First: let's remember that the home seller is usually as emotional as the home buyer so there's a potential for things to be handled illogically. Regardless of what side of the table you're on, try to think about it from the other person's perspective. For example, if you're buying a house and found some issues during the home inspection, remember that the seller has lived in the house - usually for a number of years - without addressing this issue. They could feel that it's not a big deal and that you're just looking to renegotiate. Likewise, if you're selling your house and the buyer brings up an issue, try to remember what it was like when you bought your first home and how overwhelming everything felt. Having empathy for the other party can help everyone to feel better about giving a little in the negotiation.
What's your bargaining position?
Do you want or need to buy more than the sellers need to sell? The party with the most to lose will normally be the one who ends up giving more in the negotiation. If you're fully prepared to walk away, then ask for whatever you feel is fair and let the chips fall where they may. If you've been looking for a while and/or really love the house, then make a real effort to be reasonable so as not to alienate the seller.
What kind of an issue?
There are normally a couple of ways for the seller to address a problem that the home inspector has identified: they can fix it themselves or hire a professional. So ask yourself, are there different levels of quality for this type of problem? It's not unusual for the seller - who will soon be moving out of the house - to choose the cheap-and-dirty option rather than the nicest-and-best. My suggestion to buyers is usually if the issue is maintenance-related and will be done by a professional, then ask the seller to do it. Otherwise, ask for a credit. For example, if the furnace hasn't been cleaned or a pipe is leaking, go ahead and ask the seller to do it and show the receipts. If the roof needs to be replaced, ask for a credit toward the work. There are a lot of ways to skimp on a job like that and that could cause you problems down the road.
How to ask
Like in other parts of life, how you ask for something is going to have an impact on the answer that you get. Don't expect the seller to address everything that the home inspector found. Don't think you're just going to hand over the report and all of the issues will vanish. Go through the home inspection report, highlighting anything that the inspector deemed as serious or in need of immediate attention. Now go back and rate the items in order of how important, dangerous or expensive they will be to fix. Rank the items by priority and now you're ready to begin.
Normally, the negotiation will be handled by the real estate agents. In some rare cases, the attorneys could get involved. I like to share all of the major issues with the sellers' agent and then identify that top items that the buyer wants fixed. This way the seller can see that we're not nit-picking and not asking for the house to be perfect. Be clear in your own mind how you feel about moving forward on the purchase with the existing issues.
What happens next?
The seller can agree to fix all of the items you've requested, some items or none. Some sellers just don't have the money. Some are selling the home below what they think it's worth or less than they owe to the bank. Some just believe the home is perfect and that any issues are not relevant. Regardless of the reason, be prepared for the possibility that the seller may say no to your perfectly reasonable request. It helps to know ahead of time what you'll do if that should happen. Always think positively but remember that the seller is not obligated to fix anything On the other hand, you should have the option of canceling the sale if you want, as long as you have a home inspection contingency in place.
Get it in Writing
Whatever the seller agrees to fix should be clearly written up and signed by all parties. There may be a temptation to put the list of repairs into the Purchase and Sale Agreement. Normally, this is not a great idea. That document will be given to the lender, who may then require that repairs are inspected or something else that could complicate your purchase. A side addendum that is shared between the buyer and seller side is usually a cleaner way to handle this.
No house is perfect and it's easy to be overwhelmed with the huge report that the home inspector provides. The important thing is that you feel comfortable moving forward. Talk to anyone who you need to in order to get that comfort level: contractors, parents, your attorney or your real estate agent. If you have a bad feeling or if it seems that the seller has not been honest about the condition of the house, it may be best to let this house go and look for something else.