How to negotiate repairs during due diligence

How do you negotiate during due diligence?

Put a dollar figure on every finding that matters, cut the cosmetic stuff, and send the seller one written request early enough to leave time for a counter. Each line names the problem, the fix, and the price. On the big items, a closing credit usually beats asking the seller to do the work, because you get to pick the contractor.

"Due diligence" is what the North Carolina and Georgia REALTORS forms call the window after you go under contract. Plenty of buyers use the term for any inspection period, and the steps below work the same way either way.

Key takeaways

• A priced request gets taken seriously. A round number with nothing behind it is easy to refuse.
• Send everything in one request, early. Sending it in pieces eats the days you need for a counter.
• Get the exact end date and time of your period from your agent on day one, and plan backward from it.

What should you gather before you ask?

Put all of this in one folder before you write a single line:

• The full inspection report PDF, with photos. If the severity labels confuse you, start with how to read a home inspection report.
• Any specialist reports: termite, sewer scope, radon, or a structural engineer's letter.
• The seller's disclosure, so you can see which problems the seller already listed.
• Contractor quotes for anything the inspector flagged for further evaluation.
• The end date and time of your period, in writing from your agent.

Cite the report page on every line of your request. The seller's side can check your claim in a minute instead of arguing about it.

How do you put a price on each finding?

Price every line you plan to ask about, and use the same method for all of them. A priced list reads as a repair request. An unpriced list reads as a wish list, and it lets the seller pick the number.

Get contractor quotes on the big or uncertain items. For the rest, you can work from the report itself: Kept prices every line of an inspection report for $79, usually under 4 hours. The home repair estimate template shows how to lay the lines out, and how to get repair estimates during the inspection period compares how long each option takes.

In what order should you do it?

Start the day the report comes back:

1. Price every finding before you send anything.
2. Cut the list to safety hazards, broken systems, and big-ticket items.
3. For each line, choose a repair, a credit, or a price reduction. Repairs vs. credit vs. price reduction covers which fits when.
4. Decide your walk-away point, and which lines you'd give up, before the seller answers.
5. Send one written request with every line in it.
6. Answer the counter line by line, with the same prices you started with.
7. Ask your agent what has to be signed, by whom, and by when.

Step 4 is the one buyers skip. If you decide what matters while the seller is saying no, you usually give up too much or walk away over something small. When to walk away after a home inspection helps you draw that line ahead of time.

What goes in a due diligence request?

Every line is one of four kinds, and each one needs a scope and a dollar figure.

Some states split these across forms. North Carolina REALTORS describes its Due Diligence Request and Agreement (Form 310-T) as "designed to facilitate any agreement on repairs to the property itself," and sends price changes and seller-paid costs to a separate Agreement to Amend Contract (Form 4-T). Georgia REALTORS has an Amendment to Address Concerns with Property (F704). Your agent will know which form yours goes on.

For wording you can copy, use the buyer repair request letter template. For how the final agreement gets written up, see the repair addendum after inspection.

What are the red flags in due diligence?

The real red flags are findings with no cost ceiling until a specialist looks: foundation movement, a whole-house repipe, regrading and drainage work, active water intrusion, electrical hazards, and anything marked for further evaluation. Get a contractor or engineer quote on these before you send your request, not after. A guess on a foundation line is the easiest number for a seller to attack.

For cracks in particular, see foundation crack on an inspection report.

What mistakes weaken a request?

• Asking for a round number with no line items behind it.
• Mixing cosmetic items in with safety hazards, which makes the whole list look padded.
• Sending the request in pieces instead of all at once.
• Waiting on contractor visits for small items you could price from the report.
• Assuming you can bring up a finding after the period ends.

Old but working systems are the most common padding. The International Association of Certified Home Inspectors (InterNACHI) Standards of Practice say a system "near, at, or beyond the end of its normal, useful life is not, in itself, a material defect." An aging water heater that still heats is a note for after closing, not a line on your ask. For which findings are worth raising, see what to ask for after a home inspection.

Can you still negotiate after due diligence ends?

Sometimes, but plan as if you can't. Whether you can still ask for anything, and what walking away costs you, is set by the contract you signed. Your contract sets the exact dates and terms, so confirm them with your agent while your period is still open. Ask:

• When exactly does my period end, date and time?
• What happens if the seller doesn't answer my request?
• Can I ask for repairs or a credit after it ends, and what if the seller says no?
• What happens to money I've paid if I cancel before or after the end date?
• Does a problem found later, at the final walkthrough or from the appraisal, follow different rules?

Your priced list doesn't expire. If something new turns up at the final walkthrough, it's still your record of what you found and what it costs.

How long does due diligence last?

The length is written into your purchase contract, and it varies from deal to deal. Get the end date from your agent today, then work backward: price the report first, send one request, and leave days for a counter.

Should you ask for repairs or a credit?

Usually a credit, for the big items. A credit lets you hire your own contractor after closing, while a seller doing the work has every reason to hire the cheapest one. Lenders cap credits, and some findings have to be fixed before the loan closes, so check both with your loan officer. Seller credit vs. price reduction has the caps by loan type.

If your due diligence clock is running and you need a dollar figure on every line before you send your request, upload your inspection report to Kept: $79 per memo, usually under 4 hours.

Sources

• North Carolina REALTORS, Improper Use of the Due Diligence Request and Agreement (Form 310-T)
• Georgia REALTORS forms list, including F704 Amendment to Address Concerns with Property
• InterNACHI Home Inspection Standards of Practice