Seller Strategies – Your Buyers Want Repairs After Inspection?

All residential real estate contracts used in Florida include a provision for buyers to have a Home Inspection performed within a certain time frame after their offer is accepted by the seller. The contract also specifies what buyers and sellers can or must do based on the inspection report’s findings.

This article is part of an occasional series on general negotiation strategies that sellers and buyers may want to use in the purchase and sale of Florida residential real estate. In an earlier edition, we discussed how the choice of using either a Standard or As-Is real estate contract guides a transaction, and how that choice affects negotiations. A link to that article is included a bit farther down this page.

The most effective strategies start with thinking ahead and being well-prepared. Therefore, it is key to already be aware of any possible condition items that buyers might want addressed after they have a Home Inspection performed on your house or condo.

When selling Florida real estate, Preparation is without question the most important part of a smooth and financially rewarding transaction. Use the 3 suggestions below as starting points for developing your own strategy when selling your property and responding to offers.

Strategy 1 – Have a thorough Home Inspection performed by a licensed inspector before listing your house or condo for sale

By knowing the current condition of your property and having advance notice of any items that may show up on a buyer’s inspection, you can decide whether you want to repair/replace an item before offering your property for sale, or be ready to offer the buyer a credit, or do nothing and wait for the buyer to ask for something. Depending on what an inspection issue might be, any of those choices could be the right one.

If you feel offering a credit might be easier, be sure to have written estimates from licensed contractors and suppliers ready for negotiation discussions with buyers. Having your own Home Inspection report also provides the information you need when deciding whether you prefer offers to be submitted on a Standard or As-Is contract.

Experience has shown that money spent on a pre-listing Home Inspection (along with any repairs based on that inspection) helps sellers receive higher sale prices because buyers are more comfortable when they have better insight to property condition. Uncertainty about condition often causes buyers to make lower offers with more contingencies.

Even when a seller provides a recent Home Inspection report from a reputable company, buyers are strongly advised to have their own inspections performed. This is a very important part of buyers performing their own independent due diligence. Also, different home inspectors often notice different things when inspecting the same house or condo.

A pre-listing Home Inspection at the seller’s expense is not required in Florida and if you do get one, there is no requirement to share it with prospective buyers. It is being mentioned here as a way for sellers to better understand their property’s current physical condition before offering it for sale to the public. However, be fully aware of Florida’s Sellers Disclosure laws.

Attorneys tell us that “Sellers are obligated by Florida law to disclose all known facts or conditions that materially affect the value of the Property which are not readily observable by a buyer.”

Using a written, signed Sellers Disclosure form is considered the best way for sellers to handle their disclosure responsibility. Concealing known problems or deficiencies has caused quite a few costly civil lawsuits over the years.

Strategy 2 – Know how a Standard contract defines Defective Inspection Items

Defective Inspection Items are specific defects showing up on the Buyer’s Home Inspection that the Seller is obligated and required by a Standard contract to fix or replace. The contract itself lists the items and conditions under which something noted on an inspection report becomes a Defective Inspection Item.

A closely related part of this strategy is understanding the difference between Working condition and a Cosmetic blemish that does not affect an item’s function. It is also important to realize that Age by itself does not necessarily create a sellers obligation to fix or replace an item.

Example – a non-leaking 14 year old water heater that still produces hot water is neither a Defective Inspection Item nor a Working condition deficiency. It may not look shiny white anymore, though that is only a Cosmetic issue. Just being “older” does not make something defective, even when the buyer wants a new one.

Now is a great time to review that earlier article on Standard and As-Is contracts. Here is a direct link:   Standard or As-Is Real Estate Contract? Thoughts for Sellers (thefloridarealestateblog.com).

Strategy 3 – Don’t be afraid to say NO

Unless your house or condo has been on the market for an unreasonably long time, politely saying NO (at least initially) can protect you from agreeing to something that either:

• The contract doesn’t require you to fix
• Will cost you more than it should

Of course when you have accepted a written offer, you want to reach closing as quickly and smoothly as possible under what is specified in the contract. Purchase negotiations are not a contest between seller and buyer. When you allow ego and competition to enter negotiations, the end result always suffers. You can look out for your own interests while still allowing the other side to look after theirs. The best deals are when both sides are comfortable and satisfied with how the sale progressed and closed.

Here is another point that may be useful under Strategy 3 – if you decide to accept an offer lower than your realistic and market-supported asking price, and a buyer still asks for repair or replacement of certain items (or further money concessions / credits), understand that the lower price you accepted often compensates the buyer for any condition issues that may turn up on a Home Inspection report. When this happens, let the buyer know that they already received a purchase price discount that they can use for repairs and new items after closing.

Important – This applies to repair/replacement requests that are NOT Defective Inspection Items as identified on a Standard contract. And it definitely applies to anything buyers request under an As-Is contract. Under an As-Is contract, buyers can ask for anything they want, though sellers are not obligated to fix or replace those requested items.

A Standard contract doesn’t care about any difference between asking and accepted prices, so if a contract-defined Defective Inspection Item shows up on an inspection report, the seller is obligated to address it without regard to sale price or any concessions already made. The point here is – see Strategy 2 above!

Whichever contract is being used, declining buyer requests for repairs doesn’t have to be a flat NO, slamming the door on their buying your house or condo. When you have prepared yourself as a seller with good information (using Strategies 1 & 2), you may decide to cover one buyer request, offer to do a little less than requested on another, and fully decline to address another, depending on whether those requests are reasonable depending on the contract’s guidelines and definitions.

It is also very important for both sellers and buyers to be aware of the contract’s time limitations for requesting repairs. These are found in the Inspections and Due Diligence sections of a Standard contract. And remember that Defective Inspection Items must be addressed even without a buyer request.

A Florida-licensed real estate Attorney is your best source for guidance on the specific details of your transaction. Real estate agents are not allowed to interpret or offer advice on what is contained in legal documents such as contracts.

Being thoroughly prepared as a seller, along with knowing your rights and obligations under the contract being used are the best ways to protect your interests while still keeping buyers engaged and enthusiastic about buying your Florida house or condo.

Feel free to forward this article to anyone you’d like. And be sure to check out the All Posts page for more articles on how real estate really works in Florida.