5 Tips for Making a Counteroffer After a Home Inspection

A home inspection is the professional assessment of a property undertaken on behalf of a home buyer to assess the condition of the home before the sale is finalized. Home inspections are arranged by a home buyer's realtor or real estate agent. They are meant to protect home buyers from purchasing new homes with foundational or structural problems.

A home inspector looks for things such as compromised structures, faulty wiring, plumbing issues such as leaky faucets, termites, proper fire safety preparation, and more. If the home inspection report, completed by a home inspector, finds any major issues with the home, the buyer has the right to terminate any contingent offers or to propose a counteroffer. The seller is entitled to assess this counteroffer, and respond with their own counteroffer.

In a real estate transaction, a counteroffer is any other offer that is made on a house, by a seller or buyer, other than the primary offer or the home’s listing price. Most counter-offers will differ from the original listing price.

Home sellers may make a counteroffer after a home inspection has revealed issues with the home that the buyer wants to be fixed. This lower counteroffer is a compromise to account for a portion of the price of repairs, rather than the home seller paying for the home repairs themselves.

Most home inspections will reveal some issues with a home, which may be major or minor. If there is a major structural or infrastructural issue with a home, like a plumbing or HVAC problem, the buyers may ask for the seller to fix it. However, this can prolong the closing process especially if the buyer isn’t happy with the job. It’s standard practice for a homeowner to adjust the price of the home to account for the approximate price of the repairs, rather than negotiating repairs for the seller to make. Here is how a homeowner can make a counteroffer after a home inspection reveals potential issues.

1. 1. Closely assess the home inspector’s report. Carefully examine any issues outlined in the home inspection report, and assess the fairness of the buyer’s most recent offer. If the problems are minor, the seller may not need to significantly adjust the price. If the issues are more serious, it may be appropriate to make a significant counteroffer to your buyer.
2. 2. Consider the associated costs of repair. If the home inspection has revealed problems with the home that require significant work, consider the costs of those necessary repairs and factor that into your counter offer valuation. You're more likely to reach a compromise with your buyer if you've reached a fair counteroffer that doesn't drop below your minimum asking price.
3. 3. Determine the state of the real estate market. If it is a seller’s market, the seller will have more negotiating power and may be able to offer a small price reduction in their counter offer. In a buyer's market, it is easier for the home buyer to look at properties and you may need to offer a greater price reduction to make the offer competitive.
4. 4. Look at comparable properties. Take the prices of comparable properties into account when you’re making your counteroffer. Show your thought process to the buyer. This way, they’ll understand how you’re coming to your valuation.
5. 5. Communicate and collaborate with the buyer and their agent. Whether you’re in a buyer’s or seller’s market, the sooner both parties can compromise on a fair purchase price, the sooner the sale can move forward. If the seller isn’t prepared to reduce the price, they can offer to cover the closing costs or give repair credits to compensate for the home inspection repairs. If the buyer and the buyer’s agents have established a good relationship, there is a greater chance that they will take the counteroffer seriously. Keep in touch with your buyer and ensure that you've heard whatever issues they've raised.

All investments, including real estate investments, come with inherent risks which may involve the depreciation of assets, financial losses, or legal ramifications. The information presented in this article is for educational, informational, and referential purposes only. Consult a licensed real estate or financial professional before making any legal or financial commitments.

All you need is a MasterClass Annual Membership and our exclusive video lessons from prolific entrepreneur Robert Reffkin, the founder and CEO of the real estate technology company Compass. With Robert’s help, you’ll learn all about the intricacies of buying a home, from securing a mortgage to hiring an agent to tips for putting your own place on the market.