With Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, FL
Podcast: Play in new window | Download
In this week’s Real Estate Roundup, Steve and Terry Story, a 31-year veteran at Keller Williams, looked closely at what types of repairs homes often need when they go up for sale. It’s important for you, as a home buyer, to understand what is reasonable to ask the seller to fix and which repairs might be easier and less expensive to fix on your own.
Under $500? Just Fix It Yourself
Terry’s rule of thumb on needed repairs when you’re buying a home—and there are always a few things that need to be fixed—is anything less than $500 to $1,000, just handle it yourself. It’s just easier all around that way. You should look at that cost in relation to the total purchase price of the house. The seller’s not going to want to renegotiate over a couple of hundred dollars. Terry tells home buyers to look for big-ticket items, things like needed roof repairs or the heating/cooling system not working right. Those are the issues you really need to work out with the seller before closing the deal.
When buying a home, you’re often agreeing to buy “as is, with the right to inspect”. You negotiate in good faith that nothing major is wrong. If a home inspector does a walkthrough and you’re not happy with the results, you can still pull out of the deal. You also have the right to renegotiate, and that’s the best way to handle significant repair issues.
Negotiating For Home Repairs
The easiest way to handle repair issues is to negotiate a credit toward the purchase price with the seller. For example, if there’s a total of around $1,500 worth of repairs needed, you might ask the seller to knock $1,000 off the price. You can easily negotiate down a bit from whatever number the home inspector gives because those numbers are usually highly inflated. They might peg a toilet repair at $250 that you can do yourself with a $25 part from Home Depot.
Negotiating a credit is probably a smarter way to go than having the seller agree to handle the repairs. Why? Well, what can happen is that the seller pays for the repairs, but then when you do a new walkthrough, you might not be satisfied with the work that’s been done, but the seller doesn’t feel as though they should have to spend more money after having paid someone once for the work. The smart way is to get a credit from the seller and then handle getting the repair work done yourself, assured that things are fixed to your satisfaction.
Don’t Be Afraid To Point Out The Need fFr Repairs
When you’re negotiating the price of a home, sellers assume you’re seeing things that obviously need to be repaired, such as cracks in the ceiling or the floor or plumbing issues. There may be some repairs that the seller isn’t aware of, however. Sometimes issues with air conditioning and heating or even a leaky roof might not be apparent. Make sure you bring all repair issues to the seller’s attention early on, not at the last minute just before closing.
You aren’t always going to be able to notice needed repairs yourself, so make sure to bring a home inspector with you when doing a walkthrough. And if there are specific and major issues, such as electrical wiring, then go the extra mile and bring in an electrician to assess the situation. It’s worth spending the money on a professional upfront, rather than finding out after you’ve bought the home that there are significant repairs needed. It’s too late then to renegotiate with the seller.
If you’d like to learn more about buying or selling a home, see Terry at Keller Williams!
Disclosure: The opinions expressed are those of the interviewee and not necessarily of the radio show. Interviewee is not a representative of the radio show. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by the radio show.
Steve Pomeranz: It’s time for Real Estate Roundup. This is the time every single week we get together with noted real estate agent, Terry Story. Terry is a 31-year veteran at Keller Williams, located in Boca Raton, Florida. Welcome back to the show, Terry.
Terry Story: Thanks for having me.
Steve Pomeranz: Now the last time we spoke, you were a 30-year veteran, but you’ve crossed the Rubicon.
Terry Story: I know. Time flies. I’ve crossed the line, 31.
Steve Pomeranz: Well, congratulations. 31 years, that’s amazing, especially since you’re only about 38.
Terry Story: 31 years of wisdom.
Steve Pomeranz: Yes.
Terry Story: Yes, and I’m 28.
Steve Pomeranz: And you’re 28. We were talking about what buyers should not ask of sellers with regards to repairs. I want to review just a tiny bit of that because we did that in another week.
Terry Story: Sure, sure.
Steve Pomeranz: The easily repaired items. The document I was looking at-
Terry Story: Do it yourself-ers.
Steve Pomeranz: Yeah. I always said items under 10 bucks, but you said that’s ridiculous. Items under a hundred bucks, just don’t ask-
Terry Story: I would actually say 500.
Steve Pomeranz: Oh, really?
Terry Story: If you want my number.
Steve Pomeranz: I do, I want your number.
Terry Story: I would say at least 500. And actually, I would probably tell you at least a thousand.
Steve Pomeranz: Don’t ask the seller to fix something if it’s less than a thousand bucks. Why?
Terry Story: Well, it depends on how many items. So, let me backtrack. So first of all, a lot of the contracts are as-is with right to inspect. So, let’s put this in perspective. In good faith, you negotiated a deal knowing you’re buying it as-is with right to inspect. Now, you have the right to back out of the deal if you don’t like the results. You also have the right to go back to the seller and try to renegotiate.
Terry Story: The seller’s not going to be too willing to renegotiate if there’s one item that needs to be repaired. He’s saying, “Yahoo, I only had one item that needed to be repaired. Be thankful.”
Steve Pomeranz: That’s right. Yeah, yeah.
Terry Story: So what I tell my buyers is look for the big items. Pick maybe three. Roof leak, termites-
Steve Pomeranz: AC.
Terry Story: … AC not cooling properly.
Steve Pomeranz: That’s right. Yeah.
Terry Story: Okay? All that other stuff, and there’s a ton of all that other stuff, if you can turn it into a form of credit, you can say, “Hey, all of these items add up to $1,500. Let’s negotiate. Just give me a thousand” because those numbers also, by the way, Steve, are inflated. They’re inflated because it’s based on the inspector saying, “Okay, if the toilet flapper isn’t working, it’s $250.” Okay, you can go to Home Depot and buy a flapper for, I don’t know, 25 bucks, and do it yourself if you know how to.
Steve Pomeranz: Right. That’s right. Right.
Terry Story: Now saying, “Do it yourself,” this is where we get ourselves into trouble. I’ll paint a picture for you. Buyer wants $6,000 worth of repair. Seller takes a look at the list and says, “I’ll tell you what. I’ll take care of this, this, this, this, and this, and give you $2,000.”
Steve Pomeranz: I’m going to take care of it. Don’t worry. I got it. I got a guy.
Terry Story: Don’t worry. I got a guy. So, here’s the scenario. I got a guy, really needs to be licensed and insured and receipts and everything else. Well, then, you have your guy do the work. Now, the buyer’s going to come back with his inspector and re-inspect the work.
Steve Pomeranz: I see.
Terry Story: So, then, you have opinions. “You didn’t do it right. It’s shoddy,” dah, dah, dah, dah, dah, dah, dah. Don’t go down there. Just work out a credit, that’s what I say.
Steve Pomeranz: Yeah. Got you. Replacing things like smoke detectors or carbon monoxide detectors, I think it’s smart for the buyer just to go in and replace them all themselves-
Terry Story: In the beginning when they first move in.
Steve Pomeranz: … because first of all, these things get updated. As a matter of fact, I updated mine recently. When the battery would go, you used to have to unscrew the whole thing, take it off the ceiling and everything. Now, there’s a little button you push and the battery flips out.
Terry Story: A release? Oh, wow.
Steve Pomeranz: Yeah. It spins like at a 90-degree angle, and you just replace it. It’s like, “Man, I wish I knew this like five years ago.”
Terry Story: How much are they, 20 bucks?
Steve Pomeranz: No, they’re more than that, but they’re not very much, they’re not.
Terry Story: Okay. Yeah.
Steve Pomeranz: Bottom line is you’re safer if you have your own new stuff in there, and so that’s not something that you-
Terry Story: Right, and you don’t want to rely that the seller put it in properly, installed it properly.
Steve Pomeranz: Yeah, yeah, yeah. Plumbing issues, minor. Well, you mentioned the-
Terry Story: Flapper.
Steve Pomeranz: … flapper and all of that stuff. So, use your common sense. Say, “Look, here’s a list of 12 items. 1,000 bucks, will cover it,” and then you can just move on and concentrate on the important stuff. Right? Okay.
Terry Story: Exactly. Like the roof leak, termites.
Steve Pomeranz: What about things that were obvious from the beginning? You walk up the path, the sod needs replacement, or the fence-
Terry Story: There’s cracks.
Steve Pomeranz: There’s fence issues.
Terry Story: Right, something dangling. So again, especially if it’s something that’s obvious. So when you’re negotiating on your purchase of a home, the seller is also assuming that you saw these things, there’s something is very obvious. So to bring that item up during the inspection period, it’s a hard sell on the seller.
Steve Pomeranz: Yeah, yeah.
Terry Story: So, your best bet on trying to negotiate these things when you’re dealing with a seller, if the seller didn’t know that his air conditioning isn’t cooling properly because it’s not falling in the right temperature differential, he has no way of really knowing that. That would be a legit thing you can bring to him.
Steve Pomeranz: Yeah, right.
Terry Story: Roof leaks. Sellers don’t know they have roof leaks unless they actually see a roof leak. Roof leaks begin on the edge of the house. So unless a trained-eye seller can walk around his property and recognize roof leaks, he doesn’t know about those roof leaks. Neither would you, but something blatantly obvious.
Steve Pomeranz: Right. We were talking about roof off air. One inspector came in and saw six leaks, and yet it wasn’t really six.
Terry Story: Right, right. We had two roofers and it’s two. I mean, it’s one leak instead of six leaks. So, you-
Steve Pomeranz: Why did he say there were six?
Terry Story: Because he saw stains. So, these stains weren’t wet stains. They were just stains from a previous time. The roof had been replaced, I don’t know, 10 years ago, but they’re really old stains. Truth of the matter is, somebody should’ve painted their garage ceiling.
Steve Pomeranz: Yeah. I mean, that’s lazy or whatever.
Terry Story: But you know what? That could be construed as hiding something too. I mean, I’m not encouraging to go paint stains because-
Steve Pomeranz: Okay, all right. Also, the older the house, the more issues.
Terry Story: Sure.
Steve Pomeranz: Yeah.
Terry Story: Well, yes and no. I mean, you remember the good old Chinese drywall days?
Steve Pomeranz: Oh, yeah.
Terry Story: Those were all brand-new houses. Those were big problems. Actually, you’d be quite surprised. If you are buying a new home, bring in an inspector.
Steve Pomeranz: Well, I have a question for you. Some suggest that you should not use a home inspector, that you should get a plumber, that you should get an electrician, individuals who are experts in their own individual field as opposed to kind of a generalist as a home inspector. What do you think?
Terry Story: Well, it depends on what the contract calls for. But for example, a lot of roofers don’t want to do roof inspections. They’ll come out based on an inspection report that you have and tell you, “Hey, the cost to repair this leak is this,” but they don’t want to go out there.
Steve Pomeranz: Yeah, it’s not their business.
Terry Story: Right. They’re there to repair businesses. I would tell you this. I would do a general inspection, and if there’s something that’s of concern that could potentially be a major item, if they start talking about electrical, absolutely bring in an electrician.
Steve Pomeranz: Yeah.
Terry Story: So, your inspector’s scoping out the whole entire house-
Steve Pomeranz: Like a generalist.
Terry Story: … like a generalist and looking for potential issues. Just because he finds things doesn’t necessarily mean… You just have to delve a little deeper.
Steve Pomeranz: Okay. So, I think this is an area, and we’re really out of time, but this is an area that you want to spend some money on.
Terry Story: Sure. Yes.
Steve Pomeranz: Because I mean, you’re going to be in this house a long time, and these things are important. So, don’t be penny wise and pound foolish when it comes to this.
Terry Story: Agreed.
Steve Pomeranz: Spend the money upfront so you don’t have to spend the money later. My guest is always Terry Story, a 31-year veteran with Keller Williams located in Boca Raton, and she can be found at terrystory.com. Thanks, Terry.
Terry Story: Thanks for having me, Steve.
