Getting a good deal on a home is every homebuyer’s dream. And that means many are willing to negotiate. Often, finding the right home requires a bit of vision and some elbow grease. But at the end of the day, there are a few things you can do to get the best deal on a fixer.
Order an Inspection
No matter the type of property you hope to purchase, inspections are key. Many involve legal disclosures that highlight a home’s quality and any existing issues. With many mortgage lenders, certain inspection types are requirements. In other cases, there’s flexibility when it comes to who needs to check out the property beforehand.
● Lead paint
● Wood damage
While it’s not an “inspection,” looking into the property’s history is also smart. Verifying square footage, inspecting easements, knowing the lot size and layout/boundaries, and understanding zoning and permit laws will help make negotiations smoother.
As for who pays the inspection costs, most of the time, buyers are responsible. Often, property owners decide to pay for inspections to ensure nothing questionable comes up during negotiations with potential buyers. In other cases, homeowners expect applicants to cover those costs. On the plus side, however, if a previously interested buyer backs out, any inspections they paid for must be disclosed. In this case, you won’t pay for the inspection, and the results of prior documents are legally tied to the home.
‘As-Is’ Property Considerations
Most buyers are flexible with homes that are fixer-uppers. However, if a property is for sale “as-is,” that involves a different set of parameters. Properties with this distinction may have issues such as structural problems, a leaky roof, mold or mildew, or pest infestations. Some sellers are not motivated enough to negotiate on these items. In other cases, they don’t have the funds to support any repairs prior to closing.
Negotiate Repair Costs
Once you know what problems a property has, you can consider repair costs and begin to negotiate. On an “as-is” property, it’s often difficult to get the seller to give any concessions. But on other properties, especially those that have been on the market longer, the owner may be willing to work with you. Keeping an open mind is essential when negotiating price concessions. At the same time, asking for more than you plan to settle for is also smart. If the home is overpriced to begin with, you may ask for repairs to come in under the sale price.
Establish a Timeline
Depending on the type of loan you have, repairs may be necessary before your mortgage lender will close on a property. For example, government-backed loans from the FHA and VA, specifically, have relatively strict inspection requirements. Conventional home loans, conversely, may not require inspections at all, depending on the state of the property.
If repairs must come before closing, you need to work the finances out with the seller. Some sellers may make repairs and adjust the sale price to reflect the home’s value. Others may agree to hand over cash after closing for you to make changes on your own.
Also, even if an inspection highlights issues, there are no guarantees that the seller will agree to pay for them. However, if your mortgage lender approves, you may opt to lower your offer and then handle improvements after you own the property. You should look into potential repair costs to prepare for negotiations and determine whether you can cover the work on your own.
With so many possible scenarios, it’s challenging to prepare for negotiations. Many potential buyers give up on a property they love because of an inflexible seller. Of course, you should keep in mind that being flexible may just win you the property you have been dreaming of.
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