How A Home Inspection Can Lower The Purchase Price Of Your Dream Home

Published June 14, 2017

A home inspection doesn’t just help you to find out about dangerous and costly problems that exist within the property; it can also help you lower the asking price!

A home inspection is a vital step in the process of purchasing a home. This involves having a trained professional go in and evaluate the structure of the building according to a wide variety of criteria. This includes safety and structural issues, as well as potential water damage, plumbing, electrical issues, and even minor issues that can affect the value of a property.

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Potential Problems

In addition, home inspections can make you aware of any potentially dangerous, or life threatening issues that might exist. Bad wiring can lead to fires, rotting walls can lead to collapses, and decaying floors can turn into sink holes which have the ability to do physical harm to your family. There are also more subtle problems such as the presence of mold, which can be less dangerous immediately, but which can cause long-term health problems for you and your family.
All of these factors are important for determining whether it is a good and safe idea to purchase a particular house. At the same time they can also be used as a negotiating tool in order to try and drive down the price of your dream home. Every problem that turns up and every potential issue that is uncovered is another bargaining chip that can be put in to play to try and achieve more favorable terms with the seller.
Any contract that is signed between a seller and buyer should include an inspection contingency, allowing for negotiations to take place if problems are discovered after the process has started. This will allow the buyer to either ask that the issues be repaired, or alternatively receive a credit so that they can undertake that work themselves. In some cases they will agree on a combination of those two possibilities.

According to Michele Lerner of Realtor.com "Your ability to negotiate depends on the way your contract has been written. In most cases you don’t have to agree to make cosmetic repairs. If a home inspection finds other problems, though, you are typically better off making repairs rather than having the buyers walk away from the transaction."

Negotiating Price

One thing that is important to keep in mind when you go into any negotiation over the price of a new home is the psychology of the person on the other side of the table. The seller doesn’t want to have to drive down the price, or pay for costly repairs that can eat up even more of their profit margin. But the buyer wants to make sure that they aren’t getting taken advantage of. In other words, both parties want to ‘win’ the negotiation. Understanding that will make it easier for you to come to an amicable arrangement when trying to work a price down due to inspection issues.

If you are purchasing a brand new home then there will often be a “no inspection” clause in the contract. This skews more towards the favor of the builders, however it is often balanced out by an offered warranty on the work and parts. This is often acceptable as new construction buildings should not have any defects, and if they do then those are the sole responsibility of the company that built them.
With newer homes, there will generally be fewer problems, but an inspection is still necessary in order to determine if potential issues are starting to creep up. If only minor problems exist then you don't want to get too bogged down battling over nickels and dimes with the seller. It may just be best to settle on a credit for the repairs so that you can move forward with the purchasing process.

When looking to purchase older homes the property may have significant damage, and may have to undergo extreme repairs to be restored to a livable state. In that case you need to negotiate carefully with the buyer, so that they take on the fair share of the cost of restoration to the home. In some cases older homes will also sell for less than newer ones, due to the prevalence of issues that can arise over time.
In some cases you will find a home being sold as-is. That means that there are no inspection clauses, and any damage will be the responsibility of the buyer once the transaction is complete. In situations like that you should add the estimated cost of repairs to the actual price of the home, as that will be how much you actually have to expend to make the home livable.

Those who have experience with Do It Yourself projects may decide to save even more money and complete the repairs themselves. However this should only be undertaken if you are extremely confident in your abilities. Remember that projects can take a lot of time, and be very messy, especially in conjunction with the process of moving, so that is not a decision to make lightly.


Depending on your preferences and DIY skills, it may be preferable to simply negotiate a fair reduction in price and then handle the process yourself so that you know the work is getting done exactly as you want it. No matter if you choose to do it yourself or negotiate for the seller to make those changes, being informed and having knowledge on your side before signing those mortgage papers gives you access to true buying power.