Your Seller Won't Fix Problems Found in a Home Inspection. Now What?

Talk about a tough spot to be in.

There's a reason it takes so long to close on a mortgage. Before you complete the purchase of a home, that property needs to undergo an inspection. And sometimes, inspections can reveal problems that take time to resolve.

Usually, when issues are discovered during a home inspection, the seller will either agree to fix them prior to your closing, or otherwise shave money off of the price of your home to compensate for the amount you'll need to spend to address them yourself. But what happens if your seller refuses to take either of those steps?

The good news is that as a buyer, you're generally protected financially in that situation. Home purchase contracts usually come with an inspection contingency clause that states the property in question must either pass the inspection, or that the seller must agree to make repairs. If your seller refuses, you have the right to walk away without financial penalty, and any earnest money you may have put down should be returned to you.

But if you land in this boat, is walking away the right move? Or should you deal with the repairs yourself?

Home inspection repairs can be a tough call

In a normal housing market, sellers will usually agree to make repairs following a home inspection because they don't want to see the deal at hand fall through. But today's housing market isn't normal, and it's also not particularly friendly to buyers.

Because real estate inventory is so low, sellers have the clear upper hand. A seller today might refuse to make repairs under the assumption that if you walk away from the deal, they'll find another buyer with relative ease. In fact, a lot of buyers are actually waiving home inspections to give themselves an upper hand in a bidding war.

Let's say you're stuck in a situation where your seller won't make repairs. If you walk away, you might struggle to find another home that fits into your budget. If you make those repairs yourself, you'll end up spending more money than anticipated.

What's the right call? It probably depends on two factors -- how extensive the repairs are, and how much you really love the place you're buying.

Consider what walking away could mean

If the repairs aren't extraordinarily expensive, it could pay to just make them yourself, even if the idea frustrates you. If you spend an extra $5,000 to fix an issue uncovered during an inspection, that's clearly a lot of money. But if you walk away from the deal, you might end up having to spend more than an extra $5,000 on another home.

Also, if the home you're supposed to be buying really checks off the most important items on your wish list, then you may want to deal with the repair -- even if it puts you in a tighter financial spot. If you walk away, you might struggle to find another home that meets your requirements given how limited real estate inventory is right now.

The lesser of two housing evils

In a normal housing market, you shouldn't have to put up with a seller who won't make repairs following a home inspection. But since buyers today are pretty much at sellers' mercy, you may need to come to terms with having to make a repair yourself or walk away. Ultimately, you'll need to decide which option is less painful -- shelling out money for an issue your seller should fix, or having to go through the house-hunting process all over again.