Negotiating price down after inspection

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Negotiating price down after inspection

Elena Koyun
Madison, WI · Member since 2019 · 21 posts · 12 votes

Hello,

We are buying our first duplex. After the inspection about to ask for a price reduction. Since this is our first time I was wondering on opinions of others on how much to ask and how to include the cost of labor even though we will be doing most of the fixes ourselves. Here is the list:

Asphalt cracks fix up – coding for driveway

Railing/ spindles for decks x 2 - both decks are about 8x8 feet

Power wash for deck

Stain for Deck x 2

Garage doors x 2 - need to replace both

Air conditioners – 2 - need to install new ones, the current ones are rusty and old

Heating system Furnace x2

Water heater x1 - 40 gal 

Windows  – 2 lower level double hang 2x2 feet; 4 bedroom – double hang 3x3,5 feet; living room - 1 big window 4x4feet - steel

Chimney top cover x2

1 New toilet  

1 New sink with the stopper 

 1 Fan for downstairs bathroom 

2 bathroom fans

1 Stove 

1 Dishwasher 

Bathroom wall fix - about 20"x20"  drywall water damage next to the tub

Garage ceiling fix - old damage, no leaks about  a square foot 

2 Toilet needs to be tightened to the floor. 

2 Filters replacement for kitchen fan

Kitchen cabinet missing 2 doors 

We are about to find all the pricing on all the things that we can buy.. but we do not know how to incorporate labor into this quote. We are also on a 1-day time frame. We appreciate any suggestions! Thank you!

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Don Gouge
Johnson City, TN · Member since 2017 · 209 posts · 367 votes
7y
Let me give a seller's perspective on this. When your property first hits the MLS it is at the peak of its value. The first week or two it gets many showings and after that it trickles off. When a buyer makes an offer and it is accepted subject to they now control the property. In my area most contracts are written with an inspection contingency that allows 10 days for the inspection to be completed and up to 5 days afterward for buyers to request repairs. When a property goes under contract it is marked as contingent in the MLS and basically all showings stop. Some people might write a backup offer but that is rare in my area. If seller and buyer can't agree on the repair items the contract is void and house is on the market again but now it is a "deal that fell thru" and that could cast a cloud for some that have been watching the property. The buyer had this power thru a $500 earnest money deposit that they were almost guaranteed to get back anyway. Now seller has expectations too. They think they have sold their house. They might be packing up things and even securing another place to live. Buyer comes back with a long list of demands. Selling agent assures seller that these items won't cost much to fix (sure) and pushes them to agree. Seller never realized that the original contract amount was just a suggestion. Now he is in a bind. He has mentally sold and is ready to move on. His house value has diminished because it will no longer be a fresh listing. It's a wonderful strategy for the buyer. I have worn all the hats of buyer, seller, inspector and contractor. I understand everyone's side. A home inspection is a valuable thing and every buyer should have one. There are many things in a house that are not obvious to the layman and even to the contractor. Despite my over 20 years as a licensed general contractor, I learned many things during my courses to become a home inspector. Home inspections are valuable for finding bad foundations, leaking plumbing, improper and dangerous electrical wiring, non performing HVAC systems as well as determining their age, dangerous porches and decks and railings. You can't make your offer based upon faulty wiring that you haven't tested or a bad foundation but as a buyer I feel you should take the responsibility to consider items that are obvious such as foggy windows, cracked driveway, dirty deck. A inspection report should not read as a Christmas wish list. I welcome an inspection to give my buyer peace of mind and to find a problem I may not have even been aware of. I don't welcome it as a negotiation tool.
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  • Fred Shatzoff
    Lender · Member since 2019 · 604 posts · 160 votes
    7y

    @Elena Koyun  I would recommend get a contractor to give you an estimate first.  The go to the seller.  Does the contract say as is?  If it does then you may have to go ahead.  Then the next question becomes do you have the money to do the repairs.  Have you had an appraisal?  If so how does that value compare to what you are paying.  Good luck.

    1Reply
  • Tim Johnson
    Lender · Grand Rapids, MI · Member since 2018 · 703 posts · 446 votes
    7y

    Is HVAC system working, or do you just want to upgrade because its old?

    Whats wrong with the windows?

    Are they missing a sink?

    What condition is the house in?  Are you paying for a fully rehabbed house or is the price your paying justify the purchase price.

    What kind of numbers are you getting on this deal?  To me if its a good deal I would be nervous about asking for a reduced priced because some of the items on your list sounds like you are upgrading stuff or rehab stuff.  i know if I was the seller I would tell you to go pack sand, but that's just me

    2Reply
  • Don Gouge
    Johnson City, TN · Member since 2017 · 209 posts · 367 votes
    7y
    Looks like most of these things you want fixed are obvious to a 5 year old. Why did you not deduct for these things when you made your offer? Not saying you did this but as a seller, I detest the practice of overlooking obvious items and putting a home under contract knowing you will try to drive the price down later.
    5Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    Tim Jonson - Inspector wrote in suggestions as "budget to replace or exceeded its life" 

    Windows have fog between layers of glass - inspector also recommended replacement

    Sink is not missing but has damage - recommended replacement

    Overall condition of the house is good. We are not buying a rehab. 

    Deck railing is a safety issue

    That's what we do not want - to give an impression of going after small stuff. 

    1Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    7y
    Originally posted by @Don Gouge:

    Looks like most of these things you want fixed are obvious to a 5 year old. Why did you not deduct for these things when you made your offer? Not saying you did this but as a seller, I detest the practice of overlooking obvious items and putting a home under contract knowing you will try to drive the price down later.

    I agree that these items mostly look like obvious issues that have either been factored into the asking price, or the expectation was your offer would include items as they are. Seeing an old hvac, water heater and AC units are obvious items unless there were unforeseen issues with them found only after inspection.

    You can put a dollar value on these items fairly easily, but just in HVAC/AC, water heater you are going to be reducing your offer by a substantial amount. You can try but assume you won't go very far.

    1Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    @Don Gouge  - as I mentioned this is our first property and when making an offer our Real Estate agent did say that all the negotiations on the price we can do after the inspection and apprizal.

    0Reply
  • Brian Pulaski
    Flipper/Rehabber · Montgomery, NY · Member since 2016 · 2k+ posts · 1k+ votes
    7y

    Looking at your list could very well be $20-25k or even more worth of work. Did you offer full price with the expectation of reducing it after inspection? Is your plan to reduce it by this large amount? I know lots of agents run with the make an offer and negotiate later idea, but to me with such a long list of things that are fairly apparent this is not a great way to try and land a deal. Your offer associated with their asking price should have accounted for 95% of these things and the inspection should only reveal items not readily visible at your walk through.

    Good luck with it, but asking for reduced price on all of that probably won't land the deal.

    1Reply
  • Don Gouge
    Johnson City, TN · Member since 2017 · 209 posts · 367 votes
    7y
    Let me give a seller's perspective on this. When your property first hits the MLS it is at the peak of its value. The first week or two it gets many showings and after that it trickles off. When a buyer makes an offer and it is accepted subject to they now control the property. In my area most contracts are written with an inspection contingency that allows 10 days for the inspection to be completed and up to 5 days afterward for buyers to request repairs. When a property goes under contract it is marked as contingent in the MLS and basically all showings stop. Some people might write a backup offer but that is rare in my area. If seller and buyer can't agree on the repair items the contract is void and house is on the market again but now it is a "deal that fell thru" and that could cast a cloud for some that have been watching the property. The buyer had this power thru a $500 earnest money deposit that they were almost guaranteed to get back anyway. Now seller has expectations too. They think they have sold their house. They might be packing up things and even securing another place to live. Buyer comes back with a long list of demands. Selling agent assures seller that these items won't cost much to fix (sure) and pushes them to agree. Seller never realized that the original contract amount was just a suggestion. Now he is in a bind. He has mentally sold and is ready to move on. His house value has diminished because it will no longer be a fresh listing. It's a wonderful strategy for the buyer. I have worn all the hats of buyer, seller, inspector and contractor. I understand everyone's side. A home inspection is a valuable thing and every buyer should have one. There are many things in a house that are not obvious to the layman and even to the contractor. Despite my over 20 years as a licensed general contractor, I learned many things during my courses to become a home inspector. Home inspections are valuable for finding bad foundations, leaking plumbing, improper and dangerous electrical wiring, non performing HVAC systems as well as determining their age, dangerous porches and decks and railings. You can't make your offer based upon faulty wiring that you haven't tested or a bad foundation but as a buyer I feel you should take the responsibility to consider items that are obvious such as foggy windows, cracked driveway, dirty deck. A inspection report should not read as a Christmas wish list. I welcome an inspection to give my buyer peace of mind and to find a problem I may not have even been aware of. I don't welcome it as a negotiation tool.
    9Reply
  • Caleb Heimsoth
    Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
    7y

    @Elena Koyun. Is this your first deal? You can request all this stuff but the seller will

    Likely just say no

    1Reply
  • Curtis Mears
    Property Manager · Raleigh, NC · Member since 2014 · 729 posts · 596 votes
    7y

    I@Elena Koyun

    I often ask for concessions after the inspection, but only for those issues I could not see or find on initial walk through. when I go through a property, I create a list of issues, such as deck, windows, etc. then if the inspection finds issues that I would not find, I deduct for these after the fact, such as ac does not work, even though it was listed as working. basically items the owner should have disclosed, or they are hidden except after the inspection. I do not ask for concessions for issues I should have found in my inspection.

    1Reply
  • Account Closed
    Investor · Milwaukee, WI · Member since 2013 · 1k+ posts · 1k+ votes
    7y

    Absolutely include the cost of labor, otherwise you are giving your labor to the seller for free!

    0Reply
  • Yosi Levi
    Member since 2019 · 8 posts · 5 votes
    7y

    You can request all this stuff but the seller will might say no

    1Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    @Caleb Heimsoth Seller already said - give me the number :) so, we are just coming up with a number. Some of the things on the list above we have taken off because it doesn't matter much

    1Reply
  • Michael Tal
    Developer · London · Member since 2019 · 45 posts · 33 votes
    7y

    Try figure out how much it would cost to replace all the things mentioned, I think it wouldn't come down to more than $15k. Especially since this is your first deal, you want to make sure that don't end up overpaying for the property when there's still a lot of improvement to be done on it. I'd suggest getting a quote from a contractor to take care of it all and forward this to the realtor as a bargaining chip to help cutting down the price of the property.

    1Reply
  • Michael Noto
    Real Estate Agent · Southington, CT · Member since 2008 · 5k+ posts · 3k+ votes
    7y

    @Elena Koyun There is no way the seller will agree to all of this. Save everyone’s time and submit the termination so you can get your deposit and move on. A lot of this stuff is very obvious and you should have incorporated it into your asking price which is probably the feedback you will get from the sellers. 

    Going forward just look for houses in really good shape even though it may mean paying more. Which isn’t a bad thing by the way. Value add properties always sound nice, but you have to have the stomach for them. 

    2Reply
  • Bill B.
    Investor · Las Vegas, NV · Member since 2013 · 8k+ posts · 10k+ votes
    7y

    How much more is the property worth with all these repairs? Are you willing to pay that higher price?

    If I was the seller and saw a deduction for pressure washing the deck, I would cancel your contract and take any other deal. 

    Remember, the second you say, hey here’s my new offer, this much less, you’ve opened the door for the seller to say nah, that’s ok I have another offer. They don’t even have to accept you original offer any more. I can’t count the number of backup offers I got accepted by telling the seller I’ll take your property as I see it for this price if your first buyer backs out. 

    1Reply
  • Andrew S.
    Investor · Raleigh, NC · Member since 2013 · 1k+ posts · 708 votes
    7y
    Originally posted by @Bill B.:

    How much more is the property worth with all these repairs? Are you willing to pay that higher price?

    If I was the seller and saw a deduction for pressure washing the deck, I would cancel your contract and take any other deal. 

     Agreed!  And I would go even further: I don't view ANY of the items on the list as legitimate post-inspection negotiation items.  As others have pointed out, these are all things that were obvious before you extended the initial offer, so I think its cheesy to try to squeeze the seller by trying to take advantage of/abusing the inspection clause.

    3Reply
  • Joel Fine
    Rental Property Investor · Leander, TX · Member since 2018 · 183 posts · 264 votes
    7y
    Originally posted by @Curtis Mears:

    I@Elena Koyun

    I often ask for concessions after the inspection, but only for those issues I could not see or find on initial walk through. when I go through a property, I create a list of issues, such as deck, windows, etc. then if the inspection finds issues that I would not find, I deduct for these after the fact, such as ac does not work, even though it was listed as working. basically items the owner should have disclosed, or they are hidden except after the inspection. I do not ask for concessions for issues I should have found in my inspection.

    I agree with this reasoning. Your initial offer should have taken into account any items that would have been observable during your walkthrough, as well as any items the seller disclosed in advance. As a seller, I would only consider concessions based on what was discovered on inspection but not previously known.

    0Reply
  • Michael T.
    Los Angeles, CA · Member since 2018 · 326 posts · 279 votes
    7y

    @Elena Koyun as everyone else has mentioned a majority of these items should have been obvious when you initially viewed the property so you should not expect much of a change in pricing or financial credits.

    0Reply
  • Mark Burlison
    Member since 2018 · 83 posts · 51 votes
    7y

    Great question...ignore those who harshly pass judgment. I too recently purchased my first property. I took a trusted contractor that I have known for 30 years with me to look at the property. This gave me a lot of insight before the inspection. The inspection revealed only a bunch of minor issues and after a lengthy discussion...I then continued to negotiate within reason. I still saved another 5000.00 for a very poor concrete driveway replacement. Your the buyer, you have the  money....take your time, get good counsel and negotiate the best deal you can. Good luck!

    2Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    @Mark Burlison Thank you! You are the only person who said something nice :) Unfortunately we do not have a friend contractor though! Lucky you! 

    0Reply
  • Steve K.
    Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes
    7y

    @Elena Koyun

    People in this thread are actually being very nice by giving you sound advice (for free). The only nice comment in your opinion comes from a gentleman who just told you he has only done one deal, and he was smart enough to only ask for $5k towards a concrete driveway that needed replacing, which is completely reasonable. 

     Have you shared this list with your agent? Any agent I've worked with would try to talk some sense into you to keep you from sabotaging the deal because this is not how inspection objections are normally handled. It’s supposed to be for things that are uncovered during inspection, not that were obvious prior to going under contract. 

    It's possible you mis-interpreted what your agent meant when they said you could renegotiate after inspection (usually that means for major issues like dangerous electrical panels, structural issues, partially collapsed cast iron sewer line, etc. that weren't obvious at the initial showings, not superficial things like "the AC is rusty" or "we should replace those ugly fans"). I certainly don’t think the seller was offering a blank check when they said “give me the number”. 

    The seller is almost certainly going to tell you to pound sand (unless they're really desperate, which would make me nervous as a buyer). Are the furnace, water heater, AC, dishwasher, fans, windows, etc. actually broken? If not why would the seller buy you brand new ones? You must have seen all of these items during the initial showing, so why would you think you were going under contract for something different? 

    I would advise you to think about whether you want the deal or not and come up with a much more reasonable list if you do. This looks like a rehab budget or contractor's punch list, not an inspection objection. Just being honest, take it or leave it. 

    Who know's, maybe you'll get lucky and the seller will agree to pay for all this. If you're in a strong buyer's market or there's something bigger wrong with the property the seller knows about that you missed, I guess it's possible they'll agree. Worth a try I guess, just be aware that if you piss the seller off it might end up costing you the deal. 

    Good luck! 

    2Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    @Steve K.

    Thank you for your comment. Our plan was not to ask to buy us new appliances, it was to share the experience because, yes we didn't notice, that furnaces, water heater, and other mentioned items are older than what was told to us when we asked. 

    My mistake here, as I see, is that I put everything that inspector pointed out at on here. However, I wanted to know what really matters to bring up and what not. When I was a resident manager for a 20-unit building that I assisted to sell, we went through little stuff - changing greasy filters, upgrading outlets, power washing wood balconies, painting, fixing landscaping etc. Just like in my case now everything was done after the inspection. 

    Of course, our agent was involved. We never even spoken to the owners. By the way, we did agree on a sum with a seller that is satisfactory to us. I still think Mark wrote a nice comment. 

    Thank you, everyone, for your inputs. We are off to the next step in the process. 

    1Reply
  • Cameron Don Meals
    Realtor · Reno, NV · Member since 2018 · 6 posts · 2 votes
    7y

    This thread has been incredibly helpful in deciding what concessions merit a price reduction. Overall, as it seems to me, you don't want the deal to fall through for trying to get compensation for things that were apparent when originally viewing the property. Makes sense. 

    I am currently waiting for my inspection, and will negotiate purchase price depending on any bigger items that I couldn't obviously see. However, I will use the agreed upon repairs credit as fit.

    Thanks for this thread @Elena

    @Elena Koyunundefined

    0Reply
  • Elena Koyun
    OP
    Madison, WI · Member since 2019 · 21 posts · 12 votes
    7y

    @Cameron Don Meals Glad to hear that this info was useful! Good luck with your purchase! 

    0Reply
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