Negotiations After the Purchase Contract is signed..

Posted by Steve Harmer on Tuesday, February 19th, 2019 at 3:00pm.

Buying Kamloops Real EstateWhen buying a home – most of the negotiations occur before the seller and buyer sign the contract.

You’ve found the perfect Kamloops home for sale. You write an offer.  It gets accepted. And now, you feel like the transaction is a done deal.

Although, the negotiations don’t necessarily end with the acceptance and signing of the purchase contract. In fact, sometimes negotiations continue after the signing. In many cases, just after the buyer home inspection, issues typically arise, and any such issues can spark another round of buyer and seller negotiations.

So, you do the home inspection, which brings up a whole slew of issues. The electrical wiring isn’t up to code, there’s water leaks in the basement, and squirrels have wreaked havoc on the insulation in the attic. So, what do you do now?

Before you panic, it’s important to know home inspections often reveal issues. Some of these issues can be very small while others can be huge. But, a bad home inspection doesn’t necessarily kill a transaction. Back to a few more negotiations. The negotiations usually go one of three ways. The buyer and seller negotiate repairs, money off the purchase price, or in extreme cases the buyer and seller can't come to terms and mutually cancel the purchase contract. Once in contract, here are a few helpful buyer tips for navigating negotiations after a home inspection.

Big Inspection Issues 1 Improper draining
This is one of the most common issues your home inspector will find and can be one of the most difficult to correct. When the property around the home doesn’t drain effectively, water and moisture drain towards your home instead of away from it. This can cause your foundation to move or crack, and the moisture can move up through the foundation into your home where it can cause mold and moisture damage in your walls. Most water and moisture damage in a home can be traced back to improper draining, so this is an issue that you should pay careful attention to.

Why choose a RealtorDon’t be afraid to ask the seller for a price reduction (and or) fixes:

After the buyer home inspection, many times the home inspection exposes certain items in the home that are not working or in need of repair. And even though it may not seem like a big deal to the seller, you as the buyer may see it differently. As the buyer, you have the right to request from the seller to repair items of concern, replace items of concern, or ask for a hold-back  (cash-back) at the completion in lieu of doing repairs. And just as the buyer has the right to ask for any such requests, the seller has the right to say no to any request.

If you choose this option, you’ll want to review your home inspection to see what issues you want to get fixed. Your realtor can assist you in translating what issues may be the most important to fix. In addition, if you have any specific questions about the inspection, you can also contact your inspector for further details, as sometimes a home inspection report can be overwhelming to flip through. Once you come up with a list of repairs, you’ll submit them to the seller. The seller then can review your repair list and either accept doing the repairs or respond back with what they’re willing to fix. At that point, if you’re happy with what they’re willing to repair you can proceed with closing or you walk away. If you opt to allow the seller to make the repairs, you’ll be able to inspect them prior to closing to make sure they’re acceptable to you.

Big Inspection Issues 2 Shoddy electrical wiring
Many homeowners have either taken it upon themselves to alter their electrical wiring, or hired an unqualified electrician to do the same. Aside from the obvious issue of having difficulty understanding how to control outlets and switches, this can be a serious fire hazard and should be promptly corrected by a licensed electrician. Especially if you’re considering an older home as the electrical wiring is likely to already be in poor condition due to years of use and alteration. Faulty wiring connections, an inadequate number of outlets, exposed wiring, and a lack of overload protection are all common electrical issues that you may discover after your home inspection has been completed.

Kamloops Home InspectionIf you opt to ask for a repair credit, you’ll want to get a few different quotes on each of the repairs that you done, that way you can have an idea of how much to ask for in repair credit. Once you know that, you’ll submit a request to the seller.

Of course when you as the buyer have real concerns about the home inspection and want certain items fixed, replaced (and or) receive a credit – it is important to know that you as the buyer have the right to head back to the negotiation table with the seller. And even though the seller does not have to negotiate at the table usually the buyers have a couple of factors in their favor.

  • First, if you (the buyer) are not happy with the home inspection report, there’s a good chance the seller will realize that the next potential buyer won’t be either.
  • Second, once the purchase contract gets signed – most sellers are ready for the move out date, excited about life post-sale, and will be realistic about any needed request for repairs.

Depending on the buyer's requests – I usually recommend asking the seller for a drop in the purchase price, it also makes you the buyer pay less transfer tax. You can also request a "hold back" which in effect holds a portion of the purchase price (decided between the buyer and seller) so you can be sure that the repairs have been made, if you find they are not in place you get the hold back money. As an example when buying a house in winter that has a pool and it is winterized but you don't know if it is all in good shape, the inspector cant test it. This way you have an insurance if the pool is not 100% you have the hold back money to fix it. If all is well with the pool the seller would get the rest of the sale proceeds.

Getting the seller to agree to a hold-back ensures the work gets done to the buyer’s satisfaction. In many cases, any repairs are the last thing the seller want’s to do, and they often tend to not approach the work with the same vigor as you (the buyer.) Therefore, with money in trust at the completion, there will be no going back and forth to confirm the seller correctly did the work.

  • Don’t show your hand at the inspection:Dont show your hand

In some cases, the selling agent or the owner will attend the home inspection and might stick by your side as you walk the property. A good selling agent will be looking carefully at you – and for a good reason. They want to see if you reveal signs of content (and or) discontent.

Either way, tipping your hand during the inspection can come back to haunt you as the selling agent will most likely report their findings back to the seller. Example, if the selling agent observes you are excited about the home and can’t wait to close , chances are less likely the seller will want to agree to any repairs you seek.

Bottom line. When in the presence of the selling agent or the owner of the property – try not to show any emotions either way and just take notes (if needed.) And make sure the selling agent is not in an ear shot when you and your agent discuss and go over the home inspection with the inspector.

Big Inspection Issues 3 Aging roofing materials
When your roof is in poor shape, it’s another opportunity for damage causing moisture to enter your home. Whether the roofing materials have simply aged or were improperly installed in the first place, this can be a costly repair depending on the extent of the damage. If it’s possible to simply repair portions of the roof it can be more cost effective, but if the damage is significant it could be necessary to replace the roof entirely.

  • Consider the big picture:

Kamloops Home Buyer TipsA word of caution: It is usually a big mistake to enter a purchase contract with the assumption that you can and will negotiate the price down during the buyer subjects time frame. Playing games can come back to bite you, particularly in a competitive market. Hopefully, the property inspection comes back clean, and there’s no need to negotiate further. As mentioned – playing games with the sellers once in the contract isn’t prudent, and in doing so, you risk the sellers saying goodbye and canceling the deal altogether.

Buying a house is a big deal, and that’s why it is very important you work closely with your Realtor and cross all the T’s and dot all the I’s during the entire home buying process. It is very important to remember a real estate transaction is never a done deal until you reach the closing table and the title gets transferred, the money changes hands, and you receive the keys to your new home!

Some inspection issues can be so large that you may opt to walk away. Some of the issues revealed in an inspection may be too large to take on or even if the issues are repaired, you may be leery about the home anyhow.

While it can be heartbreaking to walk away from a home you love due to home inspection issues, it’s usually for the better when this happens. Even if you love a home, it’s not worth taking on a home that will be a money pit.

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