Negotiations and Inspections: Don't Give In at the Finish Line

TLDR
Most of the money you lose at the end of a flip happens not because of the market or the construction, but because you got soft in the final stretch. Here’s how to hold your ground through contract, inspections, and closing.

Table of Contents

The Stages After Contract

A lot of first-time flippers think getting the house under contract is the finish line. It’s not. It’s the start of a new negotiation.

Here’s what happens after a buyer signs the contract:

  1. Inspection. The buyer hires a home inspector. The inspector finds things. They always find things. That’s the job.
  2. Inspection resolution. The buyer comes back and asks you to fix things, reduce the price, or give a credit. This is negotiable.
  3. Appraisal. If the buyer is using financing, the lender orders an appraisal. If the house doesn’t appraise, you’re back at the table.
  4. Closing. Money changes hands.

Each of these stages is an opportunity to give away money if you’re not prepared for them. And most sellers aren’t.

The Initial Offer Negotiation

You list at $350,000. They come back at $320,000.

Don’t take it. But also don’t blow up the deal.

Here’s my general belief: the deals that fall through fall through because that person didn’t really want the house. If someone wants the house, you can push. They were basically willing to pay asking price when they submitted the offer. A lowball is almost always a negotiating position, not their real number.

My move in that scenario: “The lowest I can go is $340,000.” Give a little, not a lot. Don’t just accept the first number.

But don’t treat this as just a price conversation. You need to give your agent something to work with.

Pro Tip
When you tell your agent your floor, also give them the pitch. Why can’t you go lower? What did you put into this house? What are the features that justify the price? A good agent will relay that to the buyer’s agent, who will relay it to the buyer.

How to Sell Through Your Agent

You can’t negotiate directly with the buyer. You talk to your agent, who talks to their agent, who talks to the buyer. That’s the chain.

This sounds like a problem. It’s actually an opportunity if you use it right.

Think about the buyer’s agent for a second. They like to seem knowledgeable in front of their client. If your agent calls the buyer’s agent and says, “Hey, before they come through, make sure they look at the kitchen and the deck, everyone has been raving about those,” that information gets passed to the buyer. The buyer’s agent looks like they did their homework. The buyer is primed to notice the good things.

You’re not just negotiating with the buyer. You’re selling the buyer’s agent on selling your house.

Your agent’s job is to be convincing. Not just to submit paperwork. When you find a good one, they’re actively working the other side of the table, not just passing messages back and forth.

Find an agent who can sell, not just list.

The Inspection Resolution

The inspection report comes back. It always has a list of things. Some real, some minor, some that the inspector is required to flag regardless of severity.

The buyers are going to ask for something. A credit, a repair, a price reduction.

Here’s the framework: play hardball, but calibrate to the market.

In a hot seller’s market, you might not fix anything. You know there’s another buyer behind this one. Your leverage is real.

In a slower buyer’s market, you might need to give a little. The deal matters more. Pick your battles.

What you don’t want to do is just say yes to everything in the inspection resolution. That’s leaving money on the table every single time.

Common Mistake
Treating the inspection resolution as a formality. Buyers expect pushback. If you cave immediately, they often think they could have asked for more.

The inspection resolution is a negotiation, not a checklist. Respond to the items one by one. Fix the things that are genuinely broken or pose a liability. Push back on the cosmetic stuff and the minor items that were already priced into the house.

The Appraisal and Closing

If the house appraises at or above your contract price, you’re fine.

If it appraises low, you have three options: reduce the price to the appraised value, ask the buyer to make up the gap in cash, or renegotiate somewhere in the middle. In a buyer’s market you’ll often have to meet them most of the way. In a seller’s market buyers sometimes waive the appraisal contingency entirely.

Closing itself is mostly paperwork. There will be final walkthroughs. Make sure the house is in the same condition as when they contracted it. Don’t let anything deteriorate or go missing between contract and close.

The ALTA settlement statement will show every line item. Review it before closing. Errors happen.

FAQ

Should I be worried that deals will fall through?

Some will. But the deals that fall through are almost always deals where the buyer didn’t really want the house. If they want it, they’ll find a way to close. Don’t let fear of fallthrough make you give up money at every stage.

What if the inspection report is really long?

They’re all long. Inspectors are legally required to flag anything that could conceivably be a concern. Read the report yourself and sort items into three buckets: actual problems that need addressing, minor items you can negotiate around, and cosmetic observations that aren’t your responsibility.

When do I need to give the buyers what they ask for?

When the market gives you no other choice, or when the repair is legitimate and the buyer is asking for something reasonable. In a seller’s market, almost never. In a soft market, pick your battles but pick them.

What’s the most common mistake sellers make in negotiations?

Taking the first offer and then caving on the inspection resolution. You give away money twice. Hold on the initial price, then hold again in the inspection resolution. That’s where flippers consistently leave the most profit.