You’ve made an offer to purchase a property. Next you will probably order a home inspection as part of your due diligence. (Click here for my blog on “Why you should get an inspection.”) Unless the home is new, it is not uncommon for the inspector to find several minor issues. But which party should pay to have these issues resolved? As they say, it’s wise to “pick your battles.”
A certain level of wear and tear is to be expected in a previously occupied home, so buyers should be reasonable with their expectations. Perhaps there is a leaky roof, sink or shower, or maybe one of the appliances does not work. If the inspector comes up with five small issues and one major issue, let the seller know that you want to be reasonable — perhaps you are only asking the seller to address the big issue and you will fix some of the smaller issues yourself. If both sides agree to share in fixing these issues, then maybe everyone can move ahead and be happy.
The scope of the problems may or may not be enough to walk away from the deal. If the seller will not concede any compensation, you may have to decide whether the deal is still worth pursuing.
A word of caution: Any time you try to open up an agreed-upon contract, you open up the opportunity for the deal to be cancelled or revoked.
If both sides will negotiate an acceptable agreement, an addendum can be added to the contract. I generally offer the seller two options, rather than a just a yes-or-no option. Rather than simply stating that the buyer would like X, Y and Z fixed, offer (a) X amount of money off the price for the buyer to do the fixing himself; or (b) state that the seller will fix X,Y and Z. This is a little strategy called an assumptive close.
Writing contracts that are enforceable is very important, so make sure the Addendum does not leave any ambiguities. Consider including an “Approval Clause” to ensure that the agreed upon correction is completed properly, by a certain time and date, and identify a consequence if it is not. For example, the stove does not work. Then write an agreement stating that the Seller agrees at the Seller’s expense to have the stove repaired by 6 p.m., 5 days before the Completion Date, to the Buyer’s satisfaction; or else the Seller must provide a $500 credit.
Remember, the Seller wants to sell and the Buyer wants to buy! Aim to find a solution that both sides can be happy with so everyone can walk away a winner.