Negotiating After a Home Inspection in Maryland

Melissa E. Spittel
Published on January 8, 2018

Negotiating After a Home Inspection in Maryland

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What Happens After a Home Inspection in Maryland?

 

Regardless of whether you sell or buy a house in Maryland, negotiating the successful close of that sale begins with price and contract terms and doesn’t end until the deal closes.

One of the most frequently negotiated items, after the aforementioned price and terms, has to do with the home inspection results. Sometimes, they can also be among the most contentious negotiations.

Very few home inspections are “clean,” meaning there’s not a thing wrong with the house. And, many of the items mentioned in the home inspection report are minor.

The home inspector will issue a report that covers many items in the house. Examples of things inspected include: HVAC systems, plumbing, outlets, the functionality of appliances, and if all windows will open, close and lock. 

 

How to Request a Home Inspection in Maryland

Buying a house in Maryland requires many different forms to be prepared and signed. One of the most common forms is the “Property Inspections Addendum”. This is considered an inspection contingency. This means the buyer has the option to have the house inspected (at the buyer’s expense), then request any repairs that may be needed. This also allows a home buyer to cancel the purchase if there are any major concerns that can not be resolved. All inspections must take place within a specific time frame, usually the first 2 weeks after the house goes under contract. 

Common types of inspections include: structural and mechanical, radon and chimney.  If a house is on a private septic system, a septic inspection is often performed. If a house is on well water, a well yield and water quality test is also often performed. Other less common inspections may include: mold, environmental, roof, and lead-based paint. 

What Happens After the Inspections are Completed?

Each inspector will provide a written report of their findings. The buyers and their buyer’s agent will review the reports and discuss the results. If there are no issues of concern, some buyers will be content and not ask the seller to make any repairs. When there are any issues of concern, the buyers and their agent will make a list on a form known as the “Property Inspections Notice”. This form, along with the relevant inspection report(s), are then forwarded to the seller’s listing agent. 

 

The 3 Most Common Types of Home Inspection Requests

When homebuyers find items in the home inspection report that they want fixed, their agents typically counsel them to submit one of the following requests:

1. Ask the seller to make the fixes

This method may delay the transaction, depending on the extent of repairs or replacements required. Usually, though, sellers understand the repairs must be completed before settlement takes place. 

It’s important that buyers understand one thing:

   the inspection report is not a complete repair list for the seller.

There is a difference between truly needed repairs and cosmetic issues.

 

One thing a seller should know is that the buyer’s lender may require certain fixes before final approval of the loan. These include issues regarding the home’s health and safety, structural soundness and compliance with the Maryland Smoke Detector Law that went into effect January 1, 2018. 

2. Ask the seller for a credit of the funds required to make the fixes

While an adjustment to the closing date may have to be made (depending, again, on what’s required to get the home where the buyer wants it), this method is quicker than the first one.

A good buyers’ agent, however will ask the buyers if they can trust themselves to make the repairs with the cash-back at the close of escrow.

Sellers should be aware that certain fixes are required by the VA and by FHA, before settlement.

Also, some lenders and some types of loans forbid a cash credit at closing.

3. Ask the seller to lower the price of the house

Buyer agents will suggest to their clients that they may want to request a price reduction to compensate for the cost of needed repairs. 

What should a seller agree to fix?

After receiving a buyer’s request, sellers have 5 days to make a decision. This allows time to obtain estimates, which helps with a seller’s decision-making. Lender-required fixes must be performed or else the loan won’t be approved and the sale will be terminated. Even if a particular buyer walks away, these fixes are now a disclosure item and other lenders will most likely demand them.

 

Offering a home warranty

A home warranty is a win-win way to address those requests for replacement of an item that, although it may be nearing the end of its functional life, still works.

An aging water heater, for instance, may concern a buyer. A home warranty might ease their anxiety and save a seller money in the process.

As always, consult with your Maryland real estate agent regarding the negotiation of repairs.

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