How You Can Use a Home Inspection To Negotiate a Better Deal

A professional home inspection is one of the most important steps in the homebuying process. It can alert you to any problems with the property that you might not have noticed or that the seller failed to mention. Depending on what the inspector finds, it can, in some cases, also give you leverage to negotiate for a better price or other concessions. Here’s what you need to know about home inspections and how to make the best use of one.

Understanding Home Inspections

Home inspections are usually optional. But having one is a very good idea. Eloise Gauthier of Gauthier Real Estate in Lafayette, Louisiana said she recommends inspections to 100% of the buyers she works with, adding that they’re especially important for first-timers, who “may not know what they’re getting into.”

While state and local laws generally require sellers to disclose any serious defects and other pertinent matters that might affect a home’s value, an inspection can verify the accuracy of their disclosures and point out any significant issues that even the seller might not have been aware of.

What a Home Inspection Entails

Home inspections can vary in their thoroughness. So it’s worth asking any inspector that you are considering for a sample of their typical inspection report, suggested Eric Tyson, a financial counselor and co-author of the book Home Buying Kit for Dummies, now in its eighth edition. “You want a report that details any negatives and deficiencies, not just a checklist,” he said.

In general, a proper inspection should take two to three hours, depending on the size and condition of the home, the National Association of Realtors (NAR) said. The buyer should try to be there so the inspector can point out any issues they find. For first-time buyers, in particular, this can be a valuable opportunity to learn how the various systems in the home (heating, plumbing, etc.) work and what’s necessary to maintain them.

You can find local inspectors on the American Society of Home Inspectors (ASHI) websites or the International Association of Certified Home Inspectors (InterNACHI). You can also ask for recommendations from your lawyer if you have one, or from your real estate agent. Remember that real estate agents can have a potential conflict of interest here. “Sometimes agents don’t like tough inspectors—also known as ‘deal killers,'” Tyson cautioned.

Expect to pay from $300 to $500 for the inspection, although in some cases, you might be able to get the seller to cover the cost as part of your deal.

The Home Inspection Report

A good inspection report will cover the home from top to bottom, inside and out. The NAR’s Realtor.com website said that the report should pinpoint any issues involving the home’s:

• Grounds 
• Structure
• Roof
• Exterior 
• Windows, doors, trim  
• Kitchen  
• Bathrooms
• Plumbing  
• Electrical systems

Common Issues Found in Home Inspections

The inspector may discover problems that need immediate attention or things that you will want to keep an eye on in the future, such as a roof or hot-water heater that’s nearing the end of its life. Inspectors might also suggest upgrades to consider when you have some money to spare.

According to the NAR, “Some common problems inspectors look for are structural or foundation problems, improper drainage that could damage the structure over time, faulty wiring that could disqualify a home from being insured, HVAC system issues, and safety issues such as tripping hazards or too few smoke alarms or carbon monoxide detectors.”

If the repair is urgent and/or costly, you have several options. One is to ask the seller to fix the problem before the deal goes through or to reduce the sale price accordingly.

Using the Inspection Report To Negotiate

As mentioned, if your inspection uncovers certain kinds of problems, the seller could be legally required to fix them before they can sell the home to you or anyone else.

Otherwise, you may be able to use the results of your inspection report to negotiate a better deal than you and the seller initially agreed to. That could mean a lower price or some other type of concession, such as covering a portion of your closing costs or buying a home warranty for you. Gauthier, also an NAR regional vice president, said that sellers are often willing to pay for at least a one-year home warranty, which the new owner can later renew if they wish to.

If repairs are necessary but not required by law, having the seller arrange and pay for them before you move in will save you some time and bother. However, you’ll have more control over the result if you can choose your contractors and supervise their work.

What to ask for—and how likely you are to get it—will depend, in large part, on how eager the seller is to close the deal. Your real estate agent may be of help here. And while it probably goes without saying, it’s wise to be cordial about it. Even if you feel you have the upper hand, Tyson said, “Don’t beat up” on the seller, or they may simply tell you to buzz off.

Bear in mind, too, that contingency clauses carry a deadline, and if you don’t reach a satisfactory deal (or call it off altogether) before that time, the seller may be entitled to keep any earnest money or deposit you put up when you signed the initial contract.

Market Conditions and Their Impact on Home Inspection Negotiations

How much leverage you’re likely to have in negotiating will also depend on whether you’re facing a buyer’s market or a seller’s market. In a buyer’s market, the supply of available homes will exceed the demand, while in a seller’s market, the opposite is true. 

If you’re lucky enough to be in a buyer’s market, the seller will usually be more eager to make a deal with you than they would otherwise. In a seller’s market, several potential buyers may be willing to meet their price, so you could have little or no room to negotiate. 

In a really tight seller’s market, buyers will sometimes make an offer with no inspection contingency clause. That can give you an edge over other would-be buyers who insist on one. However, you’ll be taking a calculated risk that there is nothing seriously wrong with the property. 

When To Walk Away From the Deal

If you’re unable to reach what you consider a reasonable arrangement with the seller, your ultimate recourse is simply to call off the deal, walk away, and look for another home. (Remember to do it before your contingency clause expires, however.)

You might want to walk away if the inspection discovers problems that the seller refuses to fix or if they won’t drop their price enough for you to deal with the matter yourself. Even if they are open to coming down in price, you need to consider how much time and energy you’re willing to put into the project. Unless the housing market is incredibly tight, there are likely to be other homes out there that will be less of a hassle, and you’ll enjoy just as much. 

The Bottom Line

Unless you happen to be a home inspector yourself, paying a pro to check out any property you’re considering buying is almost always worth the money. An inspection may more than pay for itself if it turns up issues that give you the leverage to negotiate a lower price or other concessions from the seller.

How much leverage you’re likely to have will depend on the state of the real estate market at the time and how eager that seller is to make a deal. But, as Eric Tyson put it, “you don’t have much to lose by trying to negotiate something with the seller. The worst that can happen is they’ll say no.”