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If possible, buyers should delay as many expenses as possible until repair issues are known and resolved. Why spend money for a title search, survey and other expensive closing costs until you know the house will be yours? Get your inspections out of the way early so that you can negotiate repair issues and get on with the business of closing.
Unresolved Repair Issues
Known Problems Become Material Facts: Unless the buyer makes unrealistic demands, it's often in the seller's best interests to negotiate and make repairs. Why? Because once a problem is known, it becomes a material fact that must be disclosed to all future potential buyers.
Sometimes sellers think they can up the price of the house in order to cover the repair, but if the house is already priced correctly that doesn't usually work. An overpriced house sits on the market instead of selling and the sellers continue to make payments instead of moving into a new house.
Banks Might Not Lend: Problems that are noted on an appraisal might throw up a red flag to lenders, causing them to ask for a structural inspection to verify that there are no problems with the house. The bank might refuse to lend until repairs are made
Scheduling Repairs
Repairs Made Before Closing: If the seller elects to make repairs before closing, take your home inspector back for a recheck as soon as you receive word that repairs are complete. Do not wait for the final walk-through, because you don't want to find out on the day of closing that repairs have not been made, or have been made poorly.
Repairs Made After Closing: There are a few basic scenarios for repairs made after closing:
* The seller can give you a lump sum at closing to cover the cost of repairs.
* The seller can prepay a repair person to do the work.
* A portion of the seller's proceeds can be held in trust after closing and used to pay for repairs. A signed agreement should be in place to ensure that repairs are made.
The method you use depends on the complexity of the repairs. Simple items, where you feel the estimate you've received is sufficient, could probably be paid as a lump sum. Extensive repairs often uncover more issues as they progress and nearly always cost more than anticipated.
Buyers should consult with an attorney to make sure their interests are protected before agreeing to make repairs after closing.
