release the report. It’s in their best interest to provide the report, because once the seller is aware of the issues they must disclose the issues in the future. Interestingly HUD has a policy in place to never accept inspection reports. HUD’s are sold “as is” and I believe it is so that they can claim that they are unaware of any issues.
A few days later the Seller’s agent will create an Inspection Objection Resolution. Usually there’s like 5 to 10 issues to take care of, they often agree to repair the smaller issues or they’ll have paperwork to prove that it’s not a problem (such as a roof certification) and then sometimes they apply a credit to the buyer so that they can get the issues fixed at a later date. I often encourage Buyers to take money over getting the repairs done. If the buyers handle the repairs themselves they often get a better job because if the sellers get it done they just want a cheap quick job and to move down the road. Frankly, it’s almost always combination of both money and a few items get fixed. If you have a great inspector and they come up with a bunch of things don’t freak out! Usually there’s some compromise and we move forward with the deal. The last one I had, the seller come down $5,000 and agreed to fix any of the safety issues before closing, and that my friends is how you handle a contract after your get the home of your dreams inspected.