Lemme 'Splain You Something: What to Do After a Home Inspection in Greater Boston

If you’re buying a home in the Greater Boston area, chances are you already know that a home inspection is one of the most important steps in the process. But here’s what most buyers don’t realize: the inspection itself is only half the battle. What really matters is what you do after you get that report back.

Before we get into your options, you need to understand the terms you agreed to when you submitted your offer. Did you include an inspection contingency? In most states, this is what determines whether you can walk away if the inspection turns up something you’re not comfortable with.

Here in Massachusetts, we recently passed a law that removed sellers’ ability to require buyers to waive their home inspection, so every buyer now has the right to get one. But you still get to set the terms for what happens after. You might go with a pass/fail approach, or set a repair threshold, something like: “If repairs come in under $20,000, I’m staying in the deal.” That number is up to you.

For the sake of this discussion, let’s assume you had an inspection contingency and the findings were enough to trigger your threshold. You have options. Here are the three paths forward.

1. Walk away. This is the most straightforward option. You did the inspection, you didn’t like what you saw, and you’re done. You kill the deal, get your deposit back, and move on to the next property.

It’s not always an easy decision, especially if you’re emotionally invested in the house. But sometimes the inspection reveals enough that walking away is the smartest financial move you can make.

2. Move forward as is. On the other end of the spectrum, maybe the findings weren’t deal-breakers for you. In that case, you can accept the house at the price and terms you already agreed to and keep the deal moving. If you’re in a state like Massachusetts, where you put down an additional deposit after inspection, you do that and continue toward closing.

This path makes sense when the issues are minor, you already factored some repairs into your budget, or you simply love the house enough that the findings don’t change your decision.

3. Renegotiate the deal. This is the path most buyers end up on, and it’s where things get interesting. Renegotiation typically takes one of two forms: asking the seller to make repairs, or asking for money back in the form of a price reduction or closing cost credit.

Asking for repairs. You can ask the seller to fix specific issues before closing. They hire licensed contractors, get the work done, and provide receipts. You verify everything at your final walkthrough.

The upside is that repairs sometimes balloon. A $500 fix can turn into $5,000 once a contractor opens up a wall, and licensed contractors can’t just ignore what they find. If it grows, that’s on the seller’s dime, not yours. The downside is you don’t pick the contractors. The seller could hire the best or worst electrician in town. All that’s required is someone licensed and a receipt.

Asking for credits. The other option is to negotiate money instead of repairs, either a reduction in the purchase price or, what I’d recommend in most cases, a credit at closing.

A closing cost credit puts real cash back in your pocket. If it covers your closing costs and you’re financing, that’s money you can use to handle the repairs yourself after closing, with contractors you choose. A price reduction just lowers your monthly payment by maybe $25 to $50 a month, which doesn’t help you pay for the repairs sitting in front of you.

What a lot of buyers don’t realize is that closing cost credits can also go toward a rate buydown, which could knock hundreds off your monthly payment for a couple of years, or toward any commission you owe your agent out of pocket. The goal is to keep as much cash in your pocket as possible so you’re in a strong position after closing.

Know what to negotiate and what to let go. When you get your inspection report, separate the findings into two categories.

• Category one is everything you should have already known about. The crack in the sidewalk you walked right past on your way in. Your inspector will flag it, but asking for a concession on something you already saw isn’t a strong move. That was baked into the price you agreed on.
• Category two is the stuff you had no way of knowing. Electrical issues behind the walls, plumbing problems in the crawlspace, corroded pipes, and ungrounded outlets. These are the things you hire an inspector to find, and these are your basis for renegotiation.

Here’s the other thing worth knowing: if you walk away and those hidden issues have been identified, the seller is supposed to disclose them when the property goes back on the market. So it’s often in their best interest to work with you rather than start over with a new buyer who’s going to find the same problems.

Let’s talk strategy. If you have questions about home inspections and how to handle what comes after, I’d love to have a conversation. Whether you’re thinking about buying or selling, it helps to know how this process works ahead of time so you can have as smooth a transaction as real estate will allow.

Give me a call or text at (857) 210-9925, email me at lou@c21revolution.com, or visit lousellscambridge.com. I look forward to talking to you soon.