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The buyer will most often carry out a home inspection in most property price negotiations. The result of this home inspection can often be a deal-breaker. Most of the time, the buyer will request some fixes from the seller, which can cascade into another negotiation round.
Only 17% of purchase contracts in Australia fall apart at this point because both parties can't agree on what to do. So, what fixes are mandatory following a home inspection, and how do you navigate this negotiation stage?
Types Of Post Home Inspection Fixes
Mandatory repairs are necessary to resolve safety concerns before closing on a property. Most states require homes to adhere to specific rules before you or an estate agent can sell them. Additionally, buyers may be unable to secure financing if the house has significant flaws, such as structural faults or faulty electrical work.
Technically, no home repairs are mandatory following an inspection. In some situations, property sellers list their property under the term "as is." This means they will not repair any flaws in their property. However, you may discover that it is challenging to sell your property if you refuse to do some repairs.
Many states and mortgage companies have safety requirements that your home must meet in order to be eligible for completion of sale. Here are some requirements the seller will have to meet to sell quickly.
You will also need to comply with lending criteria except where your buyer pays in cash. These requirements can vary based on the type of loan selected by the buyer and the lender with whom they are dealing. For instance, government-backed loans typically have stricter property requirements than traditional mortgages.
However, in general, your home must meet certain undefined conditions in order to qualify for financing. If the inspector identifies issues that could make the property uninhabitable, such as lead-based paint or asbestos, a professional must rectify them before closing the deal.
Some of these issues that you may be required to fix before closing a deal include:
Major plumbing defects
Not all older homes were built with our modern lifestyles in mind. Your home's plumbing system may have been poorly built, rated for far less load than was initially expected, or constructed with materials—such as lead—that are no longer deemed safe.
If the home inspector finds something wrong with it, you will almost certainly need to address it before selling the house. Plumbing problems are major home inspection issues that purchasers dislike.
Some common plumbing problems found during a home inspection include the following:
- Leaking taps
- Loose toilets
- Leaky valves
- Faulty fittings
Mould is often associated with moisture, posing a severe problem for homeowners. Mould is one of the issues that are currently dominating real estate sales in Australia. Many home buyers are now aware of the health risks that mould can pose.
Mould is regulated in many areas because there are health concerns about its presence in the home. It is dangerous to anyone who has an upper respiratory infection. Too much mould can induce allergic reactions in some people, which can be pretty dangerous.
You wouldn't want a potential buyer to discover that you have mould and, even worse, it hasn't been handled before the inspection. Removing mould before selling your home is a wise decision.
You should have your mould problem resolved before listing your house for sale, if at all feasible. Fortunately, mould remediation firms do a great job of cleaning up and preventing the root of the problem, which is usually water infiltration into the house.
Pest inspections are relatively typical in real estate contracts. When purchasing a property, the majority of purchasers will do a pest inspection. Some lenders require an inspection before granting a facility. It can be pretty distressing to find that termites have been gnawing at your belongings. This is not a problem that you can ignore. If you don't deal with pests properly, things will only get worse.
The same is true for any type of pest, from ants to mice. Engage a specialist to resolve the issue and fix any damage before listing your property. In contrast, ants and mice are not significant issues and may be quickly resolved. On the other hand, termites are not to be trifled with due to their capacity to ruin the structural integrity of a house.
A bad or damaged roof
This is yet another troubling home inspection red flag. Roof replacement is not cheap, and no one wants to do it if it is not absolutely necessary. When the house inspector raises a red flag, you're in for a costly repair. It is crucial to hire a professional roofing contractor to inspect your roof. They may do minor repairs instead of replacing the entire roof.
Knowing if your roof needs to be replaced is an important consideration to make before putting your house on the market. It is difficult to predict when a roof will need to be replaced. As such, it is one of the most contentious issues in a home inspection.
A house inspector will typically declare that the roof is towards the end of its useful life but still has a few years before it needs to be replaced. In the mind of the purchaser, this can mean RIGHT NOW. In your mind, it's a couple more years. Getting proof from a good roofer is better than hearing from the buyer's home inspector that you need to get a new roof.
Faulty or outdated electrical installation
Electrical issues are not only present in older homes alone. If you were to ask what the most typical house inspection items are, electrical concerns would be near the top of the list. Old buildings were not adequately wired to manage the electrical demand imposed by modern technology.
If this is the scenario in your house, it may pose a fire hazard. Also, it will result in inconvenient system breakdowns. If this is discovered during your assessment, have an engineer come in and rectify it for you. It might be possible to come up with a cheaper way to do this than rewiring the whole building.
It's rare that you don't come across an electrical problem during a home inspection. The following are some of the most prevalent wiring issues:
- Double tapped breakers in the electrical panel
- Lack of ground fault interrupters
- The reversed polarity of the outlets
- Ungrounded wiring
These electrical problems are usually small and, as a result, aren't very pricey to fix. Knob and tube wiring, on the other hand, is an expensive challenge. In older homes built between the late 1800s and early 1900s, electricians used knob and tube wiring to wire homes.
This style of wiring has been found to be extremely problematic. Some lenders won't loan money to homes with knob and tube wiring because it's hard to get home insurance.
This type of wiring has been linked to several fires that have resulted in catastrophic destruction. If you have knob and tube wiring in your home, you should have it removed. If you do not do so, you will exclude a large number of buyers from acquiring your house.
It's almost certain that structural defects will be at the top of the list after a house inspection. Any buyer will place a premium on a home's structural soundness. There are few things that will quickly scare away a buyer more than structural problems. The base of your building is probably the most crucial component of its structural integrity.
To maintain structural integrity, it must be in good condition in conjunction with the rest of the house—the frame, walls, and roof. Unfortunately, foundation difficulties can be caused by water damage, geological challenges, or even sloppy workmanship.
A professional assessment is required to accurately assess the extent of the problem. If it is in poor condition, you will need to repair it prior to listing the house for sale. If the problem is bad enough, you might need to talk to a structural engineer. A home inspector would be able to uncover a structural concern.
But he or she may not be able to establish precisely what has to be done to rectify the situation. Structures have varying degrees of deficiency. If you have the economic means to repair a structural issue before listing your house, you should do so. Otherwise, buyers will walk away from the deal without giving it another thought.
Many states and cities require sellers to repair specific safety problems before selling a property. Depending on where you live, you may need to repair or replace smoke detectors, upgrade your plumbing, or repair a seismic shutoff valve on your water heater.
Sellers may also be held accountable in some places for building code violations and unpermitted renovations. For example, you may be required to pay a permit fee or redo work that is not up to code.
Although these improvements are typically the responsibility of the owner, the purchaser may be able to assume liability for them. As a buyer, make sure you talk to your real estate agent to assist you in negotiating these repairs and determining who will pay for them.
There are some fixes that are not mandatory. Repairs that the state or lending financial institutions do not mandate are regarded as unimportant and are up for discussion. Nonserious issues like worn carpets and damaged tiles fall under this category.
As long as they don't hurt the structural stability or liveability of the house, sellers don't have to fix them unless they want to. However, not all non-essential concerns are entirely cosmetic. For example, some mortgage loans do not require the repair of trip hazards such as uneven sidewalks and staircases without railings.
Understandably, a buyer would want them addressed even if it's not required, given that they could be construed as safety concerns. However, it is ultimately up to you, the seller, how you wish to handle repair requests. It's good to talk to your real estate agent about which repairs to accept and which to reject.
Facing Repairs After Home Inspection
Buyers and sellers must both come to the table with reasonable expectations based on current market conditions. Sellers will be under more pressure to make repairs in order to sell their homes. A strong seller's market means that purchasers must carefully consider what they are willing to live with, as sellers may just accept a backup offer from another buyer.
There's very little, if any, negotiating power in a multiple offer situation. Regardless of the circumstances, selling or purchasing a home requires some compromise. It's important to know what limitations your strategy might have, both financially and in terms of when the sale will happen.
Planning ahead with your real estate agent about how you want to deal with possible repairs helps make sure that you come to talks with a clear plan of action and a goal in mind. Keep in mind that house inspection and repair are only one phase in the home selling and purchasing process. Don't get bogged down in the specifics and lose sight of the big goal: selling or buying a house.
Keep emotions out of the situation and take a logical approach. Buyers should prioritise their most crucial needs in order to preserve their investment and have peace of mind. Sellers should compare the prospective costs against the potential loss of a sale to determine how much they are willing to spend.
What If The Seller Refuses To Do Repairs?
All purchasers have the right to ask that the seller make specified repairs following a home inspection as long as they have not agreed to an "as is" arrangement. If they live in a state where the proposed repairs aren't required, the seller has the authority to decline.
The purchaser can freely choose to walk away from a sale if a buyer demands certain repairs and the seller refuses. This can be difficult to do once you've become heavily involved in a home, but it may be the best option if you can reach no other deal.
Making an offer contingent on the house inspection is one way to avoid making this difficult decision. That makes it clear from the start that the buyer may want to make changes, and both the buyer and the seller know that, as long as the requests are fair, the sale will be contingent on at least some of them being met.
Tips For After Inspection Repairs
Request for compensation
Some homebuyers may want to barter in other ways, such as asking for furniture or gadgets that the seller planned to take with them. For some people, this is preferable to asking for a discount. This isn't a common strategy, but it's worth a shot if the buyer has a particular item in mind.
Request seller to fix identified issues
The buyer has the right to request repairs where they are required. This encompasses significant structural and safety issues mentioned above and minor cosmetic repairs. After an inspection, this is a common situation, and many sellers are willing to make a few simple repairs to close a deal.
Request price reduction
Some property owners may be willing to reduce the sale price to allow for necessary repairs, especially if the repairs are major. Before asking for this, purchasers should conduct their research to verify that they're asking for a fair price reduction rather than simply guessing how much the fix in question would cost.
Request a house warranty
A house warranty is a sort of insurance coverage that assures customers that if certain main appliances or systems fail during a specified time period, they will be able to get them repaired for free or at a reduced cost.
They cover items like heating and cooling systems, electrical systems, plumbing systems, and ductwork and can be purchased on the buyer's behalf by the seller instead of completing repairs themselves.
Finally, it is up to the buyer, seller, and their respective agents to iron out the details of what should be done in terms of post-home inspection repairs. While improvements are unlikely to be legally required, certain practices govern what sellers should correct—or, at the very least, what they should change if they want to sell their home for a reasonable price.
Hire A Reputable Home Inspection Company
It is vital that you conduct an inspection before buying a property. A home inspection, when correctly done, will help you identify all that is wrong in a building. With the home inspection report, you can negotiate with the seller to either fix the issues identified or ask for a discount or other form of compensation. Therefore, before buying any property in Australia, make sure you hire a reputable home inspection company. This will surely save you a lot!