Making repairs when selling your home

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Tips for Real Estate Consumers

In some cases, it may be smarter to negotiate cash credit to buyers at closing

By Dian Hymer, Monday, October 29, 2012.

Inman News®

Sellers often make repairs to their home when they sell, either in the course of fixing up the home for sale or during the transaction if the buyers and sellers agree that the sellers will make repairs in exchange for the buyers removing their inspection contingency.

It’s natural to want to have repairs done for the lowest cost possible. Just make sure you hire people who are reputable and will stand by their work.

HOUSE HUNTING TIP: Sellers often run into trouble when they hire people to do work based on a proposal issued by another contractor. Getting multiple bids is a good idea. Before hiring someone to do work, do a background check. Talk to other homeowners who’ve used the contractor to find out if they’d use the person again.

Hiring a contractor who underbids the original proposal can end up costing you more. One seller thought he got a deal until the buyers hired the original contractor to inspect the job after it was finished. Some of the work had not been done or was not done properly.

Many contractors bid jobs on a time and material basis. If this is the only way a contractor will work, and you think he’s the best choice for the job, ask him to give you a “cost not to exceed” price. Ideally, you’d like a firm bid for the work. This way, if the contractor underbid the job, you don’t have to pay more.

In some cases, it may be better to negotiate a cash credit to the buyers at closing rather than having work done yourself before closing. This can save you from future liability.

Correcting a problem is not always a straightforward proposition. For example, fixing a drainage problem can be tricky. Water tends to find a course. You might succeed in stopping water entering your basement at one location only to find that water comes in at a new location.

Sellers often wonder if they need to use a licensed contractor to make repairs either before the home goes on the market or during the sale transaction. Your purchase contract may include a clause pertaining to work done by sellers during the transaction.

It may permit sellers to make repairs, even if they aren’t contractors. However, it may also say that a building permit must be taken out for any work that requires a permit.

Be sure to put something in writing informing the buyers of work that was performed before closing, who did it and when. Include a copy of a paid invoice, if possible.

Find out if there are seller disclosure requirements that require sellers to disclose any work they are aware of that was done without the necessary building permits. If this applies to you, disclose it in writing to the buyers.

A handyman can often take care of minor repairs. Ask for an itemized invoice of the work done by the handyman. Give this information to the buyers and ask for a signed receipt to acknowledge their receipt.

Itemize all repairs made by you, a handyman or contractor during the transaction. Make sure this list is available for the buyers to sign off on before the closing.

In preparation for sale or during the sale transaction, you may decide to make major repairs, like repairing or replacing the roof or replacing a furnace. Make sure that the contractor who does the work is willing to transfer the warranty to the buyers when they become the new owners.

THE CLOSING: You don’t want the buyers coming back to you with complaints about the work you paid for that was recently done by a contractor.

Dian Hymer, a real estate broker with more than 30 years’ experience, is a nationally syndicated real estate columnist and author of “House Hunting: The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide.”