Archive for November 9th, 2007

Taking Care of Minor Repairs Before Selling Can Save Your Deal

November 9th, 2007 Categories: For Sellers

Selling real estate in the Redland and the rest of Miami-Dade county, I have seen lots of things happen. One thing Ive seen happen (and its never pretty) is seeing a deal fall apart after inspections.

An inspection during the home buying process almost always generates reasons to renegotiate the contract. But it can also offer the buyer a clean way to make his getaway if hes having second thoughts.

How is this possible? Let me explain. When a buyer makes an offer on a house, the contract has a place where a repair limit is specified. A repair limit means the buyer is willing to take on X amount of dollars in repairs and still buy the house. A larger repair limit lets the seller know the buyer is pretty earnest about buying the home.

But how does anyone know what the repairs will be on the home? An inspector is hired. I always have my buyers request inspections. Most banks require them, but even if they dont, it makes sense for a buyer to spend a few hundred dollars now and save thousands down the road in unnecessary surprises.

An inspector cant tell exactly what the repairs will cost to fix on problems he finds. He can only estimate his best guess. More often than not, he will guesstimate on the side of caution and go higher than the repairs may actually be.

It is not unusual to see minor repairs on inspections add up to hundreds, and sometimes thousands of dollars. But it isnt necessarily accurate to think that it would cost that much to fix those things on your own. Thats an estimate to get a professional to do the work. A home seller can probably do a substantial amount of the work himself and do it cheaper.

For instance, on a report a broken dial on a stove might be $40 to repair but the knob only costs $12 at Sears. A broken window pane might state $200 but if you have The Home Depot cut the glass for you and you know a little something about glazing you can save $150 on the project. A broken doorknob on the closet door might bump up the report by $30 while the knob only costs $7 at The Home Depot and relatively no experience to replace. A leaky faucet might say $50 and all it needs is a $1 washer. Do you see where Im heading with this?

An inspection report could have estimates of $1,500 when in actuality it would only cost you $500 to repair these minor items yourself. While it makes sense to fix these things before hand so you dont have to renegotiate your contract and lose out on $1000 unnecessarily, theres more than $1,000 at stake. The entire deal is at stake.

How does an entire deal run the risk of being lost over minor repairs? Again, it goes back to that repair limit. Lets say, for arguments sake, that the buyer stated in the offer he made that his repair limit is $2000. Hes willing to buy your house for $xyz amount and even if the repairs on the inspection come to $2,000 he is still willing to buy the house. But if the repairs are estimated at $2,001 or more, he has the right to cancel the contract. He may decide not to cancel the contract, but he has every legal right to do so if he wants to.

So if the inspection comes up with a repair estimate of more than $2,000 your buyer now can say œSorry, I changed my mind. I dont want the house. But if the minor repairs had been made before putting the house on the market (at a cost of $500 to the homeowner) and the only thing that shows up on the report is some faulty wiring in the attic at an estimate of $700, the buyer is still bound to buy the house. And its going to cost him only $700 to fix the problem, so hes OK with that.

So dont let your repair limit get filled up with things you can fix yourself. Leave it for the true items that are best left to the professionals. Fix the little things yourself and fix them before you put the house on the market (or start fixing them the moment the real estate agent walks out the door).

In todays market, a qualified buyer is hard to find. Dont let yours get away after you have him. Head to the hardware store and get to work.

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