The home inspection and repair process can be a stressful part of buying or selling a home. As a real estate agent, knowing what to look for and expect will help you guide your client and make the process as smooth as possible. In this post, we’ll cover important aspects of the inspection and repair process, including how to set the proper expectations and what fixes are mandatory after a home inspection, specifically in resale homes.
What We’ll Cover
- Setting Expectations
- Which Fixes are Mandatory After a Home Inspection
- Who Pays for a Home Inspection
- Repairs Not to Include in a Repair Amendment
- Common Repairs to Include in a Repair Amendment
- Other Tips to Keep in Mind
Whether you are representing the buyer or the seller, setting expectations is an important first step to ensure a smooth inspection and repair process. Take the time to explain the process and how it actually works, so you can avoid any unnecessary hiccups along the way.
Working with the Seller
When talking with the seller, make sure they understand it is not unreasonable to go through multiple negotiations over the course of the repair process. It is wise to advise them to set aside extra money for unforeseen items that may pop up on the repair amendment.
A rule of thumb when estimating the potential cost of repairs is to budget anywhere from ½ to 1% of the listing price of the home. This means for a $200k house, repairs will average about $1k to $2k on the higher end. Costs will vary depending on the condition of the house and the specific repairs the buyer asks for.
Working with the Buyer
Buyers who are building a new home will typically undergo three different inspections throughout the construction process, where they can ask for any necessary repairs or fixes.
However, the repair process on a resale home is a bit different, so it is important to be upfront with the buyer and set the proper expectations. Resale homes are not new homes, and you are largely buying the home “as is”, with the exception of major repairs or items that are potential safety hazards.
Asking the seller to repair every chipped baseboard and weathered piece of siding on the house is not reasonable and will not be received well.
To make things easier on the buyer, some agents like to include the most obvious repairs as part of their initial offer on the home.
If you’d rather wait until the inspection report comes in, you can still take note of any obvious issues and let the listing agent know that getting these items addressed is important to your buyer.
Which Fixes Are Mandatory After a Home Inspection?
So what fixes are mandatory after a home inspection?
In most instances, mandatory repairs are items that speak for themselves as safety hazards or major structural defects on the property.
The only other time that repairs can be deemed mandatory is when the buyer is using a Veteran’s Affairs loan. After the VA conducts the appraisal, there are often certain repairs that have to be fixed for the buyer to get approved for the loan. These repairs fall back on the seller’s responsibility or they could risk losing the deal altogether.
Otherwise, repairs are largely a negotiation between the seller and buyer.
Who Pays For a Home Inspection?
It is common practice for the buyer to pay for the home inspection.
The average cost for a home inspection is around $400, but this number will fluctuate and can be up to $1,000 depending on the state you are in and any extra features the home has like a pool or septic system.
If the seller does not agree with certain larger items on the inspection report, it might be wise for the seller to order a second inspection on their own behalf.
Repairs Not to Include in a Repair Amendment
Now that we have gone over which fixes are mandatory after a home inspection, the following repairs are some things you shouldn’t even bother including. You don’t want to clutter up the repair amendment with simple repairs the buyer can do themselves.
1. Hairline cracks
It’s pretty common to see cracks on the outside of the foundation or driveway of an existing home. This might worry a buyer who does not know that these types of cracks are generally superficial.
Reassure your buyer that most minor cracks on the foundation and driveway are surface level, and don’t necessarily indicate that something is wrong with the structural integrity of the foundation.
Still, take note of the cracks and tell the inspector so he can check it out during his inspection.
2. Non-safety related plumbing and electrical items
Major plumbing and electrical issues that present a safety-related concern should always be addressed in a repair amendment.
However, small things will pop up here and there such as hot and cold water lines being reversed or outlets that are missing a cover, which are better to leave off the repair amendment so that more significant issues can be addressed.
3. Cosmetic issues
As mentioned above, new home builders will entertain most client grievances during the construction process, such as paint touch-ups and other cosmetic issues.
On the other hand, asking for cosmetic fixes in the repair amendment of an existing home is not advised. Make sure your buyers know this from the start so you are both on the same page.
If you run into any issues, remind the buyer that the purpose of the repair process is to ensure they are getting a safe and sound home. They can do whatever they want to the home once they move in.
4. Smoke and carbon dioxide detectors
Whether broken or missing, you can leave smoke and carbon dioxide detectors off of the repair amendment, since they are relatively inexpensive and easy for the buyer to fix or replace once they move in.
5. Landscaping items
Don’t negotiate for repairs on anything related to landscaping, unless it’s something significant like a tree touching the house or electrical lines. Instead, offer the buyer a referral to a good landscaper that’s part of your network.
Common Repairs To Include in the Repair Amendment
While not mandatory, the following are some of the most common and important items to include in a repair amendment when applicable.
If you are representing the seller, take the time to make them aware of these common repair items so they can have a better idea of what to expect.
1. GFCI outlets
The inspector will note any outlets in the kitchen, bathroom, or exterior of the house that are not GFCI and state that they need to be replaced. Converting a regular outlet to a GFCI outlet is a more involved process, so it is always a good idea to ask for this in the repair amendment.
2. Roof deficiencies
An old roof is not a repair issue, so long as the roof is in good condition.
Here we are talking about damaged roofs with problems noted in the inspection, such as missing shingles, ridge vents, flashing, or other major deficiencies.
Significant roofing issues need to be addressed and therefore added to the repair amendment.
3. Electrical panel deficiencies
Most problems with the electrical panel are safety hazards and should be included on the repair amendment if present.
These fixes are generally inexpensive and at most will cost the seller around $200 or $300.
4. Broken window seals
The seals on double pane glass windows can deteriorate over time, causing moisture to collect between the panes.
Most window companies will glaze or reseal the windows for about $1,000 to $1,500, depending on the number of panels to be fixed.
5. A/C Unit
It is not uncommon for A/C units to get stopped up and start leaking into the pan. If you see water or rust, it’s definitely worthwhile to add this to the repair amendment, so the seller can get a technician out there to service and clean the unit.
In fact, if the buyer is looking to obtain a warranty on the home, the warranty company will often require a licensed technician to check out the A/C in order to get approved.
Total cost to the seller averages around $200.
6. Thermal expansion tank
A thermal expansion tank is a requirement for every water heater, and will show up on the inspection report if it’s missing or damaged.
The lifespan of a thermal expansion tank is from 5 to 10 years, so if the seller has not replaced the water heater during that time frame, it will probably need a new thermal expansion tank.
This is a safety hazard and should definitely be addressed in the repair amendment, with average repair costs ranging from $350 to $500.
7. Pipe pressure
If the seller doesn’t have a pressure reducing valve on their pipes, it is important they have one installed. This is relatively inexpensive to do, and will cost the seller a few hundred dollars.
If the home has a PSI valve, make sure the inspector checks that it’s functioning properly. According to code, the pressure should be below 80 PSI for all pipes in the house.
8. Wood rot
It’s not terribly uncommon to see a bit of wood rot here and there on an existing home. While you might just mention a small amount of wood rot to the listing agent, extensive wood rot should be included on the repair amendment to be taken care of prior to closing.
Other Tips to Keep in Mind
Have your own handyman to recommend
It’s a good idea to have a reliable handyman you can count on to refer buyers to. The buyer will be more willing to take care of small repairs after they move in if you ensure they can be done professionally and at a fair price by your own handyman.
Be on good terms with your inspector
In most cases, the buyer is responsible for setting up the home inspection, which means they get to pick the inspector. Typically, the buyer will turn to you as the agent for a recommendation, so be sure to have one ready.
If you have a good relationship with your inspector, they can give you a heads up about repairs on the inspection report before sending it out to the buyer. This will allow you to review the items first, and determine which items are most important to have fixed before talking to your client.
Once you present your suggestions to the buyer, ask them if there are any other items they want to include from the inspection report. If there are any questions on the importance of an item, you can call the inspector for more details.
Ask for a credit
The other option you have in the repair process is to ask for a credit in lieu of the repair.
This option is often attractive to the seller, since they will not have to coordinate having the work done and can instead pay the buyer to repair the item on their own time.
Some buyers also like this option, because it allows them the freedom to pick their own contractors and make sure the work is done correctly. However, other buyers may not want to hassle with getting the work done after closing, and prefer to have the seller take care of it upfront instead.
Final Thoughts on What Fixes Are Mandatory After a Home Inspection
For the inspection process to go smoothly, it is important to set the right expectations with the buyer or seller up front.
As a real estate agent, it’s your job to make sure your client is informed and knows how the process works so you can prevent any unnecessary hiccups along the way.