Negotiating after Home Inspection

[Paul Lachaud]

Hey Biggerpockets,

I've put my first fourplex under contract for about $95k earlier this week and had a home inspector come out. He seemed extremely knowledgeable, thorough and provided great service.

He'll be sending me a full report with recommendations and photos by the end of the weekend, but he provided a short summary for now. Here are his top priority recommendations:

• Get a certified HVAC assessment of the furnace. Although it is has not had any significant problems, it was installed in 1994, and has reach the"end" of its useful life on paper (20 years). It may last another 10 years without issue, or it may conk out this year...
  • Heats all 4 units
  • Owner pays gas for heating in all 4 units (There are 4 individual meters in the house for stoves, and 1 house meter for heat and dryer)
  • Generates heat by creating steam that ciruclates in radiators in all units
  • Tenants have no control, it is regulated by a thermocouple outside the house
• Get a Structural Assessment
  • Termite Treatment
    • Evidence of termite treatment in the past (dug out tunnels)
    • Evidence of new tunnels, though they are likely inactive due to cold.
  • Fire Damage in back corner of basement, everything is replaced but some joists in opposite corner so beyond surface damage (he recommended I get records of the work done)
  • Cracks inside and outside on second floor
• Roof- recommends consulting a roof contractor
  • Overall good
  • Damage over the entry way
• Get Main sewage pipes scoped. Water may be leaching out under the basement floor (might be associated with cracks)

There are a bunch of little things that are easy to fix (doorbells not working, loose window seals, smoke detector batteries, ect). I really want to get opinions on the big ticket items though. Should I attempt to negotiate the price down, or have the seller fix them all. Or a combination.

[Christopher Brainard]

@Paul Lachaud

This is somewhat of a trick question - as the buyer, you should try to keep your basis in the property as low as possible. This includes taking the repairs into account. After all, anything the seller pays for, is something you don't have to later.

You need to carefully measure what you ask for against your relationship with the seller. The better rapport you have, the better the chance that you can propose the repairs and get them completed or a price reduction. Please keep in mind that If you have a bad (or no) relationship with the seller, requesting excessive repairs will sometimes alienate the seller and kill your deal. Additionally, you may have a very hard time getting the seller to pay for repairs which are not necessary to make the fourplex habitable. For example, the HVAC is the same HVAC that was there when you submitted your offer and appears to be in working condition.

-Christopher