Step 6: Seller Rights and Responsibilities in a Home Sale
Congratulations! You have accepted a contract, the buyer has turned in the earnest money (always a good sign!), and the home inspection has been scheduled. Let’s review your responsibilities and rights as a seller when it comes to the inspection and any repairs.
Disclose Known Material Defects
If you are aware of any material defect(s) with your property, the law requires you to disclose them to buyers. That’s the fair and ethical thing to do, of course! Once notified, the buyer can then make an informed decision about whether to move ahead on the purchase.
You might think that *any* material defect will be the death blow for a sale…but that’s not the case at all. In many cases, the buyer may be satisfied with a price adjustment that takes the issue into account.
NOTE: Colorado requires sellers to disclose any material defects currently existing as well as any such defects they are aware *ever* existed (see the Colorado Seller’s Property Disclosure Form here. The Colorado residential form has sections regarding structural conditions; the roof; appliances; electrical and telecommunications; mechanical; ventilation/air/heat; water; sewer; flooding and drainage; use, zoning, and legal issues; access and parking; environmental conditions; common interest community/HOA; and more.
Obtain a Pre-Listing Inspection
I encourage my clients to obtain an inspection before even listing the home for sale. A pre-listing inspection offers you three key advantages:
- A heads-up on potential deal-breakers, as well as the chance to fix them first. A pre-listing inspection will cost between $200-$500 depending on the size of your home. That’s money well spent if it helps you uncover major issues – foundation problems, water/mold issues, etc. – that could send buyers running. Knowing about the problems in advance may also give you the opportunity to have them fixed at a better price, since tight deadlines always seem to carry higher prices.
- It can be a positive in marketing your home. Knowing that you’ve already had a pre-listing inspection can contribute to a buyer’s peace of mind, as can letting them know that the listing price has been set with any outstanding repairs in mind.
- It can save you time in negotiations. A pre-listing inspection can cut down on or potentially even eliminate back-and-forth negotiations.
Be aware, though, that doing your own pre-listing inspection doesn’t completely remove home inspection worries. There’s always a chance that the buyer’s inspection will reveal things yours didn’t find.
Options for Dealing with Home Inspection Issues
If an inspection turns up issues, they will fall into three basic categories:
- Required: These are ones that must be addressed, or the lender will not release funds to finance the deal. If the issue relates to structural defects, safety issues, or building code violations, you’ll have to fix it before the sale can proceed. “Fixing” can mean literally getting the issue fixed or – in some cases – offering the buyer a credit that allows them to pay for the repair themselves.
- Not required/negotiable: These are generally items that have reached or exceeded their expected lifespan but are still functioning properly. Examples include a 20 year-old roof with no damage or a 25 year-old furnace in safe working condition. How you handle issues like these depends to some degree on the market cycle when you sell. You’re in a stronger position in a hot seller’s market. You can also consider offering to purchase a home warranty to allay buyer concerns. Alternatively, you can offer something of value to the buyer, such as offering to leave the washer and dryer or certain pieces of furniture so they won’t have to purchase these items.
- Ignore: Some buyers will send over an entire punchlist but this doesn’t mean it is a carved-in-stone “to do” list. Some buyers are just pickier than others so don’t take it personally if they ask for that kitchen sprayer to be fixed or if the bathtub is missing its stopper. You can always say no to items like these, or choose to do them because they are easy to do. Remember you always have a choice and I am here to walk you through the process!
In all cases, it’s wise to seek the advice of your Realtor®. After all, you’re already pretty far along the path to a sale by this point. Depending on your needs in terms of timelines and price, it may be to your advantage to accommodate some repairs rather than watching the buyer walk away.
Click to view Step 7: Closing on the Sale of Your Home