Time to be more strict with concessions after inspection?

Question

Good afternoon BiggerPockets,

I just had an offer accepted on a home in Rhode Island. In the past I haven't done much in the way of negotiations after the inspection. I feel as though the more the market is changing the more a seller will not want to go back the the drawing board with offers. Is now a good time to start asking for more in concessions?

For context: This is a 4 family with 4 newish heating systems and an architectural roof. The seller selected "Unknown" for everything in the sellers disclosure and the inspection will be tomorrow. I know there are some issue with the foundation.

Anthony Thompson · Answer

@Bevin Bankston yes, you're in a better position now to ask for concessions after inspection, compared to a year ago. But as always, you need to weigh the pros and cons of the deal when considering what to ask for. If you're getting a great deal, you might go easy on your asks. But if you feel you're paying at or above market value, you might go tougher. By choosing "unknown" on everything in the disclosures, the seller can't say "I told you about that issue/defect in the disclosures so you can't raise it after inspections" about anything. Typically you see that in a probate situation or where a property was bought from a bank foreclosure or it was an investor who just rehabbed it. Usually you want to be more careful with your inspections in these cases. Not necessarily to make more "asks" in the negotiation, but to reduce your assumptions that X won't be an issue (i.e., assume fewer things are OK and be more cautious about possible issues).Besides the overall state of the market, which has taken more buyers out of the market and thus shifted more power to buyers vs. sellers, also look at that specific property, specifically its time on market and listing history.If it was listed 6 months ago, didn't sell, and was relisted 2 months ago and has already been on market 50+ days before your offer was accepted, I'd think you'd be in a stronger position to make more asks from the inspection results, than if this was the first time it was listed and it's only been 3 DOM, and especially if there were multiple offers (though sometimes those are made-up so I'd give more weight to DOM than alleged other offers).

Theresa Harris · Answer

Your initial offer should have included defects that you knew about. If the inspection reveals extra items, then yes negotiate. When I sold a rental, we had 'unknown' selected for most things because I hadn't lived there for 20 years and while I'd been in it, it isn't the same as living there and knowing all of the problems.

Eliott Elias · Answer

It's the best time, never stop negotiating until you close.

Bob Stevens · Answer

Really not seeing a question here? If there are unknown items ( that you should have noticed BEFORE the offer) then yes, negotiate. HOWEVER, I strongly suggest you connect with someone doing deals, learn then apply what you learn. .How are you making offers withOUT knowing the reno ?

Michael Diossa · Answer

Today it is common to keep negotiating until the deal is closed as it is the opportune moment.

Dillon Cook · Answer

DOM matters. How many times they've been under contract matters. Today is much easier to negotiate post-inspection than a year ago like another guy mentioned.

Andrew Freed · Answer

It's definitely a different market and you are able to negotiate. Normally, as mentioned above, I try to be up front about the issues and negotiate the concessions in the beginning. For instance, if we see that the units need cosmetic upgrades and some foundation work needs to be done, we might ask for seller credits or a price reduction in the beginning noting these as issues. Additionally, I would advise you and your client to reach out to the city and request a Public Record Request for any inspectional or housing violations reported to the city. A lot of times, this is good information to be aware of during the inspections such as a leaky roof or items that you can use as leverage for negotiation such as a rough tenant base indicated in the housing violations. Just some food for thought.

Zachary Gilbert · Answer

1) Depends on the market situation the home is located within. If there were multiple offers and DOM was low, then be cautious. BUT 2) If there were not multiple offers (3+) and you already got a good deal on the price - then throw everything at them and see what sticks. It might mean their motivation to sell is high.

Bill B. · Answer

I know is the common setting for all rentals in my markets. It’s a single checkbox that says I didn’t live there, how would I know. If you didn’t get a good deal go ahead and negotiate. If you did get a good deal and I was in your market. I would have sent in a backup offer for $5k over the accepted offer telling the seller I’d love to step in if the currently buyer starts dragging their feet.