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Phase
II: Negotiation of Home Repairs
You
thought it was all over after the contracts were signed
and everyone agreed upon the terms of the purchase of the
house. Well, that was only Phase I of your negotiations.
Phase II begins after your home inspector provides you and
your real estate agent with a report on the conditions of
the home.
One of the most frequently asked questions of a home inspector
is, "What do I ask the seller to repair?". Our
response to that question is an easy one, "Consult
with your real estate agent". It is the buyer's agent
that has the responsibility to work with the buyer and to
use the information we provide them in our inspection report
to negotiate items for repair or correction. Your agent
has a wealth of knowledge that will aid him/her with this
process:
1. The disclosure statement
2. The contractual agreement
3. The cost of the house relative to the selling price
4. What are "appropriate" repair request and what
are "inappropriate" repair request
5. The intensity of the buyer's desire or need to purchase
the house.
The buyer has a legal right to a signed copy of the Residential
Disclosure Statement prior to signing the Offer to Purchase.
This document should provide the buyer with information
on the house related to any known adverse conditions existing
in the house as reported by the seller. Unfortunately this
document often gives little information on the condition
of the home. Also, simply because a seller reports a deficiency
in this document does not mean that the buyer cannot be
asked to have it repaired.
The contractual agreement is the best starting point when
the buyer and agent are composing their repair request.
For the most part what is negotiable has already been
agreed
upon in the Offer to Purchase Contract, Sections 13a, 13b,
13c, 13d, 13e.
The buyer does not have to accept the inspection/repair
section of the contract as written. The buyer has the right
to author this section as he/she wishes. It may not be accepted
by the seller, but the buyer has this right.
Section
13 is very specific but at the same time becomes vague
and open for interpretation. Again, this is where
the expertise of an agent is essential. This section starts
by giving the buyer the right to have an inspection at
their
own expense. It goes on to list the components of the house
that are included in this agreement:
| Built-in-Appliances |
Electrical
System |
Plumbing
System |
| Heating/Cooling
Systems |
Roof
Coverings |
Flashings |
| Gutters |
Doors |
Foundations |
| Windows |
Exterior
Surfaces |
Structural
Components |
| Columns |
Chimneys |
Floors |
| Walls |
Ceilings |
Porches |
| Decks |
Fireplaces |
Flues |
| Attic
Ventilation |
Water
System |
Crawlspace
Ventilation |
| Sewer
System |
|
|
The
wording in this section does not say the above items
are
in great, perfect, and wonderful shape. The specific language
used is important in the process of negotiating. It states, "...shall be performing the function for which intended
and shall not be in need of immediate repair...".
This is the key statement which one needs to address when
considering
adding one of the above items to the repair request. This
statement is vaguely written and is not specific, leaving
(in some cases) much room for one's own interpretation.
This section goes on to say that with the following items
"there shall be no...":
Unusual Drainage Conditions
Evidence of Excessive Moisture Adversely Affecting the Structure(s)
Friable Asbestos
Environmental Contamination
This
terminology is specific and does not leave much room for
interpretation, however, the buyer may have to document
that one of the above conditions exist.
Section (b) of the contract provides the buyer with the
right to have a wood-destroying insect inspection
by a licensed
pest control operator at their own expense. This is required
by most loan institutions. This section clearly states
that
the expense of the treatment is the responsibility of the
seller unless otherwise agreed upon in writing. Section
(b) does not state that the repairs are the responsibility
of the seller. However, if the wood-destroying insect
damage
has caused one of the above mentioned components (in section
a) to be in immediate need of repair and it is no
longer
serving the purpose for which it is intended, then the
seller can be asked to make the repairs.
The buyer through his/her agent will provide the seller
with a written repair request. If the buyer wishes for a
certain method of repair to be incorporated into an item
of repair, this should also be included in this written
request. An example of a specific request statement might
be, "Remove the 8 foot section of rotted floor joist
and replace with new 2"X10" Southern Yellow Pine.
All deteriorated wood is to be completely removed from the
crawlspace". A nonspecific statement dealing with the
same repair might be, "Fix the rotted floor joist".
Most home inspectors offer a reinspection to insure the
buyer that the repairs were performed properly.
The standard North Carolina Offer To Purchase And Contract
provides the seller with three options:
1. Completing the repairs
2. Providing money for completion of the repairs
3. Refusing to complete the repairs.
If
the seller elects not to complete or provide for the completion
of the repairs, the buyer has the following options:
1. Accept the property in its present condition
2. Terminate the contract if request meets the contractual
standard. (check with your attorney)
It is recommended that this process be followed in a systematic
manner as spelled out in the contracts and agreements made
by both the buyer and seller. This phase is just one small
component of the entire home buying/selling process that
reinforces the need for a competent and knowledgeable real
estate agent.
