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Should the seller or the buyer pay for repairs?

By Allen Norwood
Allen Norwood
Allen Norwood writes on Home design, do-it-yourself and real estate for The Charlotte Observer. His column appears each Saturday.

After a buyer’s home inspection prior to a sale, which repairs should a seller be expected to pay for? It’s a potentially contentious issue: Buyers might start negotiations by saying “all of them,” sellers “none.”

The answer has changed, says veteran broker Lexie Longstreet of Savvy + Co., thanks to a provision in the state real estate sales contract.

“(The issue) has totally changed since three years ago,” she said, “because of the due diligence contract. Basically, buyers can walk for any reason – or no reason. So buyers end up asking for everything to be fixed.”

Considering those changes, she said, a better question for the seller might be: Which problems, left as is, are most likely to cause buyers to back out of the deal?

I’ve written about “due diligence,” which went into effect in 2011. The buyer pays a fee – separate from earnest money – then gets a period to arrange inspections and the like. The fee and period are negotiable. At the end of the period, Longstreet said, the buyer can walk away. But he will forfeit the fee to the seller.

The smaller the fee, Longstreet said, the more willing the buyer is to walk – and more demanding he will be about repairs. “If the fee is $250, the buyer asks the seller to repair everything on the (inspection) list. ... Hey, a screw missing from an electrical box.” The bigger the fee, the less likely the buyer is to forfeit it.

Broadly, items on an inspector’s list are negotiable. So which repairs are most often deal breakers?

Buyers are most worried, Longstreet said, about things they can’t see, especially structural issues under the house or problems with the electrical system.

“Mold is a big issue right now, especially after all the rainy weather we’ve had.”

Buyers ought to repair rotting joists and girders. If there are screw jacks under the house for support – even if they’re just to keep the dishes from rattling in the cupboard – they need to be replaced by masonry piers on concrete footings.

Serious electrical problems need to be repaired. Not a balky three-way switch, she said, but something like an overloaded electrical breaker box.

In some neighborhoods, old underground heating oil tanks are an issue. If you’re selling, remove that before listing. You’ll have to disclose it. That can lead to a soil test, which can lead to a report to the EPA.

Surprisingly, Longstreet said most of her buyers and sellers don’t battle over roof repairs. They negotiate. “You can look at a roof and tell it’s old,” she said.

If you’re a prospective seller, you might want to hire your own inspector to spot problems, so you can repair them before listing. Lenders will require some repairs, even if buyers don’t.

Here’s another reason to hire an inspector before listing: The “due diligence” period can stretch for weeks and weeks. If the deal falls through, and your home goes back on the active market, the next potential buyer will ask why it has taken so long to sell.

“The buyer will want to know, ‘What’s wrong?’ ” Longstreet said.

Special to the Observer: homeinfo@charter.net
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