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Before you get your heart set on buying a fixer-upper, understand that more than two-fifths of home buyers who buy a house that needs work end up going way over their intended budget. How does this happen?

In most cases, overspending comes down to not realizing how big the problem areas really are. Buyers assume that a lower price on an older house will give them plenty of wiggle room for renovations and don’t realize how costly those renovations will be.

Fortunately, all hope is not lost for all of you DIY home repair lovers. A home inspection report will ensure that you’re not in the dark about potential property issues.

But what do you about the money? The truth is, you need to know how to negotiate with the seller after receiving your home inspection report. Read on to learn how. 

Start With the Home Inspection Report

First thing’s first: you need to get a home inspection report. We recommend attending your inspection in person so that you can ask important questions and ensure that you have a working knowledge of the property’s condition. 

It’s important to note that without a home inspection report, negotiations of any kind can be difficult, especially if you’ve already entered into a contractual agreement. Typically, a seller will not entertain lowering their asking price or taking care of damages that you could have been easily aware of. In other words, any damage that is visible to the naked eye should be mentioned before you sign anything.

However, some of the most costly damage is not visible to the naked eye. This is the kind of damage your home inspector will notice and the kind of damage that you can bring to the negotiation table. Make sure that you have a complete, certified home inspection report before you bring issues to the seller’s attention.

Know Your Options

Make sure you know your options before you discuss the home inspection report findings with the seller. Have a clear idea of the outcome you’d prefer as well as an alternative you’d be willing to settle for. Consider having your agent present during these talks so that you can make fully informed decisions. 

Ask for Repairs or Credits

Consider the extent of the damage. If you’re looking at a few quick fixes that are low to moderate in cost, you may consider asking the seller to make the repairs, themselves. 

Remember, however, that many sellers do not want to invest a ton of money or extra time into the property they’re trying to sell. Plus, if you leave repairs up to them, you may not like the outcome. If you or the seller are reluctant to leave the repairs in their hands, consider asking them for closing credits.

Closing credits are often ideal for the seller and the buyer which is what makes them such a viable option. However, check with your lender to find out what limitations they place on repair credits if any. You and your seller may find that the damage in question has to be repaired by them in order for your lender to complete the transaction. 

Ask for a Reduced Price

Perhaps the biggest draw to a fixer-upper is the low cost compared to move-in-ready properties. However, a home inspection report may reveal to you that that low cost isn’t quite low enough to make up for further investments into the property.

Talk to your real estate agent about the estimated value of the property once it has been renovated. Then, talk to contractors to get estimates for the many projects you’ll need to complete to reach that value. Compare both of these estimates to the seller’s current asking price and determine whether or not you’ll break even, if not come out with a profit.

If the answer is no, it’s time to bring your home inspection report and these expert estimates to the seller. Offer them a lower price according to these numbers. Make sure you know how high you’re willing to go before you open that door.

Cut Your Losses and Move Forward 

Sometimes, the connection you feel to the house outweighs the dent it might put in your budget. If a seller isn’t budging and you are certain that you’ve exhausted your options, you may feel inclined to cut your losses and move forward with the deal.

Note that if you’re working with a good real estate agent and a decent seller, this shouldn’t happen. Remember that credits can work to the seller’s benefit, too. If the seller isn’t interested in making repairs or slashing the asking price, revisit the topic of repair credits before closing the deal.

Back Out of the Deal

The worst-case scenario is backing out of the deal. Bear in mind that most buyers reserve this move for houses that have insurmountable damages to the foundation, roof, or other high-cost areas. 

Before threatening to back out entirely, take a look at the contract you’ve signed. Most contracts include an inspection contingency that will allow you to legally terminate your contract, but that isn’t always the case. Make sure that you are legally in the clear to back out of the deal. 

Get Your Home Inspection Report Today

Even if you’re ready to invest in a fixer-upper and the repairs that come with it, make sure to receive a home inspection report before closing. You never know what problems are hiding under the surface that could take you way over budget. Talk to the seller about possible avenues of negotiation before buying a house with big problems.

If you’re looking for a home inspection in Northeast Ohio, you’re in luck. Contact Class Home Inspection today to schedule your certified home inspection.