How To Leverage Your Home Inspection When Making An Offer
Did you know that you can use a home inspection to negotiate your offer? In this episode of Aloha O'ahu, I’m going to show you how to use your home inspection as a negotiation element. We’ll look at some key strategies to help you make a wise investment when buying your dream home.
Why Home Inspections Are Important
If you're in the residential real estate market, conducting a home inspection is just part of the process. It allows the Buyer to learn more about the condition of the property they are purchasing. Buying a house can be super exciting, but it’s also very emotionally driven. Additionally, the average amount of time a buyer spends in a house is less than 15 to 30 minutes before they decide to buy it.
In that short time, a buyer can quickly see how their family's lifestyle will work in the home. However, most people cannot determine the actual condition of the home during that time. There are elements you cannot or do not see when you are shopping, such as structure, the roof, plumbing, electricity, etc. This is because some aspects of a home are not readily apparent.
For these reasons, it's customary for a buyer to get a home inspection after their offer has been accepted. I'm always happy to talk to my clients about the actual process of the home inspection, but today we're going to talk today about how you can use it as a negotiation tool. In a very tight inventory market like we have now, details like this count.
Using Inspections In Negotiations
Right now, we are still very much in a Seller's market. In a more balanced market or a Buyer’s market, you would conduct a home inspection to find out what issues the home may have. These can range from simple things like changing on an electrical socket to more serious things like a leaking pipe.
The first way you can use your home inspection during a purchase contract negotiation is to strategically decide which items you discover that you want to ask the sellers to fix or give you a credit for. In a tight market, we need to be careful which terms we decide are important enough to ask to have fixed right now, as it seems like there's always a backup offer in play. You may not want the seller to move on to that next offer if you ask for too many costly repairs. When you prioritize your requests, it really makes a difference.
The second way in which a home inspection can become an essential part of your offer is by using it for informational purposes only. When you're writing the offer as the buyer, you can include that you will conduct the home inspection and will move forward with the transaction in as-is condition; you're not going to negotiate for any repairs to be done.
Essentially, your inspection will be a “go” or “no-go” for moving forward in purchasing the property. You're either all in already knowing what repairs need to be made, or you're out and you'll let the seller move on to the next buyer. This strategy has the benefit of telling the seller that you're not going to argue over minor repairs, which will then strengthen your offer in the eyes of the seller.
Waiving An Inspection
The third way you can use your home inspection as a negotiation tactic is by not conducting the inspection at all. In this offer, we would write that the buyer is waiving their right to a home inspection. This strategy tells the seller that you are so interested in this property that you are ready to move forward regardless of what conditions exist that you may have to deal with after closing.
This option is very risky in terms of not knowing the issues that lie in the house. But if a buyer wants the property bad enough, they'll take that chance. The buyer can always conduct a home inspection after they own the property to get a thorough look at all the aspects of the home. However, the buyer must be confident that they are willing to handle any issues, including structural, when they use this strategy.
Getting Your Offer Accepted
I hope this gives you a new perspective on how home inspections are an integral part of real estate negotiation. As the Buyer, you have choices to make in terms of your comfort level and what level of risk you are willing to take. In real estate, sometimes it helps to create choices and think outside of the box when making an offer.
If you ever have any questions that are not covered here, please always feel free to reach out to me and I’ll be happy to connect with you.