HOW TO HANDLE a Request for Repairs as a Seller

So, you’re selling your home, you just got that amazing price you want, and suddenly a buyer hits you with a request for repairs. What are you required to do and what are you not? How should you handle it?

Hello everyone, my name is Cameron Stephens, the entertainment industry’s real estate agent and the owner of Stephens Real Estate, a real estate experience tailored to the creative client.

Today I want to talk about a request for repairs from a seller’s point of view. You just got multiple offers, you got a price you’re over the moon about, and then the buyer goes through their inspection process. This is a tough process for both sides because the buyer is so excited about the home but man, that inspection turned up a lot of little things in it. 

And for a seller, you’re thinking, hey! I took great care of this house, it’s just old, this is normal, everything worked fine while I lived in it, why are you asking me for so much money?

This is a crucial junction for a negotiation and it happens every time, so step one for sellers is this: prepare for it to happen.

Unless a buyer has waived inspections, which is unlikely, or possibly waived their right to request repairs, most buyers will ask for SOMETHING. And could you blame them? They’re paying top dollar in the most expensive home market in history. They may legitimately want to fix some things, but they might just want a win, something to make them feel better about the turmoil they’ve likely gone through to get to this point.

But let’s get one thing straight. You, as a seller, are not required to do anything. Every house is explicitly stated in the purchase contract as being sold AS-IS, no matter what is dug up in the inspections. Furthermore, you as a seller are not required to even respond to any request for repairs you receive. You probably should, but you don’t have to at all.

The other thing that is worth noting is that though a buyer can request to have a seller do a repair, whether themselves or through a company, we NEVER agree to those requests. We always always always, give a buyer a credit. Because a credit acts as cash in hand to a buyer, they get to do the repair on their timeline, to their satisfaction, and with the company they choose. That absolves you of any issues regarding a repair whatsoever. Trust me, you don’t want to get into a situation where a buyer asks you to do something, you do it to your satisfaction but they say it isn’t done to their satisfaction, you bicker and fight and generally cause more headaches for everyone than giving them an agreed upon dollar amount and being done with it.

The first thing we as a listing agent and seller team need to do is get a copy of all the reports that a buyer is making their request for repairs based off of so we can thoroughly understand what they received during the inspection. I will be there in person to hear everything as it happens, but we always want the reports as well.

When you get a report as a seller, it can often make people feel defensive. Try your best not to. Any decent agent, and we will always choose to work with a decent agent, is going to hire licensed professionals that have at least a good amount of training. You may not agree with what they say, and of course inspectors sometimes make mistakes as humans, or make incorrect assumptions, but if they are a reputable company and inspector, we have to at least understand that the buyer takes everything written at face value.

It should go without saying that no credits will be given without reports. Furthermore, if not provided, we will get an exact breakdown of how they got to the number they are requesting. For example, if a buyer requests $3,250, we want to know that $1,500 is for termite work, $500 is for a broken pipe, $700 is for cracked tile, $300 is for outlets, and $250 is for a new sprinkler terminal that doesn’t work.

Now if at this point there is anything that they are requesting a credit for that you know for absolute certain does work, we can work together to demonstrate that and therefore let all parties know we won’t be offering money for that credit.

Otherwise, we need to decide what we may be willing to pay for and what we will not. This is a discussion we will have but things we will be weighing are how reasonable the request is overall versus how much came back on the inspection reports, what the price was of any other offers we received, if the appraisal has come back already or not, and if the requested repairs were for buyer preferred upgrades or health and safety issues.

In general, a reasonable request is one that either impacts the use of a certain function or causes health and safety concerns. An unreasonable request is something that a buyer might like to have, but it is unique to them and won’t necessarily be requested by all potential buyers.

Remember, you don’t have to credit a buyer anything, however, if you do come to an agreement on a credit amount, the buyer is required to remove their inspection contingency. That is the biggest and most general contingency that a buyer has, so it is a big hurdle to get through. They can’t come back asking for more money after that point.

So therefore, often times a seller will choose which items to pay for with a credit and then counter with a different credit number. This can go back and forth until a number is agreed upon. If the buyer never comes to a number they are happy with, they can exercise their inspection contingency and back out of the sale. If the buyer is getting close to the inspection contingency date and the negotiation isn’t going well, the seller can submit a notice to perform which means that the buyer has two days after the day of submitting to either remove their contingency or cancel the sale. If they don’t do either of these, they are in breach of contract and the seller can cancel on them and go back on the market.

My philosophy is this: if you’ve got an excited buyer on the hook that paid top dollar for your home, and they are making reasonable request for health and safety items or things that aren’t functioning, taking a decent request for repair credit so you can move forward with the sale is usually the right call. But not always, and that number can vary depending on many different factors like the sales price and how long the property has been on the market.

Just remember, if you choose to cancel on a buyer, or hold fast to a credit and they back out, you do have to go back on the market. Other buyers that submitted an offer might have found a new home to purchase, may no longer be interested, or may just get spooked that you fell out of escrow, or worse, think they can play you for even more of a discount. But if you did receive a significant amount of offers and the request for repairs was simply unreasonable, it may be better to take that risk.

Speaking of unreasonable request for repairs, something that can happen is what we call a clawback. Now, we try to mitigate this as much as possible by choosing a great agent to enter escrow with, scrutinizing the buyer and their financials, and verbally making it clear this is something that we won’t tolerate. Still, it happens.

A clawback is a buyer that submits a high offer, sometimes quite a bit higher than other offers, that doesn’t have an intention of paying that number. They think they can just get the property under contract and then, when they have increased bargaining power, submit a huge request for repairs to try to get a bunch of money back. Although it can be easy to react to this emotionally, this is why we know the contracts extremely well, know what our rights are and cancellation procedures, and react accordingly.

We can even put the property back on the market, do more open houses, and even fully open escrow with a new buyer while this clawback buyer tries to tie up the house. Technically we cannot close with a new buyer until the old buyer cancels, and cancellation must be mutual, ie both parties agree to it in writing, but a party cannot unreasonably withhold cancellation from the other, and certainly cannot do so if they are in breach of contract or they will risk losing their deposit.

Ok there you have it! Thank you for watching, I hope you learned something handling a request for repairs as a seller.

At Stephens Real Estate we specialize in working with creative professionals, entrepreneurs, and especially people in the entertainment industry because I spent 7 years of my life working in animation and visual effects. That is why I designed Stephens Real Estate to be tailored to the creative client.  

I also designed a few value adding programs for both buyers and sellers that no one else is offering. For buyers, we put together a full marketing plan that paints you as the right buyer for your dream home. 

We can help recommend local lenders that will fit your financing situation, even if you’re freelance. And don’t worry about the inspections, we’ve got you covered. They’re free, all of them, no questions asked.

And If you’re looking to sell your home, we offer the ability to REMODEL NOW, and PAY WHEN YOU SELL with Zero fees, no interest, no upfront costs. 

Plus, we pay for all of the aspects of digital marketing from photography, drone footage, videography, 3D walkthrough and virtual open houses, social media campaign, custom website, targeted emails and more.

So, if you like my energy and personality, and think my expertise and the programs I offer would benefit you, please don’t hesitate to reach out. Additionally if you know someone that would benefit from connecting with me, I’d absolutely love an introduction.

Thanks again for watching, and at the end of this video there will be a QR code you can scan to be taken directly to my website, or a link somewhere down there where you can click to learn more.