Connect with us

News

How to Negotiate After a Home Inspection

Published

on

Our goal is to give you the tools and confidence you need to improve your finances. Although we receive compensation from our partner lenders, whom we will always identify, all opinions are our own. Credible Operations, Inc. NMLS # 1681276, is referred to here as “Credible.”

Whether you’re buying a newer home or a fixer-upper, a home inspection is one piece you don’t want to leave out of the homebuying process. A professional inspector can uncover problems with the home, and based on their report, you can try to negotiate the final sales price or request that the seller make important repairs.

Homebuyers saved an average of $14,000 on the final price of their home when they negotiated after the inspection, according to a survey from real estate technology company Porch. So, if a home inspection report comes back less than satisfactory, it’s in your best interest to negotiate.

Here’s what you need to know about negotiating after a home inspection:

Major issues commonly found during home inspections

Home inspections can reveal just about anything, but some common issues pop up during real estate transactions. It’s a good idea to address these issues with the seller, so you’re not dealing with costly repairs after you buy the house:

  • Broken HVAC system: Your HVAC system is an important part of keeping your house comfortable, and replacing one may cost between $5,000 and $10,000.
  • Plumbing issues: A home inspector could find anything from simple leaky pipes to a cross-connection that may contaminate your water. If left unnoticed or unrepaired, bad plumbing could lead to small floods or cause mold to spread — and homeowners insurance may not cover a claim if you’ve neglected the issue.
  • Faulty wiring: A worn, outdated, or improperly installed electrical system could pose serious safety hazards. In fact, electrical problems cause about 51,000 fires and $1.3 billion in property damage each year, according to the Electrical Safety Foundation International.
  • Asbestos, mold, and other toxic materials: Exposure to any kind of mold or toxin can lead to health issues, such as headaches and respiratory problems. Asbestos in particular can cause cancers and other serious diseases.
  • Structural issues: Damage or shoddy craftsmanship may lead to angled floors, sagging and dangerous roofs, or cracks that invite pests and water damage. These issues may be especially prevalent in older homes and fixer-uppers.
  • Pests: Your home inspection might reveal a few minor bugs and pests, but the presence of termites is a major red flag that could indicate further damage to the home.
  • Window and exterior door issues: Leaks, cracked panes, and improperly sealed doors and windows could leave your home vulnerable to moisture stains and mold growth.
  • Radon: This colorless, odorless gas is the No. 2 leading cause of lung cancer, according to the Center for Disease Control and Prevention.

Whether you’re researching rates or looking to buy a home, Credible is here to help. You can compare prequalified mortgage rates from our partner lenders in just a few minutes.

Credible makes getting a mortgage easy

  • Instant streamlined pre-approval: It only takes 3 minutes to see if you qualify for an instant streamlined pre-approval letter, without affecting your credit.
  • We keep your data private: Compare rates from multiple lenders without your data being sold or getting spammed.
  • A modern approach to mortgages: Complete your mortgage online with bank integrations and automatic updates. Talk to a loan officer only if you want to.

Find Rates Now

If a home inspector notices any red flags that may indicate serious issues with the property, they might recommend getting a specialty inspection. Here’s what you can expect to pay for these kinds of inspections:

Specialized inspection Typical range1
Asbestos inspection $225 to $800
Lead-based paint inspection $225 to $415
Mold inspection $295 to $1,010
Pest or termite inspection $$50 to $280
Radon inspection $145 to $745
1All price estimates were sourced from HomeAdvisor.

How to plan for a home inspection negotiation

Before diving into the negotiations, do a little prep work and improve your chances of success.

Review the inspection report with your real estate agent

After the inspection, you’ll receive a report that summarizes the inspector’s findings. While no home is perfect, you’ll need to figure out what kind of damage you’re comfortable taking on.

Your real estate agent can help you identify which repairs you should handle and the ones you can negotiate. Sellers aren’t obligated to make any repairs after a home inspection, but you might be able to work with them — especially in a buyer’s market.

Don’t Miss: How (and When) to Buy a House Without a Real Estate Agent

Prioritize the repairs

The home inspection report highlights necessary repairs along with safety concerns, damage, and defects around the property. As such, it can help you prioritize the most important issues.

Inspectors can’t provide you an estimate of the cost of repairs, but you can use the report to research costs online or call local contractors for estimates. Before you start negotiations, break down the repairs into three categories:

  • Dealbreakers, or major defects that need immediate attention
  • Important but less expensive issues that can wait
  • Minor, inexpensive issues

Good to know: While a seller is incentivized to negotiate with you on repairs to help close the deal, they’re not legally obligated to make or pay for any of them.

Use your home inspection contingency

A home inspection contingency is a clause you can add to your purchase offer. It says you may back out of the transaction if you’re not happy with the home inspection results for any reason.

Three-quarters of homebuyers used a home inspection contingency in May 2021, according to the National Association of Realtors. If your contract includes one of these clauses and you don’t want to deal with any repairs or negotiations, then you can cancel the home purchase and receive your earnest money deposit back.

7 tips for negotiating after a home inspection

Negotiating after a home inspection takes some time and effort, but it’s an important step. You might save money by getting the seller to cover some costs or lower the price of the home. Follow these steps when negotiating after a home inspection:

1. Hire an experienced real estate agent

Your real estate agent acts as a middleman, so they can help you identify which repairs to negotiate and talk with the seller on your behalf.

An experienced agent should have ideas on what to do if the seller is unwilling to address your requests. For instance, your agent may suggest asking for a seller credit, a price reduction, or a home warranty. They’ll guide you through the process and advise you on important decisions.

2. Only focus on the major repairs

A home inspection report may reveal problems both big and small. But you might want to let the minor issues slide if you want to close the deal. Focus on asking the seller to fix major problems, such as:

  • Building code violations
  • Structural defects
  • Serious safety concerns
  • Systems or appliances that are expensive to fix or replace

Then figure out if you can cover the cost of the remaining repairs yourself before moving ahead with the deal.

3. Opt for a credit or price reduction instead

Instead of asking the seller to pay for the repairs, you can use the inspection report to negotiate in other ways. For instance, the seller may be willing to reduce the home’s purchase price or provide a seller credit, which is essentially cash that goes toward your closing costs.

These options might be preferable if you want to save on the mortgage or control the repair process.

4. Think long term

Before you spend the time and effort negotiating on specific items, think about your long-term plans. For example, don’t bother negotiating wonky cabinet doors or outdated kitchen appliances if you plan on renovating the kitchen in the near future.

5. Provide supporting documents

When you or your real estate agent negotiate with the seller, bring supporting documents such as pages of the inspection report, quotes from contractors, and research from credible sources. To validate the repair, you should know how much the repair costs and why you’re making the request.

6. Ask for a home warranty

A home warranty is a policy that pays to repair or replace appliances and basic home systems during a certain coverage period. If the seller isn’t willing to make repairs, reduce the home’s price, or offer seller credits, they may purchase one of these policies on your behalf.

A warranty can ensure you won’t be on the hook for a major bill within the first year or two of homeownership. This could be a good option if some of the items in the home are very old or worn, but don’t need repairs quite yet.

Good to know: Home warranties are different from homeowners insurance policies. Mortgage lenders require homeowners insurance as a condition for home loans, but a warranty is optional.

7. Be reasonable

It can be easy to feel frustrated with a seller who won’t pay for everything on the inspection report, but try to understand their point of view. The seller has their own costs to consider and may be able to cover only the most pressing repairs.

While the seller should be prepared to make a few concessions, you shouldn’t expect major upgrades. Because you both want to close the sale, you’ll likely be able to compromise in some regard.

About the author

Kim Porter

Kim Porter

Kim Porter is an expert in credit, mortgages, student loans, and debt management. She has been featured in U.S. News & World Report, Reviewed.com, Bankrate, Credit Karma, and more.

Read More

Source link

Continue Reading

News

Are Sallie Mae Student Loans Federal or Private?

Published

on

When you hear the name Sallie Mae, you probably think of student loans. There’s a good reason for that; Sallie Mae has a long history, during which time it has provided both federal and private student loans.

However, as of 2014, all of Sallie Mae’s student loans are private, and its federal loans have been sold to another servicer. Here’s what to know if you have a Sallie Mae loan or are considering taking one out.

What is Sallie Mae?

Sallie Mae is a company that currently offers private student loans. But it has taken a few forms over the years.

In 1972, Congress first created the Student Loan Marketing Association (SLMA) as a private, for-profit corporation. Congress gave SLMA, commonly called “Sallie Mae,” the status of a government-sponsored enterprise (GSE) to support the company in its mission to provide stability and liquidity to the student loan market as a warehouse for student loans.

However, in 2004, the structure and purpose of the company began to change. SLMA dissolved in late December of that year, and the SLM Corporation, or “Sallie Mae,” was formed in its place as a fully private-sector company without GSE status.

In 2014, the company underwent another big adjustment when Sallie Mae split to form Navient and Sallie Mae. Navient is a federal student loan servicer that manages existing student loan accounts. Meanwhile, Sallie Mae continues to offer private student loans and other financial products to consumers. If you took out a student loan with Sallie Mae prior to 2014, there’s a chance that it was a federal student loan under the now-defunct Federal Family Education Loan Program (FFELP).

At present, Sallie Mae owns 1.4 percent of student loans in the United States. In addition to private student loans, the bank also offers credit cards, personal loans and savings accounts to its customers, many of whom are college students.

What is the difference between private and federal student loans?

When you’re seeking financing to pay for college, you’ll have a big choice to make: federal versus private student loans. Both types of loans offer some benefits and drawbacks.

Federal student loans are educational loans that come from the U.S. government. Under the William D. Ford Federal Direct Loan Program, there are four types of federal student loans available to qualified borrowers.

With federal student loans, you typically do not need a co-signer or even a credit check. The loans also come with numerous benefits, such as the ability to adjust your repayment plan based on your income. You may also be able to pause payments with a forbearance or deferment and perhaps even qualify for some level of student loan forgiveness.

On the negative side, most federal student loans feature borrowing limits, so you might need to find supplemental funding or scholarships if your educational costs exceed federal loan maximums.

Private student loans are educational loans you can access from private lenders, such as banks, credit unions and online lenders. On the plus side, private student loans often feature higher loan amounts than you can access through federal funding. And if you or your co-signer has excellent credit, you may be able to secure a competitive interest rate as well.

As for drawbacks, private student loans don’t offer the valuable benefits that federal student borrowers can enjoy. You may also face higher interest rates or have a harder time qualifying for financing if you have bad credit.

Are Sallie Mae loans better than federal student loans?

In general, federal loans are the best first choice for student borrowers. Federal student loans offer numerous benefits that private loans do not. You’ll generally want to complete the Free Application for Federal Student Aid (FAFSA) and review federal funding options before applying for any type of private student loan — Sallie Mae loans included.

However, private student loans, like those offered by Sallie Mae, do have their place. In some cases, federal student aid, grants, scholarships, work-study programs and savings might not be enough to cover educational expenses. In these situations, private student loans may provide you with another way to pay for college.

If you do need to take out private student loans, Sallie Mae is a lender worth considering. It offers loans for a variety of needs, including undergrad, MBA school, medical school, dental school and law school. Its loans also feature 100 percent coverage, so you can find funding for all of your certified school expenses.

With that said, it’s always best to compare a few lenders before committing. All lenders evaluate income and credit score differently, so it’s possible that another lender could give you lower interest rates or more favorable terms.

The bottom line

Sallie Mae may be a good choice if you’re in the market for private student loans and other financial products. Just be sure to do your research upfront, as you should before you take out any form of financing. Comparing multiple offers always gives you the best chance of saving money.

Learn more:

Source link

Continue Reading

News

Tips to do some fall cleaning on your finances

Published

on

Wealth manager, Harry Abrahamsen, has five simple ways to stay on top of the big financial picture.

PORTLAND, Maine — Keeping track of our financial stability is something we can all do, whether we have IRAs or 401ks or just a checking account. Harry J. Abrahamsen is the Founder of Abrahamsen Financial Group. He works with clients to create and grow their own wealth. Abrahamsen shares five financial tips, starting with knowing what you have. 

1. Analyze Your Finances Quarterly or Biannually

You want to make sure that your long-term strategy is congruent with your short-term strategy. If the short-term is not working out, you may need to adjust what you are doing to make sure your outcome produces the desired results you are looking to accomplish. It is just like setting sail on a voyage across the Atlantic Ocean. You know where you want to go and plot your course, but there are many factors that need to be considered to actually get you across and across safely. Your finances behave the exact same way. Check your current situation and make sure you are taking into consideration all of the various wealth-eroding factors that can take you completely off course.

With interest rates very low, now might be a good time to consider refinancing student loans or mortgages, or consolidating credit card debt. However, do so only if you need to or if you can create a positive cash flow. To ensure that you are saving the most by doing so, you must look at current payments, excluding taxes and insurance costs. This way you can do an apples-to-apples comparison.

The most important things to look for when reviewing your credit report is accuracy. Make sure the reporting agencies are reporting things actuary. If it doesn’t appear to be reporting correct and accurate information, you should consult with a reputable credit repair company to help you fix the incorrect information.

4. Savings and Retirement Accounts

The most important thing to consider when reviewing your savings and retirement accounts is to make sure the strategies match your short-term and long-term investment objectives. All too often people end up making decisions one at a time, at different times in their lives, with different people, under different circumstances. Having a sound strategy in place will allow you to view your finances with a macro-economic lens vs a micro-economic view. Stay the course and adjust accordingly from a risk and tax standpoint.

RELATED: Financial lessons learned through the pandemic

A great tip for lowering utility bills or car insurance premiums: Simply ask! There may be things you are not aware of that could save you hundreds of dollars every month. You just need to call all of the companies that you do business with to find out about cost-cutting strategies. 

RELATED: Overcome your fear of finances

To learn more about Abrahamsen Financial, click here

Source link

Continue Reading

News

How to Get a Loan Even with Bad Credit

Published

on

Sana pwedeng mabura ang bad credit history as quickly and easily as paying off your utility bills, ‘no? Unfortunately, it takes time. And bago mo pa maayos ang bad credit mo, more often than not, kailangan mo na namang mag-avail ng panibagong loan. 

Good thing you can still get a loan even with bad credit, kahit na medyo limited ang options. How do you get a loan if you have bad credit? Alamin sa short guide na ito. 

For more finance tips, visit Moneymax.

 

 

Source link

Continue Reading

Trending