You have your home inspection in hand and you are about to go meet your real estate agent to discuss the repair amendment. When buying your first home, you might think this is a small step, but for many it turns in to the most stressful. There nothing as divisive between a seller and a buyer than this step in the home buying process. A seller does not want to be told that his house needs repairs and will resent the repair amendment. Some sellers think it is a petty request while others feel buyers expect too much for a house that has been lived in. Buyers will start to question the wisdom of buying the property if it requires repairs while other buyers will feel overwhelmed with the negotiations, which can be heated at times. First time home buyers should know that all properties require maintenance to keep the home in top shape and often sellers will not have enough time or resources to keep up with them all. All homes will require repairs. It is best to get used to this idea. You real estate agent will help you to get this step as smoothly as possible. Here are three things to keep in mind as you discuss your repair amendment with your agent.
Be aware of all the tactics available to you – Believe it or not, there are a few tactical decisions that need to be made when writing up a repair amendment when buying your first home. The most common approach to a repair amendment is to ask the seller directly for the repairs to be made before you will buy the property. The seller can then reply with their own list, usually marking out the ones they will not do. It is not uncommon to go back and forth on these list of repairs two or three times before a final list can be agreed upon. You could also ask for an allowance to be given to you at closing to do the repairs yourself. This tactic has the advantage of you being in control in how the repairs are made and who makes the repairs. Many sellers do not like this approach because it can be difficult to know how much the repairs would cost and many feel the buyers allowance is too high for the repairs needed. A third tactic is to ask the seller to reduce the sales price of the home to account for the repairs. Sellers tend to be cautious of this for the same reason of the allowance, they don’t want to overpay for your required repairs. The best way to combat this seller’s fear is to provide a list of repairs to the seller with estimated prices so they can see what it would cost them to do it themselves. You would need to call out specialists to give you a quote on the repairs, but this is why you have an option period. By arming your seller with this information, it is more likely the seller would agree to the allowance or sales price reduction as many do not want to bother with the repairs on a house they will be leaving soon.
Don’t play games with repairs – The best way to exemplify this piece of advice is to tell a story. One day, a good looking real estate agent received a repair amendment from the buyer, who had beaten out numerous others to win the bid for this home. The repair amendment listed 26 things over two pages. The agent sat down with the seller to go over the list, which they narrowed down to eight items. It took the two of them over an hour to do this. The seller then went out to get bids on all the different repairs to see what it would cost. He was satisfied with the resulting bids so the handsome agent sent the repair amendment back to the buyers. Within a hour, the listing agent received a phone call from the buyer’s agent confessing that their buyer never really wanted to do the repairs, but instead wanted to reduce the sales price to cover the repairs. It took the handsome agent’s seller two full days to get the repairs down to the comfort level he wanted. The moral of this story is that as a buyer ask for what you really want. Most sellers would have just said no to the demand to lower the sales price because of the time wasted on the repair list. It is always better to be upfront on the repairs, otherwise the seller might say no to all repairs, and you have to decide to take the property as-is or walk away when buying your first home.
You can handle smaller repairs – When it comes to repairs, it is always better than to think long term benefits versus short term pain. I always advise buyers to ask for the larger repairs to ensure that these are done. The buyers can handle the smaller repairs like leaky sinks, plugs with a crack in them, missing light bulbs, etc. Of course, if you don’t want to do the small repairs ask for the seller to do them. However, be forewarned that the seller might mark off the larger repairs and keep the minor ones in the list. In my opinion, it is always better to get the big ticket items (like foundation, roof or serious plumbing or electrical issues) done by the seller because this will save you money and heart ache in the long run. You can handle the pain of doing a few minor repairs as long as you get the bigger stuff repaired by the seller. There are different ways to approach the smaller repairs. There are those agents who would argue that it is the burden of the seller to make these repairs so you should ask for everything of the seller and then start to negotiate. This is a perfect fine tactical approach to take with the seller. Hopefully, the seller will take the high road and fix the more expensive repairs versus the smaller ones. The approach you decide to take depends on your level of acceptable risk taking. If you like to the roll dice, include all the repairs. If you don’t, do it the way I think it should be done. In the long run, it is your future home so you should do what you gut is telling you.