Request for repairs explained

Today I’ll be talking about the request for repair negotiation, one of the most important aspects of a home purchase. I’ll give you what it is, how it is negotiated, and plenty of very important tips on how to navigate it.

Ok request for repairs, let’s talk a little bit about what it is first, and the general structure of how it is done. The request for repairs is a negotiation that is entirely separate from the negotiation for the original purchase. Think of it like this: you put an offer in on a home based on exactly what you can see at the time, but you can’t see everything, you don’t have the time to look at everything, or even the ability to physically everything, so you hire experts in with specific knowledge and special tools to give you the lowdown on the exact state of the home. If you find problems that aren’t to your liking, you can enter the request for repair negotiation to see if the seller will either fix or give you a credit for those problems.

For the purposes of this video, we will not be talking about any other solution to a request for repairs besides a credit. That’s because in my years of real estate, I’ve never seen anything come from a request for repairs that isn’t a credit, and very likely won’t. The reason is this: if something is wrong, most people want to be in control of who is doing the fix, and to what satisfaction the fix is done. A seller might hire someone super cheap to do a fix that’s just a bandaid whereas you might want a well reviewed professional to make sure a fix is done right. Therefore, the only way to do that is to figure out how much it is going to cost to do that, and ask for that credit from the sellers. That credit is a credit to closing costs, money you would have had to pay otherwise, so it functions as cash in hand for you to do the repairs after you close on the home.

So, the seller will take a look at all of your reports, the amount of money you’re requesting as a credit and do one of four things: Agree to your credit in full, counter with another number as an offer for a credit, deny your credit, or not respond at all. That’s right, the seller is under no obligation to even respond to a request for repairs, all though most do, because all California real estate contracts are written for the house being sold completely as is. But here’s the thing: If you don’t like the state of the property that you’ve discovered, or you can’t come to an agreement on a credit that you’re happy with, you simply exercise your inspection contingency and walk away from the home.

So basically, the seller doesn’t have to give you anything and you don’t have to buy the home if you don’t want to.

But here’s the thing, if you walk away from the property, the seller has to go to the backup offers if they have them, or go back on the market if they don’t. That’s why the seller has a decent amount of negotiation power if they have backup offers or received multiple offers, but very little if they only got one offer.

So just to summarize, the request for repairs is a separate negotiation from the main purchase, think of it like a negotiation within a negotiation, or a sub negotiation that is based on the outcome of your findings from your inspections.

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Ok so then, how do you go about negotiating, and what kind of aspects are common to request repairs on?

First off, let me reiterate that the seller does not have to give any credit whatsoever and a credit for repairs is going to be difficult in a strong sellers market unless something pretty major comes up. Generally speaking, I counsel my clients to only request repairs for health and safety issues and items that should function that are completely not functioning. Generally speaking, these are types of things that other buyers may ask for, so by asking for these, you know it is more likely for the seller to realize that other backup offers would ask for this as well, and grant them for you. The biggest thing we want to prevent is a request for repairs that feels like what is called a clawback.

What is a clawback? Well a clawback is when the buyer tries to “claw back” money because they feel like they overpaid for a property, or if this was the intended strategy all along and they never intended to pay the price they offered. If you feel like ultimately you’re overpaying for the property separately from the state of the home, you should simply walk away. I don’t often encounter this because I counsel my clients on only offering the price they are happy with at the end of the day, no matter what happens during inspections, but sometimes it does happen. As for an intentional clawback, well this is seen as dishonest, unethical, and generally frowned upon and very unlikely to get accepted.

That’s why to prevent being seen as a clawback, I counsel my clients on what is appropriate to ask for repairs and always extremely well document exactly what we are asking for, why we are asking for it, and how we have come to the credit amount we are asking for.

So with that in mind, here are some examples of things that are great to ask for a full credit for: Nonfunctioning heating and/or cooling systems. Active roof leaks. Foundation issues. Mold that is actively present. Appliances that don’t work. Sewer issues that prevent sewer function. Non functioning doors or windows. Structural termite work. Defective wiring that could cause a fire.

Generally speaking, these need to be things that directly prevent you from using the home the way it is intended. Everything else falls under the category of a partial request or no request for repairs at all.

In most instances, we request a partial request because there are very few things that are completely broken. For example, as we stated an AC system that simply doesn’t turn on, that’s a full request, but an AC system that cools the home, but maybe its old, maybe it cools it slowly, maybe it’s at the end of its useful life and will need to be replaced but is working now, that’s a partial request.

Here’s another example. The sewer system is old cast iron. Cast iron sewers are difficult and expensive to replace. They have a useful life. But if that useful life is more than say 5 years, you’re unlikely going to get a credit for it if it's functioning properly now. If it's really getting up in age or aspects of the pipe have root intrusion or the clay portion of it has cracks, yes, you might get a partial credit towards doing those repairs eventually.

Again, the most important thing is to get an actual dollar amount from a knowledgeable professional or actual contractor who can do the work. That way we have something to work off of to request the repairs. Then we can negotiate a request for repairs that is reasonable for the seller to credit you at the close of escrow so you can have the money to ultimately do those repairs on your time table and with the people you want to make the repair.

Then of course, there are things that I tell people we should never request repairs for. These are things that are known as “owner upgrades”, things that you want to do to the house, but aren’t currently done and don’t impact the functioning of the home. These are things like cosmetic fixes like changing light fixtures, new paint, any renovations you’re planning on doing, old outlets, dated tile, worn floors, basically, anything that’s currently functioning properly that you just don’t “like”. Those are things that you ultimately GET to do, because it's the customization of your home to your taste and getting it to be the way you want it!

Ok there you have it! Thank you for watching, I hope you learned something about requesting repairs, and if you did be sure to like and subscribe, and if you found this valuable, I’d incredibly appreciate you sharing this video with someone that could benefit by connecting with me. It’s super simple, and on my website there’s a button to Book A Consultation that connects directly to my calendar. I almost exclusively work with referrals because you all are people I know, trust, and appreciate the service I offer, so thank you so much for referring me!

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