A home inspection is one of the most critical steps in buying or selling a home. This third-party process provides a professional assessment of a property’s condition, helping buyers make an informed decision and sellers understand their home’s value.
But what happens after the inspection? Whether you’re a first-time buyer, a seasoned investor, or putting your home on the market, this guide will walk you through every stage that follows to help you understand your options and next steps. From reviewing the home inspection report to navigating negotiations and outcomes, we’ll break it all down.
What is a Home Inspection Report?
A home inspection is carried out by a licensed professional who evaluates the property’s major systems and structures. The findings are compiled into a detailed report that outlines potential issues, categorizing them as major or minor, and offering recommendations for repairs or updates.
What Does an Inspection Cover?
Typical areas inspected include the following:
- Roof for damage, leaks, or the estimated lifespan remaining.
- Foundation for signs of cracks, erosion, or dampness.
- Plumbing and drainage for leaks, water pressure, or blockages.
- Electrical systems for outdated wiring or potential fire hazards.
- Included appliances to verify they’re functional and up to modern standards.
The inspection report serves as a roadmap for understanding the condition of the property and deciding whether to move forward with the sale, negotiate repairs, or potentially back out of the deal.
Why Review Your Report with a Real Estate Professional?
For many homebuyers, distinguishing serious structural issues from common wear and tear isn’t easy. A trusted real estate agent can help interpret the findings, prioritizing what’s critical (e.g., a failing foundation) and what’s cosmetic (e.g., chipped paint).
By partnering with an agent, you can determine which issues are worth negotiating and how to address them effectively.
Navigating Negotiations After the Inspection
If the inspection report reveals significant issues, the buyer’s agent takes the lead in negotiating with the seller. The goal is to find a resolution that satisfies both parties and keeps the deal on track.
There are several common paths forward:
1. Request Repairs
One option is to ask the seller to repair specific issues before closing. Repairs often focus on critical items that impact safety or insurability, such as:
- Faulty wiring
- Plumbing leaks
- Roof damage
Sellers may agree to handle these repairs to ensure the sale goes smoothly, especially if the home is unlikely to attract other offers without addressing these issues.
2. Negotiate a Price Reduction
Buyers may prefer to handle certain repairs themselves, especially if they anticipate remodeling or updating the home after closing. Negotiating a price reduction gives buyers funding to cover repairs without delaying the sale.
For example, if the inspection reveals that the water heater is near the end of its lifespan but still functional, the seller may agree to reduce the price slightly to account for this.
3. Offer Closing Credits
Instead of tackling repairs, some sellers opt to offer a closing credit. This method enables the buyer to use that credit toward immediate repairs following the sale. For example, a seller might offer a $2,000 credit for a buyer to replace carpets after moving in.
4. Walk Away
Unfortunately, not all negotiations conclude successfully. If the report reveals significant problems, and neither party can agree on how to address them, the deal may fall through. This is usually the last resort but can happen when repairs are too costly or the seller is unwilling to compromise.
Common Challenges During Negotiations
Negotiations can be tricky, and several factors may complicate the process:
- Perceptions of Unreasonable Requests: Sellers may push back if they feel the buyer is nitpicking.
- Time Constraints: If the seller has a tight timeline, they may be unwilling to take on repairs.
- Backup Offers: If there’s a competitive buyer market, sellers may prioritize offers that require fewer negotiations.
Having a knowledgeable real estate agent is key to navigating these challenges. Their expertise can help you secure the best deal while keeping negotiations amicable.
Final Outcomes
Once negotiations are complete, one of these outcomes is likely:
Seller Agrees to Fix Issues Before Closing
Major repairs like a leaky roof or faulty foundation may be non-negotiable if required to secure homeowner’s insurance or mortgage approval. Sellers who address these issues tend to attract more interested buyers, ensuring a smoother sale.
Buyer Accepts a Price Reduction
For minor or non-urgent repairs, buyers and sellers may settle on a reduced price. This allows the buyer to take ownership of the home “as is” and manage any fixes later.
Seller Offers a Closing Credit
Providing a credit at closing lets the buyer carry out repairs or updates without altering the sale price. For example, buyers might use closing credits to improve appliances or repaint rooms to their taste after moving in.
The Sale Falls Through
Occasionally, negotiations reach an impasse. If a severe issue like pest infestations or structural damage surfaces, buyers may invoke a contingency clause, allowing them to walk away and recover their deposit.
Legal Considerations and Contingencies
Inspection contingencies protect buyers by allowing them to back out of a deal if the inspection reveals significant or costly problems. These clauses are critical for safeguarding your investment and should be included in your purchase agreement.
If disputes arise, consulting a real estate attorney can provide clarity and strengthen your case during negotiations. Their guidance is especially valuable in situations involving legal or structural complexities.
Getting the Most from Your Home Inspection
A great home inspection provides peace of mind and empowers buyers and sellers to make informed decisions. Here’s a quick recap of your next steps:
- Carefully review the inspection report with your agent.
- Prioritize issues based on urgency and cost.
- Work with your agent to negotiate fair resolutions.
- Be prepared to walk away if significant problems arise.
Securing a seasoned real estate agent can be the difference between a smooth transaction and costly mistakes.