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Dealing with Repairs - My Least Favorite Part of Real Estate


I will readily admit that my least favorite part of selling real estate is negotiating repairs on a home.  I will also confidently state that I very rarely lose a transaction over a repair issue.  How do I do this?  Read on.


First, I think it is important to lay the proper groundwork with your clients.  If you are working with a buyer, make sure they understand that if they are buying a home built in the 1970's, the seller is not obligated to make it perfect.  Safety codes change over time, and a home built 30+ years ago is simply not going to be the same as one built today.  However, the seller is supposed to make it livable, so big repairs are a different animal altogether.


When I explain the inspection process to a home buyer, I always tell them that after the inspector gives us the list of items to be repaired, "we will go over the list and see which items are important enough to ask the seller to fix."  I believe this is a critical phrase to use, as it sets the expectation that not every item will necessarily be addressed by the seller.


When working with a seller, I generally give them an estimate of their net proceeds which includes at least a few hundred dollars worth of repairs.  Again, this is an expectation set far in advance of the buyer's request.  On a recent sale, I estimated $2000 and the buyer asked for nothing.  Clearly, the seller was ecstatic that they "saved" that money.  I was, too!


If there is something clearly wrong with the property and I am thinking of listing it, I always recommend getting it looked at by a professional (engineer, roof person, etc.).  That way, you can at least have some ammo if it is time for a big cash outlay by the seller BEFORE you put it on the market.  If they are not in a position to spend the money upfront, tell them to expect to be lower than the market price by more than the amount of the repair (maybe twice as much).


When presenting a list of repairs to a listing agent on behalf of my buyer, I don't have any problem saying "these are things that they will have to fix regardless of who buys the house", or something similar.  The same goes for presenting this list to a seller client.  The key is to make everyone understand and feel that the list is a reasonable one. 

Often, at least here in Texas, it is okay to simply give the buyer some money toward closing costs in lieu of actual repairs.  Please note that I said "toward closing costs", since I feel that this makes it a cleaner transaction overall.  We have an amendment that we can use for this purpose.  Allowances are trickier here, and a little harder to enforce and document. 

What do you do if they reach an impasse?  My first technique is to offer to split the cost between the two principals (buyer and seller).  If this fails, offer to split it four ways (buyer, seller, and the two agents). 

As a LAST RESORT, I will on occasion pick up the repair tab myself in order to salvage the deal.  What is $400 really if it ensures that you will get $12,000 next week?  That is an easy decision for me.  Again, I don't go straight to my own pocketbook, but I am not going to let my personal pride get in the way of my paycheck, either. 

I hope you found this helpful.  As always, thanks for reading!

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