How To Win Your Inspection Negotiations

Dear Glen, 

We are buying a house and during the inspections, a few issues turned up that we would like to have the seller fix. We don’t want to lose the house, but we also don’t want to pay for these repairs. Can we negotiate these repairs without losing the house? Like, is there a way to make them think we will walk away without actually legally walking away?

Thank you in advance for the advice.

Bluffing in Buffalo 

Dear Bluffing, 

Full disclosure: I have not read your contract!! For specific advice, you will need to get a professional opinion from someone in your state who is qualified. Therefore, we will be speaking hypothetically and I will make some assumptions along the way. We good? Ok…let’s roll on…

Most inspections clauses are like a tennis match: Back and forth until somebody wins.

First, The buyer does the inspections. This is called the “inspection period” in most real estate purchase agreements.  The inspection period is usually 7-14 days long and allows the buyer reasonable access to the property to work the place over and look for any material safety or structural issues. These issues are also called habitability issues, meaning that these problems would interfere with someone’s ability to live in the house safely. 

Once the buyer finishes the inspection, they can do a handful of things:

  1. The buyer can simply accept the property “as is” and ask for no repairs from the seller.
  2. The buyer can send the seller a list of defects or problems, along with the inspection reports, and ask the seller to fix these items. This is called the “request for remedy”, “removal of contingency” or “post-inspection” process. Depending on where you live, this process could go by any one of these names. Most contracts have a set amount of time for this activity called the “remedy period”.
  3. The buyer can ask the seller for compensation to offset the issues. In other words, the seller can give the buyer money at closing or can lower the price to balance the issues out for the buyer and keep the deal moving forward. 

Once the buyer submits their findings and requests for the seller to fix or pay for these items, the seller has the ball.  Like in the offer phase, the seller has three options: 

  1. Accept the buyer’s proposal and do exactly what the buyer is requesting and the deal moves forward.
  2. Counter offer the buyer’s proposal and offer to do some, but not all, of what the buyer is requesting. The seller can alternatively offer a cash discount or closing credit to the buyer instead. If the buyer accepts this counter offer, the deal moves forward.
  3. Reject the buyer’s proposal altogether. That’s right—the seller can cross their arms and refuse to do anything. 

BUT—unlike the offer phase, only the buyer can walk away. The seller can refuse to do anything, but they can’t kill the deal. Since this is the buyer’s show with all the inspections and requests for repairs, only the buyer can kill the deal at this point. 

If the seller wants out of the deal because they have a backup offer or just doesn’t want to deal with this buyer any longer, they can refuse to negotiate, but the way most remedy periods work, the seller can not kill the deal. 

If the buyer doesn’t get what they want from the seller, the buyer, that’s you in this case, can move forward anyway. Or…you can walk away. 

This brings up a wonderful strategy. When the buyer is trying to get the seller to give in and fix things that were discovered during inspections, the buyer really is holding most of the cards. Time is one of the best negotiating tactics out there. If you have time, use it and let silence work to your advantage. 

If the seller refuses to fix or pay the buyer, they could lose that buyer, but the pain for the seller doesn’t stop there. If the deal falls apart, the seller (and likely their agent) now has direct knowledge of a latent (hidden) safety, structural, or habitability issue and they legally have to disclose or fix that issue before the next deal.  Every minute that goes by after the buyer makes their demands, the seller is thinking about all of these possible outcomes. That is a powerful tool.

The buyer can simply move on to the next deal less a few hundred dollars for the inspection and a few hours of time, but basically unharmed.  Sure, the buyer may be a little disappointed, but there are plenty of fish in the sea.

The seller is the one who has to pick up the pieces and try to find another buyer after the world knows the house went under contract. The seller will now also have to endure the obligatory “why is the house back on the market” questions. The seller also has to write new property disclosures (depending on the state) discussing the problems that were found—even if they fixed them. 

If the buyer wants to play hardball, they can. Using time, the buyer can simply state what they want and wait. If the seller refuses to fix or pay the buyer, the buyer can simply submit a new post-inspection report waiving everything and taking the house “as is” if that’s what they want. 

This is why, during the offer phase, I will rank an offer with no inspections above just about any offer with an inspection clause. Anything can (and usually does) happen during inspections and remember, the love is fading every day after the offer is done. 

So my friend, if you want to play like you are going to walk, my advice is this:

Send over a document that spells out what you want the seller to fix or pay for. Include copies of the inspection report demonstrating the issues. If they give you what you want—you win. If they give you something but not everything you want, wait them out until the last day of the remedy period. Make them sweat and cost them some sleep. If they give anything at all—you win. 

If at the end of the remedy period, you still have no movement, you can just send them an updated request that states you will take the house “as is” and move forward with the deal and, based on what you told me—you still win. 

Best of luck and remember, the perfect house is almost never perfect. You can fix most things and chances are, after you move in and start making memories, you will not even remember the pain and suffering of this period of time. 

Oh—and be nice to those sellers. All is fair in love and negotiations, but keeping positive relations with the sellers will help you long-term. You may get moved in and need or want to know things that only the seller can tell you. If they hate you, it’s going to be pretty tough to ask them for anything. 

Best of luck and keep the questions coming! 

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