KGCI: Real Estate on Air - How to Provide Value Through the Inspection Period

Episode Date: June 26, 2024

And welcome to the nerdy agent podcast. I'm your host, Luke Pedersen, with my brothers and fellow nerds, AJ and Josh. I feel like we haven't had a joint podcast in a while. That was a really good and. It was a great addition. Today we are going to talk about the ins and outs on how to handle inspections from, kind of from contract acceptance through the end of the inspection period, everything that goes into that for us, for agents out there that might want a refresher on that

or need some extra information. But first, to start, oh, I had something. Would you rather? Oh, you have a would you rather. I have something else. Yes. Before we do the would you rather, I would like to openly congratulate the Minnesota Vikings on making the 2024 NFL playoffs as this will be coming out on Tuesday. And the Packers not making the playoffs.

Congratulations. Dore in love for the three interceptions he threw against the Bears. This is a. And all of the touchdowns that Justin Fields was able to get to beat the Packers, go Vikings. This is a wild 2.7% prediction right now. It is wild. Luke's going to do a parlay on that. I'm pretty psyched about having a top of pick.

Minnesota, you can't parley wins and loss is only parley stats. Yeah, I know. Man, bummer. Well, the would you rather of the week is, as a real estate agent, would you rather in, let's just say there's actual snow on the ground. For those that aren't from Minnesota, we really don't have that right now. Let's say there's a foot of snow on the ground. And you know, the sidewalks are shoveled, maybe the driveway shoveled pretty good.

Would you rather, for a showing, have very comfortable slip-on sneakers or boots that you have to tie up for your shoes. I have boots and they're great. Very comfortable slip-on boots. I think I'd go with boots. Very comfortable slip-on boots don't seem to exist. I have those. I have these huge old boots that I can just slip on.

See, mine are cool Northwoods boots. They just kind of have a little tie at the top there. Sounds like you guys are living in the past. Haley, do we get listeners from like California? They don't really understand what we're talking about right now, probably. Every once in a while. They still go hiking. They can have boots?

There's, no. They probably just work. Trying to compare it to surf. somehow, but I can't. No, you can't. All right, sorry. Let's get into what actually matters. That is a good question. Super exciting. We did get rid of the would you rather as an agent you brought it back fast. We're knocking off the rust for the new year right now. It's getting to what actually matters. So inspections, just to start. And I know this is super basic and some of this stuff might be for some of you agents. But again, other agents are new and it's important to understand this stuff.

So as far as in Minnesota, especially, it's different than other states. Maybe explain kind of what the inspection period is, how that's negotiated. and what the timelines look like. Yeah, so actually, this is an important one because it's changed over time, right? So the way in which inspections worked with the Minnesota contracts have changed, what was it, three, four years ago is when that change happened. To make the inspection period a window. So it's say seven days is an inspection window. During that window, it's the time in which after you have a purchase agreement that's under contract,

that you have to find somebody to go inspect the house if you'd like to hire a professional inspector. do any sort of alternate inspections. So we'll talk probably about what those things are, but whether it's radon or sewer or chimney or pest, et cetera, you have to do that inspection. You have to get the results of that inspection. You need to make a list of the asks that you want, taken care of, whether either financial or repairs.

And then you have to have it actually all signed during that one window of time. So let's save seven days. You have to complete all of those within that seven-day period. If you don't, the House automatically moves forward in the process and you run the risk of getting nothing. You can always sign amendments after the fact, but it's a much riskier proposition. So that's kind of just the broad overview of it. An important piece to note there.

We did have an agent asked this yesterday. As far as the period goes, especially in Minnesota, how it works is the day that every single person signs the contract. The last signatures on that contract gets executed is called Final Acceptance Day. And delivered to all parties. And delivered. sure and delivered, which the odds of it being signed at 11.50 p.m. and delivered at 12.01 a a.m. I have a lot of them that get signed while I'm sleeping and then I deliver it the next day. That happens. So when it's delivered, that's day zero of the inspection period. So what I always do is I say,

well, it's seven day period. I go, well, when was final acceptance day? You know, that's day zero. And I got one, two, three, four, five, six seven. That's going to be the final day. It ends at 11.59 p.m. that night. You knew guys in real estate. Josh mentioned the contracts. It was probably seven. It was seven years ago. How we used to do this was five two to one, which was five days to perform all your inspections, two days after that time period to make a request. As soon as you made your request, your two day window would go away. So let's see you do your inspection on day two and then on day three you make your request. Well, now the next window starts. So we have two days to make our request, right? Made our request. That kicks off another two-day window for the seller to respond. Once the seller responds, it kicks

off a one-day window for us to get all everything done. So we had a lot of calendar invites on our I'm sure that people probably just missed stuff all the time. We just skipped it. Like, honestly, most of the time, like no one even paid attention to it. It was like, it seems like it's 10 days overall. Let's just get it all done in 10. In multiple offers would, like did the contract state all of those? Like I could go, well, we're instead of doing a five, we're going to do three. And then we'll give you three days to respond. I was going to say, multiple hours are a little bit of a concept. So, but yeah, 5-2-2-1 was kind of the go-to. Can you imagine a world without multiple offers? Did prices even appreciate? Is that possible? They did indeed. Okay, that's in the weeds a little bit.

What's the typical cost in Minnesota? If an agent was asked today, hey, from their buyer, hey, agent, what's it going to cost from you do the inspection? What's the breakdown on that? I mean, our go-to guys are like $350, $400 for your standard general inspection. That price is very good for the market. Very good. I think a lot of people are more around like $600. $600. The cost of doing additional inspections, obviously, being more. So I think radon is in that 180 to 200 range. Sewer scopes are also in that 180 to 220 range.

You could add on, like Josh said, like a level four chimney inspection, whatever they call those, those can be another $150 to $200. So, you know, if you have the whole gamut go and not to throw out names, but like structure tech does a lot of these, will they group everything together. and they can be $1,200 to sort of do the whole gamut. If you want to do an engineer, right, structural engineers, another two to three hundred. Everything's pretty much like $200 on top of it, right? It's kind of like when either an electrician plumber or an HVAC guy shows up your house

and drops his bag, he's like, $500. Yeah, $600. It's always that. And so before we get into, so that's basically cost, timelines, types of inspections you can do. Before we get into what we do when we get in the inspection period, I did want to mention just because recently, and I do predict, which a lot of people are in 2024, the market's going to get pretty competitive. So I wanted to talk about the fact that our team, I would say, maybe compared to the general market, I'd like to think, is able to get offers accepted with inspection periods on them more often than not. Give us an idea on how you can negotiate that with a seller, even if there's multiple offers, what you can do as an agent to still allow your buyer to have an inspection on that contract.

Well, I mean, we talk about this sometimes, but having open lines of communication. communication with the seller's agent on the front end is extremely important. One of my biggest pet peeves and I'm a listing agent is if someone just shoots me an offer without any context and they haven't done anything other than maybe text me once or just nothing. Sometimes it already fixed you. It's baffles my mind. They might have just forwarded you the authenticine as well. Seriously.

It's unbelievable. But having a conversation with the sellers agent on the front end, I usually use the line with them like, hey, it's a first time home buyer or whatever thing it is. but they want to make sure that they're going to be comfortable with everything moving forward. We're not here to negotiate or at pinch pennies. We know this is a competitive situation. But I want to at least have a list of all the things that they're going to have to do within the first year. And I want to make sure with them being newer to it that we go through this inspection process.

I think it's kind of crazy that we keep having this market where everything's waving inspections. That said, the offer is going to have in it certain language that's going to stipulate that we are not going to negotiate or cancel the purchase agreement unless something major comes up. during that inspection window. So the language that then I communicate with my clients, especially I do this during the buyer meeting every single time in the inspection part of it, I'd say, if we're in multiple offers, one thing that I do is I would tell you, I'm never going to advise you to waive an inspection. I don't want to make that decision for you. If you want to make that decision at some point, I'm not going to stop you from making it, but I'm going to encourage you to go through that process just so you know what you're walking into and there are no major surprises. That said, the language that I would use

if we're in multiple offers, read something along the lines of, um, buyer will not cancel or negotiate this purchase agreement unless a material defect is found during the inspection. A material defect is a singular issue in excess of X thousand dollars. It could be a thousand. It could be five or ten thousand dollars, whatever you want to make it. Um, if,

if you don't find anything above that price, buyer will accept all, all defects and move forward with the process. So then you're putting yourself in a position where you're based. basically telling the seller's agent, we're not going to negotiate or cancel unless something huge comes up. You're looking almost the same as a no inspection offer. In reality, it's not, but it looks almost the same. And you're still doing your client as service by getting them the house and getting the inspection at the same time. The biggest note on that verbiage that I like and make sure my buyers know is that the sewer scope on a lot of these houses built before 1980,

even some of the newer ones, is what we consider to be the most important thing. because if a sewer has too big of a belly or if it's got too big of a crack and it needs some sort of a repair, a liner at a minimum these days is $8,000 can get up to $10K pretty quick. If they have to dig, you're going to be at 15. And so you're covering yourself on a huge expense, but you also want the house. You're not just going to tiki-tack anyways when you get into the inspection period. So it allows you to kind of have the best of both worlds.

Yeah, I tell my buyers during that same buyer meeting, I'm going to be pointing things out as we go through us showing, right? So the inspector is going to call out a lot of the same things that I've already pointed out to you. That said, I can't smell radon. I can't put my head in the sewer to see if they're good, right? We have to go into the inspection window. You imagine, you imagine Josh, just like opening that sucker up and just looking in there. Yeah. I can't do it, right? So I want to make sure I'm doing everything I can to protect you in those cases. I had a, I had a West St. Paul sewer scope, get to the end of the line. And then the camera looked like. It was just staring at like concrete.

They like couldn't get past to the main sewer. And we were like, hey, this is weird. So we called the city and the West St. Paul city sewers are walkable. So one of their texts went in, walked down the sewer and then looked at where it entered the sewer line. And just like a piece of concrete or like asphalt from the old road was there. And he just like hacked it off and then it was good. He was able to literally go into the sewer though and see this. That's wild.

Isn't that cool? because it's so old. Do you think they only hire guys like named Michelangelo and Donato have to go under there? They have to. I'm sorry. I'm getting off topic a lot today, but I thought that was a crazy story. Yeah, I mean, we obviously do a lot of that. We don't waive a lot of inspections unless Josh said the client really wants to do that

or maybe they're losing over and over and realizing they're losing because somebody else is waiving the inspection. Now, on the flip side of that, when we're dealing with our own money and buying our own properties, we don't ever do inspections. So to each their own, right? And I think as a real estate professional, if you are doing investments on your own, that there is a benefit and an advantage to potentially not having an inspection.

But I always like to say, when I'm not dealing with my own money, I'm a lot more careful, to be honest. Yeah. Because I know if I make a mistake with my own money, I will have to deal with the risks and issues that come up with that. Whereas when I'm dealing with somebody else's money,

that's not something that I'm willing to do. And we know the risks and we're willing to take them on if that's... Exactly. It's a financial risk reward evaluation, right? So you can say, okay, the biggest repair I'll likely have could be $10,000 or $12 or 15. In a worst case scenario, the odds of that happening are this. So therefore, if it happens, we're ready for it.

We have the financial wherewith all to handle it. But not everyone's in the same position. So it's just, yeah, we have that conversation with ourselves. One of my favorite clients was Josh's father-in-law before Josh got in real estate. And when we found the house, they were going to make an offer on. And they said, okay, well, here's the things we need to include. and how long of an inspection do you want and all this? And he's like, inspection.

I'm like, well, yeah, I mean, like, it wasn't multiple offers or anything. He goes, why would I want to do an inspection? And I'm like, I don't know to have somebody come look at the properties. He's like, I already looked at it. It's fine. So you can make, so you can get some more money off the price. I don't know.

So we skipped it. Hive Lane once offered on a house in St. Louis Park with just an exterior photo and no inspection. Non-refundable earnest money. Got the house. The entrance to the basement's about six foot four. were six foot two. There were some things we had to work through.

Yeah, but we figured it out. Grandfathered in. The most important thing on the inspection, and we talk about we waive them ourselves, we don't do that with our clients. We don't suggest that to them. If you don't remember anything else from this podcast and your real estate agent, especially anywhere, but especially in Minnesota, it is against the real estate code of ethics to suggest to your client that they should

waive the inspection. Yes. That's a really important part there. And I don't think many people really got caught, but I bet more agents were breaking that rule in 2020 through 2022, then I would like to know. But it's really important to understand that. You should be very close to your chest when a buyer wants to do that. You should never tell them that they should do it. You should always give them the risks. I think one important thing that you can use to build credibility during a buyer consult, right, is talking about the reality of what's going on.

So I think I said something on it was in 2022, 2021 was 57% of homes were sold with no inspection. during that year. So I'll say, like, we've gotten to the point within our market where there are a lot of people waiving inspections. About 57% of the purchase agreements were purchased without inspections in the last year. That said, I feel strongly that this is something that you should include, and I'm never going to advise you to waive an inspection. So I lay out the facts of what other people are doing in that.

So if they decide they want to do it, they have the wherewithal and the understanding of how the market's working. But I'm also building credibility with them. And a lot of times if you're like with a first time home buyer, you're going to build credibility by being like, I'm not going to encourage you to do this crazy, this thing that they think is crazy and they're afraid of in their head. They're going, oh, okay, you have my best interests at heart versus you're just trying to sell a house. So let's get into offers accepted. There's an inspection period on that purchase agreement. What is that process like?

So obviously the inspection gets scheduled. I'm just going to fast forward to day of. Typically it's the morning. What's the communication with the buyer? like and what's the process for that. Can we talk about what ones we want to make sure are included usually? The ancillary services? Yeah.

Which inspections do we make sure that we are scheduling? I mean, we do sewers on almost everything. All of them. I would say the ones like I have, you know, one built in 2022 and it's like I'm probably not going to do it on that. But I've done one on 2005 before. Yeah. Some of them, you do run into it where they,

they get crushed or whatever if they're 15, 20 years old. But for sure, the older properties, you know, call it 80s, 70s, 60s, 50s older, those sewers can have issues and be problems. And truthfully, a lot of those sewers haven't been looked at before because that's become a lot more of a common thing in the last few years. In fact, I'm putting a property under contract today,

a listing and they've put into the inspection part of the contract that they're going to do a sewer. I mean, it's not, again, to, in my opinion, nor on the people I've talked to a intrusive inspection, but they put it on there so we know about it. And I asked my sellers, did you do this? Because they didn't buy that house with me last time around. And I said, did you do a sewer inspection? He said, no. And said, if you had any backups, he said, no.

I'm like, well, hopefully that's okay. But just know if they're doing a sewer inspection, they might find something that we don't really like very much. And you're going to have to be aware of that because it has become a hotter button thing. And I think radon is always an interesting one for me, too. I look at that from a cost-benefit analysis all the time. So on homes that were built more recently, it's funny because you ask inspectors, they're like, you can have radon in any house, you know. And it's like, well, yes, that's true.

We have seen them in houses that are brand new. And we've seen houses built in 1920. They don't have any, any radon at all. But the caveat there being, homes built after the code switched where they put clear gravel down, they put poly down. They have a drain tile system that's completely sealed on a sump pit. And they have a passive radon system in them. they caught you know to mitigate radon when there's a passive system in there is anywhere for six from six to eight hundred bucks if you have anywhere with all at all you really just have to buy the fan cut the pipe

and put the fan in and plug it in in the attic it's really really simple to do right to mitigate that radon and the cost of doing the inspection can be two hundred dollars right so if you're spending 200 and you think the chances of the high radon in this house is 20 percent well you're you're doing something that's basically it would have to cost a thousand dollars for it to make sense right And if it's only $600, then the cost benefits just not quite there when you can go to Home Depot and get a test for $20 after closing and do it yourself. Yep. Also, those radon inspections, notably if you look at them are 48 hours long. That's what the EPA requires. Requires it to be a licensed person when they're doing as part of an inspection process of purchase. That just came into play like last year. Sometimes you look at them and the test is every hour. And you'll see, for those that don't know, over four picoleters per milliliter.

I believe... PICO leaders. Yep, is the number. It's over 4.0. The EPA would say that's over the acceptable level and we should mitigate the radon. Sometimes you'll see those tests come back hour by hour and it's like 1.5, 9.2,

4.7, 0.5, 6.4. And then it gets the end and it's like average of 5.2. And it's like, how accurate was this test really over 48 hours when the reading was all over the place when you're just averaging it out? A lot of people I've talked to have said, The 30-day test with charcoal from Home Depot can be significantly more accurate because it's a longer time period. And so it gives you a better understanding during that time period.

The other thing that people that really know Radon have told me is if you're doing a test in the summer, you should also do one in the winter to check and see the difference between the two because sometimes your home's going to breathe more at a certain time of year. The doors are opening and being closed more. Maybe your windows are open a little bit more. And again, it's supposed to be sealed for the test. But for all intensive purposes, if you're concerned about Radon, it's the number two. leading cause of lung cancer in the United States, according to the EPA, it's a bad thing. And so I encourage everyone to get one, but I do explain that to them, especially on new construction

where it's like, you're going to pay $200 to get this done. The chances of it being high aren't that high. And so do you really want to do it now or do you want to do it later? If you're really concerned about it, I almost would say, let's do a couple of different tests throughout the year to make sure that you're knowing what's exactly in your house and protecting yourself and your family from radon, right? So there's, the more you know about these kinds of things, the more you can kind of have those conversation with folks. But of course, in an existing 1950s home, it's like, we're doing a

rate on tests like every single time. But it also comes on a tradeoffs though, right? So as you think about, and the other thing is think about what you offered. So if you offer with a material defect that says we won't negotiate or cancel unless the purchase agreement over, or an issue over $3,000 been found, well, rate on system costs $1,500 to $2,000 to put in. Unless there's a crawl space. Sure. But you know what my point is, it's, you should not. If you're not going to trip that clause, then I would advise my client, don't spend the 200 now, buy the $20 test kit afterwards because even if it's high, you can't really ask for it based on the contract is written. So in that case, it would make a lot of sense. On the sewer, though, I think, I mean, I agree. Anything 80s or before, I'm definitely pushing for people to have look at.

It is, in case and point, I had a client who just bought a house in December. That house had been purchased previously in January. So this is 11 months after she bought the house she sold it. In January, she did not look at the sewer line when she bought the house. In November, when we looked at the sewer line, we found major issues with it and it had to get lined. And we got $9,600 from her for that. Had she spent $200 in January, she would have been able to get it fixed and then not had to pay us $9,600. So I imagine the guy that was selling that house was probably the one that helped her buy it.

She probably wasn't real happy with him when he was like, hey, The sewer line is bad because I would be like, why didn't you have me test the sewer line when you bought it with me? I jokingly tell my people, I'm like, honestly, guys, like you can test for radon. You don't need to. Like, that's up to you. It's literally your decision. And it is your decision if you're going to scope the sewer line. But like, it's not.

You're scoping the sewer line. Yeah, everyone's pretty much doing them now. I've had a situation where I sold one in 2015 when they weren't as big of a deal. And then I sold it again in 2023 when the other buyer does an inspection and it came back bad. And I'm like, yeah, sorry, guys. Like, we just weren't doing them. then. And Dwight was saying that today is like, what new thing are we putting in houses today that we're

going to be testing for in 10 years that we don't know about right now? So it's, it is really interesting as technology evolves and science evolves what we learn about houses. But those are two things that I think are very, very important. Yeah. Let's get into the process, though. So day of the inspection, what's that look like? Hey, Luke, welcome to the inspection day.

The worst day of the entire transaction, laughing emoji, crying. This is a text message, not a call. He's not saying that. I could. This is what I send to all my folks. I really say that. I say this is going to be the worst day. It's going to be the most stressful day of the whole thing because you just got super excited

about this house that you're buying. And now some strangers going to come through the house that you've never met. And they're going to tell you everything that's wrong with it. Hopefully, to Josh's point, I've pointed out 80 to 90% of the items that are issues, right? After the inspection, we're going to have four options. We can move forward as planned, which I don't often suggest, considering the seller can't back out during the inspection period. Again, depending on what you've put in the contract, ask for repairs as a result of the inspection, fix this, fix that, get it all done, ask for money off in lieu of repairs

or cancel the purchase agreement and get your earnest money back. Again, all of this has to happen within the inspection time period. So if you're going to do a cancellation, it better be sent prior to the inspection period ending. Most of the things that we're looking for, and on this Texas say the same thing are health, safety, and big ticket items. I usually say that big ticket items Are any one thing worth over $1,000? A big ticket, a GFI outlet not being present in a kitchen is not typically a big ticket item. We're not looking for the house to be up to code, you know, first time buyers or parents a first time.

You know, people say that kind of language a lot. And it's like, well, it was up to code when this house was built. It didn't become out of code because of the age of the house. It became out of code because they changed the code. So like you're going to find situations where maybe you've got spindles on. a stair rail that are more than four inches apart. Well, back in 1925, there wasn't necessarily a rule on that. The kids' heads were bigger back then. They were real returns. They made them smaller. More brains. Exactly. But these are things that it's important as you're walking through a house as

the buyer's agent to say, these are probably six inches apart. The inspector is going to point that out, not because it needs to get fixed, but because you should know that if they were rebuilding this staircase or this house today, they wouldn't be allowed to put that in there, right? There are minimum expectations like smoke detectors and all these sorts of things, right? But we're looking for these big ticket items. So like a great example is my first year in real estate I sold the house. Furnace CO came back super high. We said we'd like you to get a furnace tech out here to take a look at this. They brought the tech out. Red tag the furnace. It's got a cracked heat exchanger. You got to turn the gas off. It's not it's not safe. Well, in that case, it's like we want a new furnace.

Like when we did the showing, we were under the understanding that this house would have heat, right? And when we bought the house, we thought it was going to have heat. So in that case, we're going to ask for a new furnace or for some money off for ourselves to do a new furnace. But windows, roof, and again, to what Josh was saying, stuff in the attic, testing the furnace, looking at the sewer, doing the radon, even the roof, if it's in season, that the inspector can go on the roof. these are all things that we're going to try to take a look at to make sure that we don't have significant issues going forward. The only piece there that can change is if your financing is either FHA or VA, you might

want to be looking for, you're going to want to be looking for more ticky, tacky items because the appraisal is going to also be looking for health and safety stuff. And so if it is an FHA or VA, I just mentioned to him, hey, we will be looking. I will let you know if I see anything on the inspection that has a higher than not likelihood of coming up on the appraisal and in that situation, the theoretically listing agent knows that the appraisal is a thing. So we might, you know, we might be like, hey, could you guys just like put that like at a smoke detector right there because they're going to call it out. The guys are going to have to come back. It's me a pain for everybody. Two points that I think I'll add onto what AJ said because I think

everything he said is really important. And I've talked about the buyer consult a number of times already, but saying all of that in the buyer consult as well is really important because you're setting the expectation then that it's going to be a terrible day. You're setting the expectation the day of, that's going to be a terrible day. And then what you're doing is with Target, we called it under promise over-deliver, right? Like you're creating this expectation that things are going to be really bad.

So then that day of, they're like, oh, it wasn't as bad as I thought it was going to be. But if you say nothing, then on that day, they're going to be like, oh, gosh, I'm deer in the headlights, right? So you're setting an expectation so that they're not going to be overwhelmed by the situation.

That's really, really important. Secondarily, one thing I also call out is the different options that we have, in lieu of repairs getting cash, I tell them I prefer that option because if you think about it, if you're selling a house and someone asks you to fix stuff, you're going to fix it as cheaply as possible because you're selling that house. So I'd always rather have the funds versus have to have them fixed stuff because then you're creating much higher risk that things aren't going to be done as well as you'd want to be done. And the seller's going to assign a value to having to coordinate those kinds of things to get repaired. So you're not

going to get the true value that you would get if you did closing costs. I think that's a great point. And I think it's important to note that it is the best strategy if you know the cost of doing the repair that you're looking for. Right. So in situations where the sewer didn't get all the way through, that's not where I would say I want closing costs. Or if the furnace tested high and we wanted to get looked at, that's not where I'd go for closing costs. But most items in a house, you can quickly talk to it comes in above 4.0 pico curies per liter. You know, I want $2,000. You know what the cost of these, a lot of these kinds of items are.

right. So like, yes, we have several, you know, it needs a new electrical panel. Call the electrician. Oh, it's going to be $2,000. Okay, great. Now I know. And there's not much, uh, just sitting out there that maybe could make that cost go significant. Exactly. Exactly. So you set the expectations. You do the inspection. You set such great expectations that it wasn't as bad as they were expecting. You get the report back later. What's the follow up after the inspection look like? Um, so and what's going to expectation. One last thing is I will always send a prior inspection report to them before the inspection happened so they can look at it and be like, oh, this is what I should expect to get. So another expectation setting thing. Afterwards, when I get the report, I actually break it down

for them. So I take every line item on there of things that popped up. And we split it into four categories, which is like the big ticket, ask for items, the fix yourself, or have fix yourself first, fix yourself later, and then keep an eye on, right, are the four buckets. Because I want a prioritize for them all of the things that came through is like this is really important this one it's not that big of a deal but it's on the report so i want to call it out for you and i send that usually the same night and with that email that i sent to them i will send here is my recommendation is what i would ask for so it it will depend on each situation right were we in multiples did we have a material defect clause or like this one that we had this last week the inspection

is actually pretty clean but we're the only offer i've been sitting for three weeks and so i said let's ask for $4,000, right? Because we can. We have the leverage here. And we got $4,000 for, you know, a small amount of things. So you send that email, typically then you schedule a call, go through it, answer any questions they have. Decide on what you're going to negotiate on. And then how they, let's say, right, they want $4,000 because this and this needs to be fixed.

You sign up that amendment. Typically, you prepare an email to the listing agent. What does that look like as far as the negotiations to get your buyers as much money as possible? I usually would just call the agent before I actually send that over. And I think one thing in negotiations that I've learned in doing this is to Josh's point, you could have said, we want these 10 things taken care of. But instead you said we want $4,000 in closing costs, right? And instead of picking 10 things to get to $4,000, pick to sure, right? But even sometimes I won't even, I'll say here's the things they're concerned about.

We think they're going to cost about $4,000. One thing I would really advise agents against doing is assigning a value to each thing as you go. They'll rip it apart. They'll rip it apart. They'll say, well, this isn't a problem, this isn't a problem, this isn't a problem. The non-problems I just stripped out of here are 2,500, so we'll give you 1,500. Rather saying, we think it's going to cost more than what we're asking for for all these items and not saying each one of them what it costs.

But the way that you did that and the reason closing costs often works better if you have the space to ask for them or negotiate on price is because the least number of yeses you can ask for typically is the easiest way to negotiate. And I've learned when I get them on my listings and it's like you put 12 things in there. And I'm like, you're asking my seller to say yes 12 times. Like they're not going to say yes 12 times. They're going to say yes to maybe four or five of these things and then they're going to say no to the rest of them because you ask me for too much crap. And you should prioritize the things that you actually wanted because you asked me for, you know, a new radon system. But in the same breath, you asked me to replace one GFI outlet.

It's like those my seller is just going to assign equal value to all these things potentially. You know, some of them are going to cost more, obviously. But in their brain, they're going, I have to get over the hurdle of saying yes to each one of these things. So I'm going to say yes to the ones that are easiest for me to do. And then we end up with this kind of battle during the inspection, which little sidebar, I think is always absolutely hilarious because we've just negotiated, you know, the buyer came in $25,000 under the list price. And then the seller decided they were going to cut 15 from where they were. And now we're 10 apart. And we find a way to meet and make a deal happen.

And then we're nickel and dyming each other over like $1,000, always during. inspection and it always takes a long time and everyone's stressed out. I'm like, we just swung, you know, 25 one way and 15 back up the other way last week. And now we're all really, really bent out of shape about 500 bucks, you know. I want to win. Everyone wants to win. So typically what I do as well, it's all, I'll list those things on an email. I'll say, hey, buyers are concerned about some stuff. These are all these things that they're going to fix. To make this as easy as possible, they're just asking a salary to give some money towards it so they can fix it. It's going to cost a little more than that. How's $4,000?

And it gives you the best chance. I will typically send an email too when I'm doing my inspection. I call. You could if it's a lot, I would do both. Email and call. And especially if it is a lot, though, like if you're asking for six grand or more 2% of the purchase price or whatever and you think that it's a lot, it probably makes sense to instead of just emailing them this insane amount of dollars or items, you call them and explain. Well, it comes back to expectation setting, right? So what I would do in a case like that is I have an inspection.

It's like, oh, this isn't going that well. Right. I'm probably going to text that agent versus maybe call them, but maybe just text them and say, hey, there's some stuff that came up here. Just wanted to give you a heads up. I'm going to review everything with the buyer tonight, but just want to prepare you that there are going to be things that come through. Right. So you're once again, you're setting expectations on the front end. And then when you send your ass, they're not like, oh, gosh, this guy's being unreasonable. They're preparing for it. And I get it. And they're like, oh, it's okay. I think it's very important in negotiations. And again, I'm going back and forth on a deal right now where I said, here's our owner offer, please give me a call when you get this so I can give you some more information to pass on to your buyer so they don't just immediately send it over to their client because you send a $4,000,000, it's all this stuff and they haven't talked to you yet and they send it straight to their client and their client's like, F, these guys, whatever, because you didn't have that softer conversation on the phone about how to actually portray the information. So I think saying things like, please give me a call when you get this before you talk to your seller,

I'd like to explain some of these items so you have more context when you're having the conversation with them. It, it, again, expectation wise, then when the agent calls the seller, they're like, well, yeah, they did find X, Y, and Z. I just talked to the buyer's agent. Here's what, what, what, what it was and here's why they're making this request. The goal is always in our jobs to, A, understand emotions and how you can minimize emotions as much as possible through the process and the way in which you handle communication. And two, understand leverage, right? So, like, do I have the ability to ask for certain things or do I not, right? During the inspection, even if you don't have much stuff on the inspection report, if you have leverage,

you can make things happen for your clients and they will be forever grateful for you, right? I have a seller buyer who owns a house right by the state fair and I parked in his driveway this year because he parks people for the state fair, right? And I was like, Wayne, how much do you want for it? He's like, you're the guy who got me $3,000 for a garage that wasn't in that bad of shape. You can park here for free forever. And it was a year and a half ago, right? Like, because I was like, well, they have no other offers, like, just ask for something.

The worst they can do is say no, and then we can say, okay, or move forward or get half of it, right? But if I have, if they have 10 offers, you got someone to be like, I want $5,000. You set an expectation with your buyer and say, hey, you're not going to be able to get that because they'll just say, I'm going to move on, right? So understand leverage in negotiations and use it effectively. But then to the point of like, I've gotten to the seller, right? If your seller gets an email that says, hey, we want $10,000, but there's been no communication on the front end, no prep for that and you have to then figure out how you're going to convey that, their first response is going to be really negative versus if you, on the flip side, like I call them and say,

hey, be prepared, this is coming. They will probably then tell the seller, hey, the inspection sounds like there were some things on it. I'll let you know when I get more information, but then when they get a bigger request, they're not going to be as surprised and they're not going to be as emotional. And maybe they were expecting $6,000 and you came back with four. And so they're thrilled. But they weren't expecting $6,000 until you set the expectation on the, front end. Exactly. That's all we have this week on the nerdy agent podcast. Get your buyer's inspections. And as always, remember, be better.