Listing Agreements and Negotiating Inspections

Published on February 20, 2018

Listing Agreements and Negotiating Inspections

Listing agreements and negotiating after the home inspection are often very stressful and confusing. This can be a general guide to help ease you through the process.

After the Listing is Signed

While buying a home for the first time is somewhat confusing until the process is explained, selling one for the first time is even more so. This is a huge investment you’re selling. How much will you make, and when?

Knowledge is power and you should be aware of every step in the process so that you never have to wonder what happens next.

It starts with listing your home. When you know what happens after you sign the listing agreement, and what is expected of you during this time period, nothing will fall through the cracks and you can relax into the process.

So, for anyone thinking of selling a home, here is what you can expect after you sign the listing agreement.

The pre-showing period

Immediately after signing the listing agreement, or even before that time is one of the most important periods.  You will get suggestions on ways to improve the home’s curb appeal and, if needed, tips on how to stage the interior to appeal to the greatest number of potential buyers.

More importantly, you need to walk you through any repairs that will help the home sell quicker and for more money.

While you get busy making improvements and needed repairs, your agent will have their own tasks to complete. Here is just a handful of what is done during the listing process.

  • Ensure all the pertinent information about the HOA, if applicable.
  • Your agent should measure each and every room for ‘proper and accurate room dimensions’. Be advised, a room 11’10” – will be rounded down to 11’. Don’t worry – your total square footage is included in the listing. Unfortunately, sellers and Brokers can be sued for the wrong room dimensions.
  • The agent will verify there are no ‘special assessments’ presently or ‘planned’ for your area (roads, sewers, sidewalks…)
  • Determine how the property will be shown; lockbox, appointment or agent to accompany all showings.
  • You will get an ‘overview’ of the broker’s open, which is the open house for real estate agents.
  • You will be reminded how to guard your valuables and what to do with your pets.
  • A sign will be ordered and placed in front of your home. Often times, neighbors and people driving by may know someone who may be very interested!
  • Professional photographs should be taken. In addition, a ‘Matterport’ (3 Dimensional Visual Tour) can be done on your home (depending on the price and size of your home.) This is an exciting and NEW avenue of marketing your agent should be well aware of.
  • These photos will not only be used in the MLS listing but in all other marketing materials, so you’ll be given plenty of notice to get the home in tip-top shape before the photographer is scheduled.

Once the photos and information are in the MLS, your home is officially on the market and all other real estate agents in the area will have access to the information and can begin showing your home.

While the home is on the market

While the home is on the market you’ll be called on periodically to sign various forms. From contingency releases to other acknowledgements, so be sure that you fully understand what you are signing. One example is if you are giving a ‘buyer’s allowance’ for carpeting, wallpaper removal or other items that will make your home more attractive to buyers.

Most sellers must fill out various disclosures. These forms tell the buyer anything the sellers know about the home that may bear on their decision to purchase.

The Seller’s Disclosure Statement is one that all sellers must complete. Although we cannot fill out the form for you, we’re happy to assist you if you have any questions.

Seller disclosures are serious business, it is your most important duty when you sell your home. It may seem that by being totally honest about known problems, you may be sabotaging the sale, but you are actually protecting yourself from future legal liability.

While the home is on the market you will need to keep it tidy and keep your valuables locked away. Leaving the home, and taking your pets with you is key while it’s being shown. This is the best approach, if you hope to sell the home quickly. Buyers will spend more time, be able to ask their agents questions, and won’t be distracted by barking dogs or ‘no axis’ to rooms where you might want to leave them while the house is being shown.

Inspection Negotiations

Once you receive an offer on your home, then your buyer will have your home inspected.

Negotiating the successful close of a home sale begins with price and contract terms and doesn’t end until the deal closes.

One of the most frequently negotiated items, after the price and terms, has to do with the home inspection results. They’re also among the most contentious negotiations.

Very few home inspections are totally clean, meaning, there’s not a thing wrong with the home. And, many of the items mentioned in the reports are minor.

Your real estate agent will counsel you on how to deal with buyer requests for repairs. But, it helps to know why they are making certain requests.

When you know how to choose your battles, and why, you’ll understand this negotiating process.

The 3 most common types of 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 and, depending on the extent of repairs or replacements required, and the deal the buyer made over the price, the buyer runs the risk of the request being denied.

One thing you, as the 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 safety, structural soundness and to remedy building code violations. Expect to make all of these types of repairs.

  1. 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 require to get the home where the buyer wants it), this method is quicker than the first one.

Again, as the seller, be aware that certain fixes are required by the VA and by FHA, before the close of escrow.

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

  1. Ask the seller to lower the price of the home

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 you should never agree to fix

The real estate agent for the buyer that insists that the seller replace that piece of plastic or that the seller buy and install a globe light bulb in the outlet over the front porch, should counsel her client that “the inspection report is not a repair list for the seller”.

Typically, repairs to rectify cosmetic issues can be safely ignored. Lender required fixes, on the other hand, should always be performed.

Even if this particular buyer walks away, these fixes are now a disclosure item and other lenders will most likely demand them. Plus, once a material issue has been disclosed to the seller, it must now be put on the seller’s disclosure statement.

During a ‘sellers’ market, you are in the driver’s seat and can safely ignore most of the more trivial requests. In a buyers’ market, however, you may have to take a deep breath and carefully consider agreeing to the buyer’s wishes.

You don’t have to follow the buyer’s agent’s script

If the items on the buyer’s ‘fix it list’ aren’t of a safety, structural soundness or building code violation nature, you are under no obligation to respond to the buyer’s preferred remediation method.

In other words, you don’t have to offer a credit, make the fixes or lower the price of the home. You have options, too. Some of these include:

Hold back personal property

If you won’t be taking your appliances with you when you move, don’t automatically include them in the sale. Hold them back to use as bargaining chips during the negotiating periods, as replacements for repairs.

Instead of lowering the price of the home or making non-essential repairs, offer to throw in the appliances.

Offering a home warranty

Offering 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 the buyer. A home warranty might ease their anxiety and save you money in the process.

As always, consult with your real estate agent about all possible responses to a buyer’s request for repairs.

Related Articles;

Six Important Tips to Help You Prepare for a Home Inspection  via Sharon Paxon

Strategies Used to Make Home Sellers More Money via Jeff Nelson

8 Costly Mistakes Home Sellers Make  via Michelle Gibson

Home Inspection Repair Requests a Buyer Shouldn’t Make via Bill Gassett

Getting Your Home Ready For a Smooth Sale via Eileen Anderson

10 Low-Cost Tips To Sell your Home Fast For Top Dollar via Maria Mastrolonardo

Wendy Weir Relocation – Real Estate Agent, Relocation Specialist, Birmingham, MI

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