Negotiation after inspection

[Jeremy Torres]

I’m in the middle of buying my first Singe family home in Texas. I got it at $82k (listed at $84,900) , but the home inspection came back with several deficiencies. For example all windows don’t open (all windows have new blinds) , wiring exposed under the sink, rotten wood , damaged shingles , unlevel sidewalk, exposed romex wiring in laundry rm, damaged siding , & no drain pan for water heater . What should I do?? Time to negotiate !!

[Todd Rasmussen]

Originally posted by @Jeremy Torres:

@Todd Rasmussen I won’t get no cash return doing all that myself. Repairs cost a lot. New Roof, windows, new fascia boards. Most things aren’t up to code either. No water pan , no gas lines , broken siding boards , exposed romex wiring .

So I'm going to make some sweeping assumptions about you to offer my next set of advice. No offense is intended if I break this down too much.

There's a couple numbers you need for us to help:

What have similar properties sold for around this place? This number is "C"

Get a quote to replace the roof and windows since those are the hardest to deal with. That combined number is "Q"

C - (Q/.9) should be greater than or equal to $84,000 ($2,000 more than your offer price to allow you to fix all the small stuff you are sweating)

If the number is greater than $84,000 you are getting a deal still. The bigger the difference the better the deal.

If your number is less than $84,000, then you should ask for a credit of that amount. Even if you don't have the time and the skill to make repairs yourself, then hire it out yourself to know that it's all done right. The seller will cheap out and you'll end up with half done or poorly done work 9/10 times. Take the credit!

Now, If it's going to take 30k of work from the seller for you to be able to move in then ask for it, the collective advice you've received is that in this market the seller is likely to say no but that's better than losing ten years off of your life due to stress. If this happens, you should look at a new build and concede on one of the other areas I'll talk about later.

From the seller's point of reference, they have already conceded close to $3,000 and you are about to ask them to reroof the house and fix everything else too. I think they are just going to release your earnest money and wait for the next offer. I hope I'm wrong because I'm rooting for you, but most seller's are going to balk at things you should have noticed during your initial walkthrough especially if you are asking for something big like the roof (which probably also visually has buckled shingles or other indicators that it's at or close to end of life)

A credit at closing is the same as cash to you because it's money you don't have to put into the title company.

You will ONLY get a cash return doing it yourself.

Exposed Romex is $25 to replace with conduit and a surface mounted box if you do it yourself. New fascia board is going to cost less than $100 if you buy the hammer and paintbrush to put it up too. Even factoring in the pizza and beer you buy for a buddy to hold it up while you are nailing it in. Windows you should be able to do for a couple hundred each (although that requires more technical know how) If you figured out how to replace a window, the credit or savings you calculate from the top of my reply would pay for correcting every single item on that inspection report that you actually need to do.

 Typically a 65 year old property needs work and that can be very intimidating to a first time buyer. However all home buyers make a best determination of the right home for them by sacrificing or prioritizing at least the following factors: price, size, condition, and location.

Typically budgets are fixed so you'll have to decide to buy smaller or in a less expensive location if you can't stomach the condition of the home you are considering (assuming your realtor didn't let you make a major mistake on your offer price). The only combination of those factors that is fiscally responsible is to buy the biggest crappiest house that you can still live in in the best location for the most you can afford comfortably.

I'm guessing I won't be able to talk you into taking on some repairs yourself so just try and use objectivity to balance your emotions during this time. No home inspection report has come back clean... ever. Look at everything on the report prioritized from most to least important. Decide where you can move in and where it needs to be within 6 months from moving in. Ask for the first group of items to be done by the seller and a credit to get the second group of items done.

If you can deal with the feedback, you can email me the inspection report. I'll line item and rate the stuff that's on it for DIY consideration.

Good Luck