Showing Off Spencer-Discovering Spencer, the Brookfields, Worcester County, Massachusetts and New England: Buyers!!! A Home Inspection is Not to Re Negotiate the Deal!!!

Buyers!!! A Home Inspection is Not to Re Negotiate the Deal!!!

Buyers~A Home Inspection is Not to Re negotiate the Deal!!!

 

When selling /buying  a home in Massachusetts, it is common practice and encouraged for the buyer to have a home inspection on a house once you have agree on price, terms and conditions, and have a signed offer to purchase. 

Frequently the inspector will check the structure (foundation, ,roof, sills, etc), the mechanical(heating system, plumbing failed roofand electrical) and more.  He/she will come up with a report which often highlights areas that have concern, and may need to be corrected.  This list may be quite extensive, even for a new construction home.  The list could include anything as minor as a small rip in the kitchen floor vinyl, to as extensive as a failing foundation.

The practice of home inspection was intended to let the buyer know what they were buying during the discovery period, and allow them the opportunity to continue forward to purchase, or give notice that they no longer want to buy.  In most cases, it allows them to get out of the contract without bias, and allows them the return of their deposit.

However through the years, it has become common practice for the buyers to ask the seller to do repairs or give credit to the buyer at closing so they can fix the items.

What most buyers who are purchasing a home do not understand is that once you ask the seller to do something as a result of the home inspection, you are renegotiating the binding contract, and the seller could decide not  to sell anymore.  The request for repair, rejects the original offer, and introduces a new offer.  The seller does not have to accept the new offer, and further more does not need to sell to the buyer anymore.

 

The point of this story?  Buyers~home inspections are not for re negotiating the sale, it is to allow you to know what you are buying.

 

 Pam Crawford

Pam Crawford, ABR,e-PRO®,CRS,CDPE,LMC

Owner, REALTOR®, Managing Partner, MBA, BSBA
RE/MAX Professional Associates

 

phone/fax (508)-784-0503    
e-mail: Pam@PamCrawford.com
www.PamCrawford.com
www.CrawfordRealtyTeam.com

 

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Comment balloon 215 commentsPam Crawford • July 26 2012 04:26AM

Comments

I have hit suggest. Buyer agents should share this with the buyers.

Posted by Gita Bantwal, REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel (RE/MAX Centre Realtors) almost 6 years ago

Pam, very interesting post today about Home Inspections and the Contract. I always urge my buyers to carefully consider what they might ask the seller to do for some of the very same reasons you write about.

Posted by David Burrows, No Pressure, Just Seriously Devoted to Real Estate (Classic Realty) almost 6 years ago

Good morning Pam. I liked your title and agree with your premise. That said, sometimes there are surprises and if things can be resolved it's preferable to saying goodbye. Last year I bought a home that appeared sound until the inspector unearthed some serious structural stuff the sellers were unwilling to address. I moved on and they sold for 15K less after addressing those same issues for someone else.

Posted by Sheila Anderson, The Real Estate Whisperer Who Listens 732-715-1133 (Referral Group Incorporated) almost 6 years ago

Sheila,

You are correct, however the buyers need to understand if they ask for something, sellers could say no, and I am no longer selling to you.  It really should be used for the big things that buyers would walk away from the house over. 

Sounds like your buyers made the right choice.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

Gita,

Thank you.  As the housing market starts to rebound, this topic may become more important.  This could open the window for the seller to accept higher back up offers.  Once the buyer asks for repairs, they negate the original offer.  No contract because there are no meetings of the mind.  Buyer could rescind the request, but that does not re instate the original offer unless both parties agree again.

Could be a very risky negotiation tool in the future.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

I am of the opinion it does not hurt to ask for repairs based on an inspection contingency. As a seller if a minor repair will close the deal, why not?  Of course this is not a renegotiation.  And a seller who balks at a minor investment may be signaling they are not motivated.

Posted by Gary L. Waters, Broker Owner, Waters Realty of Brevard, LLC, ... a small office, delivering big service! (Waters Realty of Brevard, LLC) almost 6 years ago

Pam, Hopefully many buyers read this post! It's become the trend here to ask for everything on a home inspection repaired, as if they are buying a brand new-construction listing!

Posted by Carol Faaland-Kronmaier, PhD, e-PRO, Manville, Hillsborough, Somerset NJ (Weichert, Realtors; Hillsborough) almost 6 years ago

Great post Pam.  Especially when the sellers disclosure already discloses issues that the sellers know about and the buyers acknowledged, these will not be re-negotiated.

Posted by Gabe Sanders, Stuart Florida Real Estate (Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales) almost 6 years ago

Gary,

It doesn't hurt unless the buyer LOVES the house and is just bluffing, and the seller says NO  and decides not to sell to that buyer.  Who looses then?

If we as agents encourage our buyers to ask and then loose the house for them, we blew it!!!

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

I think it depends on the area that you live in if it is truly a renegotiation of the contract.  Here in Texas we have the option period that gives the buyer the unrestricted right to terminate the contract for any reason.  Usually, during that time, they will get the home inspection done.  If they negotiate repairs due to the inspection report, they are, in a sense, renegotiating the cotract because our contract has specific areas to mark on for repairs.  Nine out of ten times, they will check the box that the buyer accepts the property in its present condition.  

Posted by Brenda Mullen, Your San Antonio TX Real Estate Agent!! (RE/MAX Access) almost 6 years ago

Brenda,

Our offers have a paragraph for inspection contingencies.  This gives the buyer the right to inspect.  It gives the buyer the right to cancel the contract without bias as long as they do it in writing within the proper time frame.

However if the buyer still really wants to buy, but wants to see if they can get more out of the seller, they open pandora's box when they ask for items as a result of inspections.  Even if they rescind the request, seller can say, I am not selling to you anymore, and buyer is out.  The request is proof that there was no meeting of the minds.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

I do find the differences between states fascinating.  Here in Maine, our contracts are heavily tilted towards buyers.  It is an ongoing debate.  We do have the occasional buyer that seems to think the inspection contingency is a free for all and wants to ask for kazillion silly things.  However, most view it seriously and only ask for changes regarding previously unknown or undisclosed items.  In Maine, requests for changes during the inspection contingency period do not constitute a counter-offer and the sellers do not get the option of not selling to that buyer.  The seller doesn't have to agree to any changes though, and then the buyer needs to decide if they will procede anyway or void the contract.

Posted by Kristen Wheatley, Supporting Success - Best Job in the World! (Better Homes & Gardens | The Masiello Group) almost 6 years ago

Here seller can void the contract if buyer asked for something.  I had that happen recently and buyer was dumbfounded when seller said I am no longer willing to sell it to you even if you will now take it as is.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

I don't see what the issue is really.  The inspection will always be used as a bargaining tool.  And just as all buyers should be aware that the seller might say no the seller should be aware that the buyer may ask for concessions based on unforeseen things found during the inspection.  Of course the seller can say no---but they also have hooked a buyer--they would have to think twice about cutting the fish loose.  Going after frivolous items in the inspection report might back-fire on the buyer and they might end up looking for another house.  I think both sides should be acting in good faith---but there will always be those willing to abuse the system.  I have seen sellers dig their heels in as well as buyers dig their heels in.  I had one that would not replace an aged water heater.  The deal went south over an item that should never be a deal killer for either party in my opinion---if I had been the agent on that deal I would have paid for the dang heater myself:)

Posted by Charles Buell, Seattle Home Inspector (Charles Buell Inspections Inc.) almost 6 years ago

This is a timely post and a great reminder.  A defect is a defect, and even if a Seller has the right to cure, they do not have the obligation to do so in Wisconsin.  And yes, it does sometimes cause renegotiation and kills deals.

Posted by MaryKay Shumway, Door County Wisconsin's Real Estate Expert (The Kellstrom Ray Agency, Inc. (Est. 1948)) almost 6 years ago

BINGO! As a home Inspector I am always asked if they should make the seller fix "insert defect here" and I always have to tell them the same thing. My Job is to inspect the home, report to my client and explain if necesary. The function of my inspection is so you (the buyer) can make the decision wuith as much information as possible.

 

That being said, I do understand what my reports do get used for (even beyond the intended purpose), as there are usually calls from sellers, contractoprs sellers hiore asking questions about repairs to be dont prior to the sale. I know my report (which by the way is ONLY FOR MY CLIENT, not sesigned for the whole world to use) goes to the seller and is used as a negotiating tool.

 

Along the same vein, I also get asked if the home is worth what they offered. My answer here is the same too, I am not a property appraiser, I'm not your realtor either. I inspect for condition, not value.

 

Nice post, I think it stems from lack of education of home buyers, and maybe even some realtors too.

Posted by Mike Auger, Certified Master Inspector (Patriot Property Inspections, Auger Enterprises, Inc) almost 6 years ago

Pam, this is the Theme of the Week for my deals.  Smooth sailing, then out of the blue the buyer decides he wants 10% off.  The buyer knew that the last deal fell through from constantly re-thinking the price, so here in the home stretch - he re-thinks the price.

Posted by Richard Arnold, Realtor - Tempe, Chandler, Mesa, Gilbert, Phoenix (Keller Williams Realty East Valley) almost 6 years ago

Maybe the inspection was never intended to act as a renegotiation of sorts but, for all intents and purposes, that's what it has become (in New York) and I give my Sellers a heads up so they're not shocked when it happens.

Posted by Jill Sackler, LI South Shore Real Estate - Broker Associate (Charles Rutenberg Realty Inc. 516-575-7500) almost 6 years ago

Not in our market.  And it should be stated when you're writing about something that might be the standard of practice in your area . . . because it sure isn't the standard of practice here. There is nothing that stipulates that buyers repair requests are a re-negotiating of the original offer and therefore the seller can back out.  To the contrary.  Our Sales Agreement expressly allows for the negotiating of repairs.  Negotiation of repairs does not change the original offer giving seller an out because . . . negotiating repairs is contractual and in the original offer.  However, there is nothing that states the sellers HAVE TO negotiate with the buyer for repairs, since they are buying AS IS.  If the seller doesn't want to make repairs, or make all of the repairs, etc. and so forth, they don't have to.  But the ability to negotiate is set out in the language in the original offer.

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) almost 6 years ago

All contract contingencies are re-negotiable.  Inspections is a contingency, appraisal is a contingency and anything you want to add is a contingency.  Even Home Insurance and  the size of the lot could be a contingency if it is added to the contract. 

Contingencies give the BUYER the option to void the contract, NOT THE SELER!

Whatever is in the contract that is subject to the buyers approval is an option for re-negotiations.

As an exclusive buyers agent if inspections reveal deficiencies that the buyer was not expecting,  I do attempt to re-negotiate the contract.  Minor things are acceptable, but new roofs are not. 

Sure, the seller can say "NO" just like the buyer can say "GOODBYE"

Nothing wrong with it on either side.

Eve in Orlando

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 6 years ago

Pam, any time a buyers wants to have the sellers "fix" something, no matter how big or small, I caution them that they could back out of the deal right then. What would happen if they had a back-up offer waiting that was for more money?

Posted by Eric Michael, Metro Detroit Real Estate Professional 734.564.1519 (Remerica Integrity, Realtors®, Northville, MI) almost 6 years ago

Hi Pam.  If the home inspection reveals a serious defect then I disagree with your premise about not being able to renegotiate.

Posted by Conrad Allen, Webster, Ma, Realtor (Re/Max Professional Associates) almost 6 years ago

Conrad,

I didn't say a buyer couldn't try to re negotiate, what I said was the seller doesn't have to.  Furthermore, the seller could decide not to sell to that buyer.  This post was actually to warn the buyer that if they are bluffing, just trying to get a better deal, it could cost them the deal.  A risky proposition if they really love the house.

 

 

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

Interesting!  Our sales contracts (not "as is" contracts) in northwest Florida require the seller to pay up to 1.5% of the purchase price in warranted repairs (not cosmetic items) that are revealed as part of an inspection.  Of course, this number can be negotiated at the time of contract too - reduced and/or eliminated.  

Posted by Miriam Dillon, Realtor in Rosemary Beach, SoWal and all of 30A (Rosemary Beach Realty) almost 6 years ago

As a buyer's agent, I'm always negotiating.  When I'm on the seller's side I'm doing the same thing.  It's our job to get the most we can for our clients while arriving at a fair and reasonable conclusion.  I think it really depends on what's found in the inspection.  

If the inspection discloses something egregious that the disclosures didn't disclose and it wasn't apparent to the average consumer, it is absolutely a negotiation point.  I recently had a property where we were provided a $3800 Section 1 termite.  (In California Section II isn't usually requested).  My family bid according to that report.  I always have them order their own reports.  Ours came back with a $40,000 Section I.  We requested a price reduction.  My rule of thumb is $5000.  Under $5k I don't go back to the well.  Over $5k we discuss requests for repairs, credits and price reductions and request whichever is most appropriate from the seller.

With equity sales, it's common practice for the seller to have their own reports done, home, termite, roof.  Those are uploaded into the MLS for all to see.  That's how you stop the renegotiation.

Posted by Valerie Crowell, Broker Associate (Keller Williams) almost 6 years ago

As a home inspector, I am asked constantly asked "how much to repair, what should I ask the seller to fix, Who do I know that does this work? All good questions, but not my job and answering would be a problem with any realtor. I always tell my clients that their agent is the best person to talk with about all pricing concessions or repair requests. I do tell them that many items on the report are not significant and should be left to them to be repaired after closing, kind of like-Pick your battles. Good post.

Posted by Scott Seaton Jr. Bourbonnais Kankakee IL Home Inspector, The Home Inspector With a Heart! (SLS Home Inspections-Bradley Bourbonnais Kankakee Manteno) almost 6 years ago
Buyers make an offer on a house in "as-is" condition, and as far as a buyer can tell by a normal house viewing, it's in good condition, most of the time. When a seemingly well put together home shows serious maintenance issues or defects in an inspection, it is logical that the buyer would want to renegotiate. The price they offered can seem too high when shown a big list of defects. Sellers should expect this. And of course, all areas have different language, but here in VA, if a seller does not agree to a buyer's repair request, the contract can become void. So yes, a buyer risks losing the deal by asking for repairs, but the seller risks the buyer walking by saying no. That's why both listing and selling agents should prepare their clients that the deal does indeed often get re-negotiated after inspection. Saying it isn't so does not make it true.
Posted by Coral Gundlach, Real Lives. Not Just Real Estate. (Compass) almost 6 years ago

Loved the article - makes us working with both Sellers & Buyers think about what we need to advise our clients so that neither are surprised at what the other party may/may not do based on the Home Inspection.

 

Posted by Betty almost 6 years ago

If you've accepted our offer contingent on the home inspection, you'd better expect we'll be back at the negotiaion table afterwards!!

Posted by Jeff Lowen (The Real Estate Expert Advisor) almost 6 years ago

I had a buyer that wanted things repaired on an "AS IS" contract found out durning the inspection...to get the deal closed the listing agent's husband and my husband went and fixed the few problems. $100.00 worth the materials and time an the deal closed.

Posted by Kathy Dowd, Consider it SOLD (RE/MAX Realty Team, 239 220 4133) almost 6 years ago

Pam,

I clearly do not agree with your analysis. Maybe it's true under MA law or something specific to your contract, but in most places a repair request (or any other request to amend a contract) would not terminate the original contract.

Under basic contract law, the parties to a contract are always able to re-negotiate the terms anytime up to closing. The fact that either party requests to amend an existing binding contract does not terminate the original contract.

So a buyer is never "at-risk" of losing a contract by requesting repairs unless state law or the contract state otherwise.

Tom

Posted by Tom Branch, Broker, CDPE, SFR, ACRE, Plano TX Ambassador (RE/MAX Dallas Suburbs) almost 6 years ago

With inventory levels below 3% on the "average" priced home in my area I am seeing more buyers putting in offers at or very near to asking within the 1 or 2 days of property hitting the market so that their offer gets accepted however just as you said when the inspection comes back they TRY and re-negoatiate the deal.

Not on my watch...

 

Posted by Nick Walton, Call 469-556-2393 (JP & Associates REALTORS®) almost 6 years ago

Good morning Pam: I would have to agree with you one hundred percent that the seller has no obligation to fix, remediate or remedy any issue uncovered by the home inspector. It is a good practice to let the buyers know that this is stipulated on the contract. However, as Gary(post#6) pointed out, it does not hurt to ask.

If the the price of the property already reflects the condition of the house, the buyer should be made aware of the obvious problems. On the other hand, the seller should also weigh the pros and cons of rejecting a home inspection request.

Inevitably, any future inspection will reveal the same problem. The question is: does it make economic sense to come to an amicable terms with the buyer to resolve the issue and to move forward with the transaction or is it smarter to put it back on the market.

 

Posted by Maria Gilda Racelis, Home Ownership is w/in Reach. We Make it Happen! (Home Buyers Realty, LLC-Manchester, Bolton. Vernon,Ellington) almost 6 years ago

While some buyers can definitely take it too far, I have to disagree with the message here. Each case is different, of course, but if the inspections uncover some issues that need to be dealt with, the buyer SHOULD make an effort to renegotiate to have those issues handled. If buyers just walked every time they found a problem during the inspection period, a great many of our deals would bust, and the seller would have to start all over. Be glad those buyers are still willing to accept the property, with some repairs, otherwise the process of selling a home (and buying a home) would be extremely frustrating and long-term for everyone involved.

True, the seller has no obligation to make those repairs. At the same time, the buyer has no obligation (in OK at least) to continue with the purchase either. I tell my clients that it's a negotiation from the contract through the inspection period. Nothing is concrete until that period has expired. In fact, our state contract even specifies a renegotiation if more repairs are needed than what were estimated at the time of contract.

What buyers need to keep in mind (and should be reminded of by their agents) during the inspection process is that they're looking for substantial structural or mechanical issues, that could cost them dearly later, not cosmetic or personal taste issues.

Posted by Ryan Hukill - Edmond, Realtor, Team Lead (ShowMeOKC Real Estate Pros of KW Elite) almost 6 years ago

My husband is a boat broker (and not REALTOR) and most buyer's offers are contingent upon a satisfactory sea trial and survey.  When he negotiates the price between the buyer and seller, he tells the buyer that the price is reflective of the condition of the boat.  Kind of puts them on notice, but just like with a home inspection it creates another negotiating point in the buyer's mind after they receive the report.  

It is up to the Seller to decide how much they are willing to sell it for and the Buyer on how much they are willing to pay for it.  I think we all have to remember who we work for and what we are hired to do and sometimes getting the best price for your clients is one of those duties.  Educate upfront and you will have less problems in the end.

Posted by Sharon Curtiss, Search for Ocean City Maryland Area Homes for Sale (Berkshire Hathaway HomeServices PenFed Realty) almost 6 years ago

I was about to write the same blog. As buyers agents, we should have at least some understanding of major defects to look for. If the shingles are badly worn or if the furnace is obviously 40 years old- that is discussed at the time of the viewing. My buyers are told that the purpose of the home inspection is to come up with a to-do list and to look for major defects. There is no such thing as a perfect house.

Posted by Karen Salmon, Okotoks Real Estate Agent (Royal LePage Benchmark) almost 6 years ago

Great post and comments! Here in NC we have a due diligence period where the buyer can walk for any reason or no reason. However, I think the seller should be afforded the opportunity to make repairs.

Posted by Mitch Muller - Charlotte NC Real Estate, Certified Residential Specialist (ProStead Realty Charlotte, NC CRS CDPE mitch@prostead.com) almost 6 years ago

Area means everything and does not always constitute a "re-negotiation" or allow the seller to walk. In most areas I believe the buyer has the Right to ask for repairs without allowing the seller to walk. The seller is under no obligation to do the repairs and the buyer then either chooses to move forward or walk.

Posted by Charles Trins almost 6 years ago
Small items aren't usually deal breakers for the buyers. But I will always encourage my buyer clients to negotiate repairs that significantly add to the true cost of buying the home. And if it's an investor flip, perhaps more so. I've encountered issues several times where in their haste to turn a property, the flippers have covered over egregious problems.
Posted by Karen Crowson, Your Agent for Change (Coldwell Banker Residential Brokerage) almost 6 years ago

I am more like of the openion of Gary L. Waters.

It does not hurt to ask for a minor repaire. Also, inspections might find a problem that the seller him/herself did not know about and they based their selling price accordingly, or may be they knew about it and they did not inform their agent who did the CMA.

I usually do not renegotiate agreements, but I believe that, some times the buyers want the house if its fixed and sellers do not mind fixing it, because they want to sell.

Adam Morgan

Broker of record

adam h. morgan brokerage, Ottawa, Ontario

Posted by Adam H. Morgan almost 6 years ago

Buyer are not home inspectors, they buy houses on emotion. The book may have had a beautiful cover but when they opened it find out that all of the pages were ripped. Renegotiation is needed. If it was just A. or B. we wouldn't sell very many houses.

Posted by Mike Russell, Overland Park Kansas Real Estate (Mike Russell & Associates) almost 6 years ago

I agree with you, Eve #20.

"Binding contract?" I think not if it is subject to a contingency. If the contingency gives the buyer a clear out and issues/surprises come up then it's most definitely time to renegotiate. I can't imagine the seller will not because if the deal goes south they will likely need to deal with the item for the next buyer.

And Mike #16, just because a buyer's agent is advocating for the buyer and trying to get the best deal possible for the buyer (doing our job) does not mean we're in need of remedial education. At least in most cases.

With regard to inspection contingencies, defects, and requirements to remedy the details are in the contract. Both sides better understand the terms, clearly...

Posted by Bob Pisa Downing-Frye Realty, Commitment, Service, Satisfaction... (Downing-Frye Realty, Inc. Naples, FL) almost 6 years ago

Pamela:

You are 150% correct!!! My uncle, who was an ultra successful agent in the real estate business for 45

years, emphasized this when training us.  THE INSPECTION RESULTS SHOULD NOT BE USED

TO RENEGOTIATE THE CONTRACT regardless of whether the contract allows it or not. 

I see far too many agents that have fallen into the sloppy practice of asking for every little item

to be fixed by the seller or for an astronomical credit to the buyer.  Also, many buyers'

agents don't explain to the buyers that it is the home inspectors job to point out every flaw in the

home.  I ALWAYS TELL BUYERS TO EXPECT AN ENCYCLOPEDIA SIZED FILE OF THE INSPECTOR'S FINDINGS

BUT NOT TO BE ALARMED.  Then, we review the findings together and discuss the projected costs, etc. 

It is my belief that many agents enter a contract with the intention of asking for a reduction after the

inspection.  THIS IS NOT ETHICAL or fair to the seller!!  Probably the same agents who insist that

the property be listed as "CTS" or "UNDER DEPOSIT" immediately even when they know they are going

to hit you with a RIDICULOUS request after the inspection. 

Posted by Margaret R. Memoli, Broker, Realtor, GRI - Fairfield & New Haven Counties (Memoli & Memoli Real Estate) almost 6 years ago

Pam,

in the state of Maryland the contract of sale states in paragraph 21 that the property shall be delivered vacant, clear of trash and debris, broom clean, and in substatially the same condtion as of the date of contract acceptance. "all electrical, plumbing (including well and septic) , heating and air conditioning,  appliances, smoke detectors and all mechanical systems and related equipment included in the contract shall be in "working condition".

So by signing the contract of sale the seller has already agreed to fix any non working issue covered above. 

This does not however cover the rood, windows or chimney.  those are considered "Wish list" items. 

Peggy

Posted by Peggy Magnanelli almost 6 years ago

I also completely disagree with the comment that we, as Realtors, should be able to spot the repair items before inspections. I am NOT a home inspector, nor do I plan to become one. I'm not hanging my neck on the liability line by claiming to be one. Even if I spot what I believe may be a problem, I'm not going to make that decision. It's up to the buyer and their inspector to determine whether it's a big deal.

Our job is to help the clients locate the right home, negotiate on their behalf, and see the transaction to closing.

Posted by Ryan Hukill - Edmond, Realtor, Team Lead (ShowMeOKC Real Estate Pros of KW Elite) almost 6 years ago

In our contract there are certain items that the seller is obligated to correct or the buyer can rescind the contract and earnest money must be returned.  We also have a sellers disclosure list and if the defects that were found were not listed to begin with, they must now be included so any future buyers will be aware of the defects even before making an offer.  Usually it is in the sellers best interest to repair/replace the discovered defect while still in the original contract.

I have seen however unethical agents not amend the original sellers disclosure when defects are found but that's another topic.

Posted by Gene Donohue, Flat Fee Service...Exceptional Results! (Only Way Realty / UpstateHomeSeller.com) almost 6 years ago

Sorry Pam. As seen in all the comments...it depends on the area. The statement in this blog post, "...once you ask the seller to do something as a result of the home inspection, you are renegotiating the binding contract" is definitely not true in my state.  

Real estate laws and practices are different from state to state. There can even be slight regional differences within the same state. I agree that a Seller does not have to do any repairs discovered during an inspection (and can potentially lose the Buyer), but I disagree that a Buyer should not "renegotiate" and ask for serious repairs (or a price adjustment) once the defects have been discovered.

All parties should try to be fair and reasonable and not lose a multi-thousand dollar deal over a few hundred dollars of repairs. 

Posted by Sheila Cox, Katy & Sugar Land Real Estate Agent (www.KatyHomesForSaleTX.com) almost 6 years ago

Wouldn't it make more sense to do the inspection report BEFORE an offer is made, so that the buyer knows what they are making an offer on?????  Why does everyone wait until after a contract is signed?  To me, it is axiomatic that if I find a house that I want to purchase, I am going to get all the relevant information I can BEFORE I make an offer.

Posted by Peter Pike, Board Certified Real Estate Attorney in Florida (Myron E. Siegel, P.A.) almost 6 years ago

Pam, Our area practice is like Tom's in #31.  Inspections only offer the buyer the opportunity to ask for something found during that period, but they don't entitle the seller to tell the buyer to pound sand for asking for something like a leaky pipe to be repaired.  Seller can say no to the repair request and buyer has option of choosing to accept that seller is going to do nothing or buyer can exit the contract and have earnest money returned.  And obviously not all things are apparent prior to the home inspection, so buyers SHOULD have the opportunity to ask for corrections or price adjustments to the original contract if the home isn't truly as first thought.

Posted by Liz and Bill Spear, RE/MAX Elite Warren County OH (Cincinnati/Dayton) (RE/MAX Elite 513.520.5305 www.LizTour.com) almost 6 years ago

You're right! Dont bluff if you cant take the outcome!  Out here, we write it as an "addendum" and that addendum can be accepted or rejected.  The buyer can "ask" the seller can say yes or no, but it's only up to the buyer if they want to cancel the contract (within their due dil period).  And yes, homes are sold "as is" here too--but you can still ask.  Looks like someone else has some different views than yours and created a rebuttal blog (and comments) that differ from your opinion??!! 

Posted by Paula Smith, Paula Smith Red Rock Real Estate (Red Rock Real Estate St. George) almost 6 years ago

Another clear indication that real estate is local. Carla Muss-Jacobs said it beautifully in comment #19. Negotiating repairs is done ALL THE TIME in our market. The buyer can ask for repairs to be made, the seller can agree to do them, give a credit at closing, or decline to do them, and we always explain that to the buyer. Rarely is an inspection deficiency a deal breaker here, unless it's something huge. Sellers usually will fix it or give a credit. 

Posted by Pat & Wayne Harriman, Broker/Owners, Wallingford CT Real Estate (Harriman Real Estate, LLC (203) 672-4499) almost 6 years ago

I'm with Carla (#19) on this.  The Texas promulgated form EXPLICITLY STATES that though the buyer accepts the property  in its present condition, the buyer has a right to have inspections and negotiate repairs.  The contract is then AMENDED not renogitiated. 

A buyer has every right to ask for repairs.  If the seller doesn't want to do it, then the buyer can decide to stay or go. Sometimes buyers can be unreasonable and unfortunately, it's just part of it.  A part that we have to accept and work with as best we can, employing diplomacy and professionalism.

 

Posted by Kate McQueen, Tailored service for your real estate needs! (Realty ONE Group-Lone Star) almost 6 years ago

Way to draw the lines of perception and thanks for this timely post! ;)

Posted by David Evans, HUD NLB Cumming GA (RE/MAX TOWN AND COUNTRY) almost 6 years ago

great debate here!  I love it!  I will play politician and agree with both sides!  Although I would lean towards it being an "opportunity" to renegotiate.  Buyers need to be advised accordingly and each transaction comes with different circumstances.  Sometimes a buyer needs to offer more in a multiple offer situation knowing that they "may" need to use inspections to work the price back down. But I do validate the point in this post that inspections are not a time to play poker and bluff the seller.  I guess it all depends on the supply and demand of similar like kind homes in that particular market.  Buyers can play the game if they are not in love and think they can find something comparable elsewhere.  But if the property is hot or one of a kind buyers should use caution just as Pam has explained.  Thanks for sharing!

Posted by Dylan Taft, Ulster County Area Consultant (Dylan Taft Broker/Owner Taft Street Realty, Inc.) almost 6 years ago

Asking for a credit or for repairs and having the seller say "No" does not mean the contract is then canceled and the buyer loses the house.  The seller can say "No" and the buyer can decide whether or not they want to continue with the sale based on the inspections.  The seller can't just cancel the contract because the buyers asked for something as a result of inspections...at least not here in PA.

When you are working for the buyer: it does not hurt to ASK. I can see a listing agent taking this kind of stand...but that may not necessarily be in the best interest of your client the seller either.

Posted by Karen Rice, Northeast PA & Lake Wallenpaupack Home Sales (Davis R. Chant, REALTORS) almost 6 years ago

Here in the Tampa Bay area, there is 1.5% of the purchase price built into the contract for repairs to warranted items.  If the property is purchase As Is With Right To Inspect and the items in need of repair are not listed on the Seller's Property Disclosure or are items that need to be repaired in order to obtain financing, then, yes, the Buyer will ask for the items to be repaired.  Also, if the Seller rejects te repair request and the contract is cancelled, then the Seller must now disclose the newly found defect(s) on the Seller's Property Disclosure.

Posted by Linda Mitchell almost 6 years ago

Peter - re: doing the inspection before making an offer....sure if the buyer is willing to lose the $600 he is spending on a home inspection on a home that the seller could sell to someone else while he is doing his due diligence and having the inspection and waiting for the results. Wouldn't that suck? To decide, yes I want to purchase this house now that I've spent $600+ on an inspection...whoops, sorry, someone else just put it under contract...darn...

Posted by Karen Rice, Northeast PA & Lake Wallenpaupack Home Sales (Davis R. Chant, REALTORS) almost 6 years ago

Here, the contract very specifically states that the buyer can request repairs following the inspection.  Even where a buyer checks that they accept the condition of the property, there is a paragraph that says checking that in no way prevents the buyer from requesting repairs following the inspection.Also, on our Board form that we can use to work up a seller's net sheet, repairs is one of the items to be filled in.

The seller does not have to agree, it is true, and the buyer (during the option period) can walk for that reason or no reason.

It has also been stated in many articles from our state bar association that the option period is not a license to renegotiate the PRICE

It behooves us to inform our clients, whether buyer or seller, that this can and most likely will occur.  It behooves us to inform our buyers that the seller has the right to refuse to do requested repairs, and that their choices then are to walk or to go forward with the contract as is.  It behooves us to inform our sellers that, if they haven't had a pre-inspection done, that it is entirely possible, even probably, that something will show up in the inspection and the buyer will request to have it fixed, and that they can refuse to do so but that the buyer can then walk and they won't have a contract any longer. 

I would thus never encourage a seller to be outraged (nor would I be outraged myself) at a buyer requesting repairs for items found in the inspection.  It can be abused, yes, but that's the fault of the individual buyer or seller, not the system itself.  ANY system can be abused, but throwing the baby out with the bathwater is not the appropriate response.

Posted by Tricia Jumonville, Texas REALTOR , Agent With Horse Sense (Bradfield Properties) almost 6 years ago

Here in Arizona, it's a little different.  If the buyer asks for repairs as a result of the inspection, the seller can say "no", but then it is the buyer who must then decide to go through with the contract or not.  The seller doesn't cancel the contract by refusing to make repairs.  (In the case of back-up offers, it may be different if there is an addendum in the contract that gives the seller the right to bail out.)  Also, in Arizona, price reductions as a result of inspections are typically requested on a separate form as an addendum to the contract.  Again, if the seller says "no", the buyer normally has the opportunity to say, "ok, never mind..." and continue with the original contract.

As an agent who primarily represents buyers, I wouldn't say one should "never" request repairs or a price reduction.  It depends on the property.  On a bank-owned property with multiple offers, you're not going to get repairs.  However, I had a short sale once with an unforseen defect discovered at inspection:  the bank would not take a price reduction addendum, but the listing agent said to go ahead and submit a new offer at a lower price, and it went through just fine, saving my client $5,000.

 A price reduction is also possible if the seller does not have the time or money to make repairs, but just wants the darned house sold.  This was the case with an estate sale that I personally bought - we found that it needed a new water line and new gas line; in exchange for an As-Is Addendum and letting the sellers off the hook for *everything*, including cleaning out debris left at the property, they gave me a couple thousand off the price.

Posted by Laure Chipman almost 6 years ago

Here we spell this all out in our Inspection Contingency Addendum.  Buyer has so many days to ask, seller has so many days to respond and depending on the responses the buyer ends up with repairs, $$ or nothing and then has the chance to walk away and recive the EM back or accept the sellers offer.  But until those issues take place they don't loose their contract to purchase.  They are still in a binding contract. 

Posted by Jo Olson, HOMEFRONT Realty @ LAKE Roosevelt - Stevens County (HOMEFRONT Realty) almost 6 years ago

It's different in Georgia. If the buyer submits an Amendment to Address Concerns with Property (which asks for repairs) then the seller may or may not agree to any or all of the requested repairs, however, asking does not terminate the contract. If the seller does not agree to make the requested repairs then it is the buyer's option to terminate without penalty if they are still within the timeframes.  The seller cannot terminate the contract because a buyer asks for repairs.  It's always interesting to see how contracts differ in other states.

 

Buyers should not use the inspection to ask for unwarranted repairs but I see nothing wrong with asking for reasonable repairs.

Posted by Thomas almost 6 years ago

Pam,

I'm kinda like Kristin (#12)  I am always amazed at the great diversity of contracts between states.

Here in NC we have a blanket due diligence period which offers the buyer a (negotiable) time of his choosing to do all inspections and get financing.

If the buyers finds descrepancies, he can ask for a monetary credit, repairs, or nothing at all.  The seller can concede to a credit or repairs, negotiate either or tell the buyer to take a hike.  The buyer then has a decision to make - one of which is take the invitation to walk, at which point the deal is dead with no repercussions to either party.

I don't have a problem with re-negotiation - if that's what someone wants to call it - especially if something major comes up that was an unknown.  In North Carolina you would be right, a seller is never required to negotiate.

I would like to go back to caveat emptor!

Have a great day selling!

Posted by John Dotson, The experience to get you to the other side! (Preferred Properties of Highlands, Inc. - Highlands, NC) almost 6 years ago

We always try to explain that items that NEED to be addressed that are called out in a home inspection should pretty much be structural, health and safety (such as the cracked heat exchanger in the furnace that was found to be leaking significant carbon monoxide in the home).

Posted by Robert & Leslie Lang (Weichert, REALTORS® - McKee Real Estate) almost 6 years ago

Also, requesting repairs, here, does not throw out the contract.  It starts a discussion between the parties about amending the contract, and the seller may NOT activate backup offers unless and until the contract is terminated by the buyer - the contract is still "live".   The seller cannot just decide not to sell to that party while negotiations regarding repairs are going on.  

Posted by Tricia Jumonville, Texas REALTOR , Agent With Horse Sense (Bradfield Properties) almost 6 years ago

I like your real estate contract in which the seller can terminate the deal. In Texas, almost every resale transaction, I'd guess more than 99%, is renegotiated after the inspections and the seller is the only party that is bound to the contract. The buyer has the right to terminate within a specified time frame (negotiated) while the seller is held hostage to the deal. Now the seller is not obligated to do any repairs or make any concessions in lieu of repairs but they cannot terminate the agreement in any case.

Posted by Dale Ross, Realty Group (CEO - Dale Ross Realty Group) almost 6 years ago

Actually my contract allows the buyer to ask and if the seller says no buy anyway.

Posted by Debbie Holmes, Gets the job done! (Gold Key Real Estate) almost 6 years ago

I respect your opinion. but i disagree. if the buyer gets under contract and then finds that there are major repairs needed that were not disclosed this is the perfect time to settle up snd get the price right. the seller does have the option to cancel, but in the state of florida they would still have to disclose the problems to the next buyer. so it is usually likely better than just letting the buyer walk.

Posted by Nathan Tutas, Your Central Florida Real Estate Expert (Tutas Towne Realty, Inc.) almost 6 years ago

In Florida there is an inspection clause in the contract. There are a number of terms but in most instances 1.5% for repairs that the seller is obligated to repair. If an AS-IS then a little different. Buyer can walk or try to negotiate repairs. Seller has same option. If a buyer wants to buy and a seller wants to sell then you work it out.

 

Posted by Anonymous almost 6 years ago

Pam:  Every state may have its own variations on this.  In Texas... the buyer can have an inspection during the "option period" that is agreed to in the original purchase agreement.

If the inspection finds repairs that the buyer wants completed, they can request that the seller complete these repairs.  If the seller does not agree to those repairs, or if some sort of mutually agreeable compromise is not arrived at during the option period, the buyer can cancel their purchase agreement, and their earnest money will be refunded.

Rather than state that certain amounts of money are for repairs, most agents suggest that the seller pay a certain amount of money towards the buyer's closing costs instead.  Of course, it must be within the lenders percentage guidelines regarding the limits of seller contributions.

You can call it what you wish... renegotiating the contract or not, but it still ends up doing the same thing.

By the way... during the above-mentioned "option period..." the buyer may cancel the purchase agreement and receive the return of their earnest money... regardless of their reason, or even for no stated reason whatsoever.  Although it usually has to do with repairs, it does not have to be.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) almost 6 years ago

Pam I really liked your post. I think aggressive buyers agents are mostly to blame for this practice and they are shooting themselves and their potential buyer in the foot at the same time. I am really glad that our contracts for the purchase and sale agreement got updated for our use by the Tennessee Association of Realtors and those buyers who might request repairs to be made was revised to read; 

 

"or (3) furnish Seller a copy of any and all inspection report(s) and a written list of items set forth

in the inspection

report(s) which Buyer requires to be repaired and/or replaced with like quality or value in a professional

and workmanlike manner.

a. Resolution Period. Seller and Buyer shall then have a period of ______ days following receipt of

the above stated written list (“Resolution Period”) to reach a mutual agreement as to the items to

be repaired or replaced with like quality or value by Seller, which shall be evidenced by the Buyer

Inspection Contingency Removal/Notification, the Repair Counter Proposal form, or written

equivalent(s). The parties agree to negotiate repairs in good faith during the Resolution Period.

In the event Seller and Buyer do not reach a mutual written resolution during such Resolution

Period or a mutually agreeable written extension thereof as evidenced in an Amendment to this

Agreement signed by both parties within said period of time, this Agreement is hereby terminated.

If terminated, Buyer is entitled to a refund of the Earnest Money."

 

You are right that many buyers need to be advised that this repair request is just exactly that. A request to make needed repairs, not to bombard the seller with an overload of items and to attempt to re-negotiate the price of the home. 

 

It is our job as agent to keep the parties engaged in the transaction and to come to a amicable resolution. 

It is normal to find defects in every home and reasonable to ask for repairs that are of importance to the buyer.

I normally advise my buyers that they may definitely request repairs that are to make the home safe to live in or are structural issues that need attention. 

 

If every home seller would just hire a professional and licensed home inspector and made the repairs prior to listing the home on the market, then 95% of repair issues would simply disappear. 

 

Thanks for your post.

 

Posted by Andy Freeman, REALTOR® (Parks Real Estate Co.) almost 6 years ago
It is interesting how some states view this issue. In Iowa, the buyer has a right to inspect and as long as the seller agrees to remedy, neither one can just walk away. The buyer has a better shot than the seller. Inspection contingencies are meant to protect the buyer from a money pit and to inform the seller of things they may not know. It is usually in the seller's best interests to make these repairs, but they are under no obligation to do so. The reality is if the seller does not make the repairs deemed necessary,(in Iowa it must be a major, structural, mechanical, health or safety related issue,), and the buyer walks away, the next buyer will request the same. Most sellers choose to negotiate the repair and move forward. Great discussion!
Posted by Karen Feltman, Relocation Specialist in Cedar Rapids, Iowa (Cedar Rapids/Iowa City, IA KW Legacy Group) almost 6 years ago

I try to point out everything I notice, maintenance items, defects, etc. before we get to contract.  I explain that everything we are aware of should be taken into account in the offer to purchase.  Upon the home inspection, if items come up that are a surprise to us, then the buyer can walk away with a return of deposit money, or try and negotiate with the seller.

What I think is important is that the conversation be had with both the Buyer or the Seller (whoever you represent) as to how the whole inspection process works.  If you communicate the process and what's expected/what can happen things tend to go much smoother. Of course I say tend....sometimes even I'm amazed at what buyers want to ask for or what sellers won't fix--even with the benefit of me giving my pre-inspection speech.

Posted by Pam Burzynski almost 6 years ago

Great Post Pam - Some buyers do not understand the purpose of a home inspection and a binding contract.

Posted by Misstie Pollard, Answering Northern VA Real Estate Questions. (Realtor and Title Settlement Agent) almost 6 years ago

Pam,

The title lured me in, with that said I think you need to expand on the message you were trying to deliver!

I understand that home inspections should not be an automatic Re negotiate however if the "binding" contract includes an inspection clause that makes your obligation to purchase the home dependent on the results of a professional home inspection performed within a stated period of time during the sales transaction then it most certainly can and should be re negotiate if items of concern are unearthed.

and I believe that a seller would feel compelled to make some allowance and want to keep the deal together rather than starting all over again.

One way to avoid the entire issue is to have the buyer perform the inspection prior to the contract being issued... this way there are no unexpected issues to occur.

I have done this many times and it works very well....try it

Jon

 

 

 

 
Posted by Jonathan Lerner, Licensed RE Broker (Five Corners Properties) almost 6 years ago

 

In Northern Nevada, I primarily help Buyers find homes using VA and USDA loans. The Appraisers/Inspectors are now requesting a copy of the Home Inspection and using the report to make their list of repairs. If the Seller won’t make repairs, there won’t be a loan, therefore No Sale. The request for repairs does not come from me or my Buyer, it comes from the Lender. The Seller either makes the repairs for my Buyer, or they will have to disclose all of the defaults to the next Buyer.

I just closed two deals where the Sellers had to put out over $5000 for repairs to get the deal done. One of them was an REO. 30 years of deferred maintenance should be addressed by the Seller prior to listing a property available for purchase using government loans. Listing agents should be more aware of what the process is when using VA and USDA products. I always ask the Listing Agent if they think the property will pass VA or USDA inspection, and sometimes I think they say “yes” without knowing the process.

 

Posted by Megan Gebhardt (Realty Executives Nevada's Choice) almost 6 years ago

Let me start by saying I am a newly licensed Agent in CT, and I have not even had my first closing yet, so this topic is really interesting to me!  I realize from my coursework, that different states have different laws and even within the state of CT, we have different standard practices. That said - what I understand the original article to be saying is - if a buyer says to a seller after the home inspection, that they would like some things repaired at the sellers expense, they risk the seller cancelling the contract JUST for asking! That was not howI understand our contracts here in CT to work...and I would like to know if this is the case here or not. We have MLS listings that clearly indicate if a property for sale is being sold in "as is" condition - in which case the inspection is for information only and anything that is discovered could not be used to get a buyer out of the agreement to purchase. We have contracts with inspection contingencies, which I think we all agree, are there in order to allow the buyer to get out of the purchase if the inspection turns up things they are unwilling to deal with (example - the house I own had radon in the water and the seller was willing to mitigate, but the original buyers were too afraid - mitigation or not - they did not want a house with radon.  We got the house as a back-up offer and were willing to purchase it on the condition that the original owner install a mitigation system at their own expense.) What I never heard of or considered that just "asking" for things to be repaired by the seller, would be considered an opening for the seller to get out of selling the house to the buyer under the original contract. I tend to think it does not work that way here in CT...I understand that the buyer can ask, then decide based on the answer whether THEY want to buy the house based on whatever the seller says.  I do not believe the "asking" creates an opportunity for the seller to get out of the contract. I believe the seller is still required to sell to the original buyer regardless of what the buyer asks...they can say no, but as long as the buyer is willing to still buy under the terms of the offer...they HAVE to sell.

Posted by Sue Apito almost 6 years ago

In our area of California, it's common for the seller to get both a home inspection and pest inspection report prior to listing the property. Buyers have a ton of information available to them prior to making an offer. Buyers usually get other inspection reports on their own during a contingency period. Unless something substantially different crops up, rarely is the contract re-negotiated.

I did have a listing where the 2nd termite inspector found about 15K more in needed repairs than the first inspector. The buyers could have walked away, but they loved the house. The sellers could have said 'forget it' and forced the buyers to make accept it or leave. Instead we negotiated a partial credit to the buyers. All parties were happy.

Posted by Lottie Kendall, Serving San Francisco and the Silicon Valley (Pacific Union International) almost 6 years ago

It would seem to me the important thing to remember is that if you are planning on listing your house for sale and want a relatively fair market value for it then you also have to have the items in good order which the appraiser is using to value the property. Otherwise, whenthe inspector comes through there may be a ton of items wrong which can initiate the repair request agreement form, or the buyer may feel less happy seeing the bulk of the deficiencies and walk from the sale. Let's not lose sight that the inspection protects the buyer by informing them of the condition of the property they are intending on purchasing. If the sale price of the house has been lowered to reflect the repairs needed that is one thing. But if the house is being sold for full market value and needs 30-40k in repairs I sure hope you hold no hostility towards the inspector, or buyer, but rather the seller for expecting more than fair value. And as a licensed home inspector in NC I very frequently deliver 70-100 page reports detailing all defects and would shudder to think anyone would ever consider making the largest financial purchase of their lives without having a qualified inspector. Furthermore, I would hope that an agent hired to look out for the interest of the buyer during the purchase of the property would not mind revising, or starting over on a contract in order to protect the client as well. My fear is that agents lose sight of the clients best interest easily when thinking that their commision is reduced being that a less price on the house means less money for the agents.

Posted by Don Agel almost 6 years ago

A lot of good comments. I have been a Certified Building Inspector for over 16 years and I am very thorough. Buyers only see the house surface and don't see the internals. Yes, if the roof is old they notice, if an exposed foundation has massive cracks they notice and that is great.

The contacts give an option to accept or decline the inspections and the Seller's are agreeing to this also. The inspection should be used for negotiating major repairs or safety issues like electrical. The inspection is a negotiating tool for this reason.

The contracts are set up where a Buyer can walk with a $25 unacceptable issue found during the inspection and I disagree with that, because there is not a perfect home pre-owned or new.

I find issues with roof covering installations, where i tmay look good, but installation was incorrect with flashing or underlayment and water issues can occur. I see electrical issues where the work was just performed and it is not to code.

It is pretty sad to say, but homeowners just about need to have inspections done on any kind of work performed on their house before they pay in full.

I get calls daily from real estate agents asking for advice on these same issues and I consult with them through the transaction. I believe the Buyers need to be more educated in the buying process before they make an offer. There are time where I might inspect 2 or 3 homes for the Buyer buys one. They get more savy as they go, but educating them may make eveyones life better. I tell agents to contact me or have the Buyers contact me with questions about the house before they make an offer. I can walk through an area and see issues and keep going that most people don't see if they are looking.

Bottom line is that the inspection has to be a negotiating tool, because the Buyer and the Agent are not structural and mechanical inspectors, but the Buyers need to be educated before making an offer and then the smaller items won't stand out to them. If there are major issues, then yes the Buyer can ask to have it corrected and yes the Seller can say no and sit on it until the next buyer asks!

Posted by Rick Cauthon almost 6 years ago

Pam

In CA we have a 17 day clause, where the Buyer has the right to do a physical inspection and the Seller has the right to refuse to do any repairs or credit any money. At that point, Buyer can cancel the Purchase Contract.

But I think Buyers need to be reasonable and not use the 17 days as an "out" which unfortuantely is used that way all the time....and as I see a major loophole in the CA contract. Of course, a cracked slab, foundation issues, major repairs above $20K etc are reasons to walk BUT I have seen a deal fall apart over a 10 year old washing machine the Seller refused to replace, and IMHO that should not allow a Buyer to cancel the contract.

Posted by DEBORAH STONE (PACIFIC HOME BROKERS, San Diego, CA) almost 6 years ago

Pam,

Without knowing the details of MA law, I can't without any doubt say that you are incorrect in your observation.  That said, however, I've seen many contracts from various states and not one of them allow for a seller to decide to cancel a contract and not sell to a buyer simply because the buyer has asked for repairs.

Those states (as NC once was) that have contingencies like a repair contingency have them in place for the buyers benefit.  They can have their home inspection and can even ask the seller to repair items.  The seller can decide not to repair anything.  It's then up to the buyer to decide whether to continue with the purchase or not.  No where does it give the seller an opportunity to cancel a contract.  They can only respond to the request.

Those states (like NC is now) where all contracts are options to buy until a certain date, the buyer can back out for any reason at all until that date.  However, the seller is "locked in" until the buyer decides not to buy.

Posted by Roger Johnson, Realtor - Hickory NC Real Estate (Hickory Real Estate Group) almost 6 years ago

I hear where you're coming from.

The physical inspection should not be used as a way to manipulate the contract.

However, if there are substantial repairs needed to the home, the buyer has the right to request either the work to be done or issue credit, because they made the offer under the assumption that the home was in working order, without any safety or health hazards.

Plus, the physical inspection is more often tied in to lender requirments.  A lender will not lend on a home that does not meet the general safety requirements for that state.  So in many cases, the deal may not even be able to be completed unless lender required repairs are made.

Posted by Ralph Gorgoglione, Hawaii and California Real Estate (800) 591-6121 (Maui Life Homes / Metro Life Homes) almost 6 years ago

So very true, I try to reiterate the AS/IS part of the contract when they schedule the inspection. No Major items I am ok addressing but a honey-do list now. Good Post.

Posted by Gayle Beyer, Port St Lucie FL Real Estate Broker (Welcome Center Realty 772-336-8583, FLA777) almost 6 years ago

Pam

THe premise of your post certainly generated some good discussion and it's clear practices, and contract laws, vary quite a bit. Carla already already said better than I hat is done here in CA. No doubt the request for repairs causes lots of angst among buyers and sellers, and both can dig in their heels, or negotiate some or all repairs of a credit. And sometimes buyer just say goodby.

THe only time you typically won't get anywhere with a request for repairs is with REOs and short sales from what I have seen.

Jeff

Posted by Jeff Dowler, CRS, The Southern California Relocation Dude - Carlsbad (Solutions Real Estate ) almost 6 years ago

I completely disagree with this blog.

Sellers should have an inspection BEFORE they sell the property because they are asserting its condition.

If an inspection shows them to be wrong of course the buyer should have recourse to the seller.

Sure, it retructures the deal, but the house is generally not what the buyer expected to be buying.

It's the SELLER who has changed the deal, not the buyer.

Posted by Peter Lake, Associate Broker (Harborside Sothebys International Realty) almost 6 years ago

When a buyer buys a home it is not to renegotiate- just become aware of the condition to see if they should stay in the game or pull out (period) Buyer agents often times tell their buyer "Oh you can beat the seller up after the inspection on price" and then with bad information the buyer looses the home they really wanted.

Posted by David Raesz almost 6 years ago

Interesting post and comments, but a lot of bad information here.

Like Carla and Eve & Mike said in post #19 & #20 it depends on the language of the contract first and then potentially local norms. I'll add that it also depends on the context of the transaction up to that point.

And, it depends if the licensee is representing the buyer or the deal. A lot of "buyer agents" commenting here seem to be representing the deal, not the buyer.

In general terms, and if the contract language facilitates it, and it makes sense in the context of the transaction, our buyer clients might go back to the seller for:

1. Misrepresentations. Like when the seller tells us it is a new, tear off roof and it turns out to be a shingle over.

2. A structural issue. Like when the West wall of the basement is moving East.

3. A health and safety issue. Like a high radon level or an attic filled with mold.

As a Exclusive Buyer's Brokerage we also recommend that our clients use credible inspectors to start with.

And since our buyers are well educated and coached we still find our way to the closing table on a high percentage of  our contracts.

 

Posted by Jon Boyd, Ann Arbor Real Estate Buyers Agent (Home Buyer's Agent of Ann Arbor) almost 6 years ago

Hi Pam,  Excellent blog, every agent should read this! :)

Posted by Ricki Eichler McCallum, Broker,GRI,ABR, - Your Coastal Bend Home Source (CastNet Realty) almost 6 years ago

I completely agree with Mike Alexanders opinion above.

Everything is negotiable!! and re-negotiable till you come to and agreement.

You can always say no.

It does not matter if you are assisting a buyer or a seller. Your duties are to transmit the wishes of whom you are representing. You are only the messenger. Yes, you have to advise whom you represent about the consequences of what decisions might implicate, but you are just the messenger.

Negotiating is a skill, remember that many customers hire us because of our skills. You negotiate Listing Price, Selling Price, comissions, Appraisals, Terms, settlement time, etc, etc and yes you Negotiate inspections too!

Posted by Jeri & Henri Gutner, CRS,GRI (Realty One Group Legacy) almost 6 years ago

Very interesting discussion, especially how different the practices are from state to state.  One comment that jumped out to me was #50, encouraging the idea of getting a home inspection before writing an offer.  I don't know about most areas, but that would be ridiculous here in San Diego!  Most every listing has multiple offers and a buyer might bid on as many as 10 homes before getting his/her offer accepted.  As a  quality home inspection on an average size home will run about $350 this would be cost prohibitive and slow the bidding process.

I believe that the home inspection is a critical part of the purchase process.  If you think about it, most buyers make a decision to buy based on 1 or 2 visits to the property for a total of 20 - 60 minutes.  That's not a lot of time, and certainly not sufficient time to uncover all the problems that might lie beneath a well-staged facade.  If an inspection uncovers defects that need repair, I totally believe that the buyer has the right to ask for the repairs or credit, unless the original offer was made at a below market price that reflected the assumed need for repairs.

Posted by Marti Steele Kilby, CRS, Broker/Owner, San Diego, CA (Steele Group Realty) almost 6 years ago

Great post and comments.  I agree that the purpose of the inspection is to allow the buyer to know the true condition of the property before proceeding to a closing.  It gives him some points to consider.  Today, too many buyers look on the inspection as the way out of the deal if the inspection shows too many deficiencies or as you say, a way to get the seller to lower the price.  I get this response all the time when selling bank owned foreclosures.  I look at the defects I find in the home and reduce my BPO value accordingly.  When the bank has me list the home, the cost for these defects has already been factored in.  Buyers want to discount the price all over again and the banks don't accept that low ball price offer.  But as with most things, the situation has a way of working itself out.  There aren't too many foreclosures still sitting out there waiting for a buyer to find them.  Most of them sell very quickly. 

Posted by Tom Esposito (Alpharetta Home Solutions) almost 6 years ago

THIS IS WHAT THE BLOG STATES:

"What most buyers who are purchasing a home do not understand is that once you ask the seller to do something as a result of the home inspection, you are renegotiating the binding contract, and the seller could decide not to sell anymore. "

 

Now that the opinions have swung over the the correct thinking, lets not backpeddle and pretend that the post said something different...

While contracts in different states have a bit of variety..,ALL CONTRACT CONTINGENCIES IN EVERY STATE are re-negotiable at the BUYERS option...THE CONTRACT IS NOT DEAD UNTIL THE BUYER SAYS SO.

Please show me a standard contract in any state  that says if after inspections the buyer asks for a repair, that the seller has the option to cancell the contract.

Eve in Orlando

Ps: check out the Mass contract which has an addendum for several contingencies...including inspections.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 6 years ago

I think the question is in the sygnificant fact or material defect you learn of in the process... if the furnace is shot but they still like the house who could see the heat exchanger is cracked.. not I said the Realtor.... 

Posted by Matthew Johnson (Keller Williams Premier Realty) almost 6 years ago

I do agree that the option to terminate or inspection period should not be viewed as a "second round of negotiating." I tell my client's it is a "comfortability period." Whatever they want to do to feel comfortable with proceeding they should do; inspection, foundation, mold, termites, etc. If they don't feel comfortable then terminate.

I do DISAGREE that sometimes when you are paying a very fair price for the home and the HVAC, for instance, is on it's last leg, you do need to renegotiate. Here in Texas, property values differ, but $4,000-5,000 for a new HVAC is an expensive repair. Adding $4,000-5,000 no longer makes it fair market, then you have to renegotiate. The seller doesn't have to accept, but then the buyer's don't have to proceed. If the seller's want this deal, then they need to be receptive.

People who keep their house clean, but do no regular maintenance to the interior mechanicals of the house or who are found to have a foundation issue, mold, termites, etc. not known about until after the inspection should not be getting the same price as their neighbor who has done regular maintenance to mechanicals and who has taken care of what's below the surface as well. If renegotiating is no longer possible than fewer deals would get done and first-timers would get spooked. Buyer's would just terminate and the seller's would be like "damn, he terminated over that? I would have worked with him on that."

I agree, buyer's cannot nit-pick over repairs, but the costly ones are a time to renegotiate for sure (especially if you're paying a high market price (which is where our market in Austin is at right now).

Posted by Chris Matthews (Horizon Realty) almost 6 years ago

In Arizona, the Buyers may ask for repairs and the Seller can either agree or disagree but they do not have the option to decide not to sell during the inspection period just because a buyer asks for repairs or a credit. If the Seller does not agree to repair the requested items, it's the Buyers option to proceed or walk away. Sounds like it works differently in Mass.

Posted by Steven Connor, Marketing (TSU.Co) almost 6 years ago

I dont agree with the thought that asking for repairs cancels the original agreement.  Requests for repairs are asked for on an addendum and if that addendum is agreed to by all parties then it becomes part of the contract. If that addendum is not signed by all parties the original purchase agreement is still intact and still enforceable. If the the sellers do not sign the addendum then the buyer has the right to either walk away or stick with the original offer that is still in place. if they decide to walk away then they have to sign a mutual release of the purchase agreement.  Your argument that the seller can decide to just not sell to that buyer if they ask for repairs is not true. They would be in breech of the contract.

Posted by Don Bass (V.I.P. Real Estate) almost 6 years ago

The Purchase Agreement in our area addresses the terms for repairs as a result of the home inspection.  The Seller can choose not to make repairs, but that does open the door for them to lose a buyer.  Each transaction stands on its own, which is why having an experience REALTOR is essential to both buyer and seller.

Posted by Eileen Knode, REALTOR (Long and Foster Real Estate) almost 6 years ago

Hey Pam. My sincere CONGRATULATIONS on this post! I know you may be feeling a little "beat up" with so many comments disagreeing with your original post. But I think you have SUCCESSFULLY engaged a great discussion on an important topic. I love reading all the comments on a controversial blog post...the comments can be what makes a blog post GREAT! Thanks for being brave enough to post on a controversial topic.

Posted by Sheila Cox, Katy & Sugar Land Real Estate Agent (www.KatyHomesForSaleTX.com) almost 6 years ago

Once again we see why it is so very important to use an experienced Realtor to represent her client, whether it be on the selling side or the buying side.

If the results of an inspection create an issue that might cause the buyer to consider walking away, then a good Realtor will have prepared her buyer or seller client for that possibility, and along with it, the best way to resolve it should it appear.

In any negotiation, (s)he who cares the least, wins. A buyer willing to walk has a better chance of getting what (s)he wants, while a seller willing to refuse that request has a better chance of keeping the deal going without extra trouble or expense. 

 

Posted by Thomas McCombs (Century 21 HomeStar) almost 6 years ago

Interesting. Your post may be true where you work, but is definitely not true here. In the areas I work, the seller can not just refuse to not sell the house to the buyers if they ask for repairs. The seller can refuse to do the repairs and give notice of a void if the buyer does not choose to go forward. However, the buyer can void under the terms of the home inspection contingency.

I also want to add, that this post received some great comments from some very helpful realtors who appear to have a thorough knowledge of their area. IF you are a buyer or seller, speak to your local real estate agent to get the facts about the home isnepction.

Posted by Dana Hollish Hill, Lead Associate Broker (Hollish Hill Group, Keller William Capital Properties) almost 6 years ago

Certainly, if there is anything major wrong with the home..... I will begin negotiations.... Regardless of whether it kills the contract or not.

But this is interesting information.

 

Posted by Tom Burris, Texas/Louisiana Mortgage Pro - 13 YRS Experience (NMLS# 335055) almost 6 years ago

I am currently in a deal where the Seller has maintained their vacation home.  The buyers home inspection didn't  turn up much, but the listing did say "As Is".  The buyer tried to renegotiate based on the minor issues, a spot where paint was chipped, and they wanted some doors replaced.  The buyers also made the offer as a conventional loan and a week later changed to FHA.  I explained to the buyers agent (who is new to the business) that this was effectively changing the agreement and my sellers would not accept an FHA mortgage.  The buyer backed off, they realized they were getting a great deal a 3 bedroom home on 5+ acres with a guest cottage and 3 car garage surrounded by 350acres of forever green land for $169,000.00. 

Posted by Virginia (Ginger) Schott, Assoc. Broker, CBR, CHMS (Century 21 Geba Realty Assoc.) almost 6 years ago

In GA you don't cancel the agreement and the SELLER cannot cancel during the option period of the buyers submits a concerns with property addendum, he does not have to repair or reduce price, but buyer has the option to cancel.  Perhaps you need to consult an attorney in your state because this post seems to be offering legal advice.

Posted by Tammy Lankford,, Broker GA Lake Sinclair/Eatonton/Milledgeville (Lane Realty Eatonton, GA Lake Sinclair, Milledgeville, 706-485-9668) almost 6 years ago

In my area, the buyer can request, and the seller can accept all or part of the request, or the seller can decline.  This does not cancel the original contract.  I would prefer to keep the deal together if possible and it makes sense for me client.

Posted by Roger Newton (Roger Newton Real Estate) almost 6 years ago

It works the same, here in northern Illinois, but as others have stated... that's not the case in every state or region.

Posted by Alan May, Helping you find your way home. (Coldwell Banker Residential) almost 6 years ago

Actually the seller can always say no, but they can't choose to not sell. The buyer can accept the house with no repairs. The seller signed a contract to sell, and the buyer can hold the seller to that contract.

Posted by Jon Quist, Tucson's BUYERS ONLY Realtor since 1996 (REALTY EXECUTIVES TUCSON ELITE) almost 6 years ago
Pam, I bookmarked your post so I can go through all (lengthy) comments and the topic generated a great discussion. I too am of the opinion that the buyer has the power to walk away from a contract anytime until all contingencies are lifted. It is a re-negotiation tool. Sellers know they now know what is wrong with the property and will have to disclose that to the next buyer so they kind of are on the hook and will need to decide what is in there best interest; allowing a buyer credit at COE or walk away and find a new buyer who may or may not be willing to offer the same price for the property.
Posted by Anja Kerstens, GRI, CDPE, CHS, ASP, Selling Silicon Valley Real (Coldwell Banker Residential Brokerage) almost 6 years ago

Ahem to your blog. I agree that the inspection has morfed into a new negotiating tactic. In my most recent transaction the home inspection was completed. There were two areas of concern but even the inspector said the home was in great shape. My buyer brought in his handyman to give us an estimate for the repairs and the next thing I knew the buyer was asking for $10,000 in repair credit so he could remodel the bathrooms based on the handyman's estimate of that work. I had to work very hard to get the buyer to reduce his request to $5000, which of course was still outrageous. As I explained to my buyer, there is a difference between repairs and replacements.

Posted by Catherine Valentine, Your Neighborhood Specialist (Coldwell Banker Residential Brokerage) almost 6 years ago

One point that has been missed in this conversation pertains to the legal and ethical liability assumed by the listing agent if the seller refuses to correct significant defects that results in a failed deal, and then refuses to amend the seller disclosure form. Legally speaking, agents are required to inform prospective buyers of any known MATERIAL DEFECTS that could affect the value or desirability of a home, even if the seller doesn't. Sellers (and isting agents) are fools if they think the "problem" will just go away. It's not about renegotiation, rather, it's about doing the right thing and foillowing the COE.

Phil Amodeo, RE/MAX Pinnacle Group DFW

Posted by Phil Amodeo almost 6 years ago

Catherine, portaited a buyer which fits the profile of the buyer you described in your blog, Pam, and that sounds more like a buyer threat than fair negotiating.

Posted by Anja Kerstens, GRI, CDPE, CHS, ASP, Selling Silicon Valley Real (Coldwell Banker Residential Brokerage) almost 6 years ago

It is interesting how differing states handle this.  I answered on a similar blog post that Texas is one sided in the unrestricted right to terminate the sale (usually 10 days) but is negotiated.  The Texas contract allows the buyer to REALLY terminate up to closing and is common practice for the seller NOT to get the earnest money as most will not go to court to get it. 

I hear agents saying "as-is" in their listings which ultimately lower the initial offer on the home with NO benefit to the seller.  I tell agents, if there is an option period the buyer is not accepting the property "as-is".  If the seller will not (can not) do repairs, better to get the deal, then let the buyer know the seller cannot do repairs.  The inspection would be a buy it or terminate issue. 

In any case, the seller CANNOT terminate the sale.  Only the buyer can under the terms of the contract. In my humble, non-lawyered opinion....hehe

Good post,

Tony

Posted by Tony Barker (Premiere Home Realty - Tony Barker 832-867-0835) almost 6 years ago

Important to note that there are no State to State laws on this topic. There is a Purchase and Sale Agreement, and each and every offer and acceptance is subject to the contract agreed to by the buyer and the seller of each separate home.

It is possible, even in a State where a "standard" Home Inspection Contingency is used in the majority of sales, that the contract between a given buyer and seller does NOT give the buyer the right to walk away. For instance builder contracts rarely give the buyer the right to walk away from the transaction after a home inspection...in ANY State. Some REO transactions will give the buyer the right to cancel, but not the right to make inspection repair requests.

The post is incorrect to advise buyers of homes generally that an inspection request negates the contract, but so is everyone else incorrect to say "in my State"...because it is not up to "The State".

The determining factor of what buyers and sellers can do is in their mutually accepted agreement that governs what they can and can't do in each and every transaction. The agreement may not allow the buyer to walk if the repair needed costs less than $100, as example. There is nothing stopping a seller and a buyer from negotiating the contract to be different from an area norm or standard.

IF NONE of this poster's Buyer Clients have the right to make a request as a result of the home inspection

...then there is something wrong with the way she is writing her offers to purchase for her buyer clients

and negotiating said offer with the sellers of homes.


I will not doubt that Pam had the experience of the buyer getting kicked to the curb for making a repair request...but...that does not mean the State of Massachusetts imposed that provision on the buyer of the home. If this did happen to Pam and her Buyer Client, then it was that particular contract that failed her client, not the State of Massachusetts. 

 

Posted by ARDELL DellaLoggia (Sound Realty) almost 6 years ago

One of my personal AR frustrations is that posts selected as features often posit an absolute whereas they should be offered with the caveat that state laws may differ dramatically as in this case where contracts in MA and NC appear to be very different.   Of course, even within NC, builder contracts are different than the standard NC Offer to Purchase and Contact which states the buyer can walk "for any reason or no reason" as long as they are within the due diligence period.  On resales in NC, let the renegotiating begin after inspection!   

Posted by Beverly Femia, Broker Realtor Stager - Greater Wilmington, NC Are (BlueCoast Realty Corporation) almost 6 years ago

This was a great posting, and I agree with you. In our market, many sellers will not even accept offers with home inspection contingencies. Homes are sold "as-is" with home inspection for informational purposes only.

Posted by Alisa Delice, Professional Realtor in Maryland & Washington, DC (Coldwell Banker Residential Brokerage) almost 6 years ago

Very true! Home inspections are for the buyers due diligence, and all to often they can kill a deal that would otherwise be to their advantage. That said, in a case where, due to the nature of the repairs, the buyer is ready to walk away, anyway, it does give the seller the opportunity to salvage it. 

Posted by Dennis J. Zisa & Associates, Inc., 26 years in So. Jersey and the Greater Camden area (Dennis J. Zisa & Associates, Inc.) almost 6 years ago

I have had home inspections done where there were defects that the seller either didn't know or failed to disclosed. If the defect is material the contract is unenforceable. The seller has the option to cure the defect or equitable compensationate the buyer.

If not homes are sold as is. Also, many times it may cause the buyer to be unable to obtain a mortgage, which should be in the contract. i always ask for it.

 

 

Posted by Philip Hoblin, Founder of The Hoblin Institute, a firm that speci (Petrie International) almost 6 years ago

Wisconsin's standard offer form anticipates a post inspection discussion/negotiation for the curing of defects.

Posted by Tim Klingman, President (North Shore Homes, Inc. (Milwaukee, Wisconsin)) almost 6 years ago

It is an executory contract.  What they discovered is always up for negotiation.  Could be to get it fix, a credit issued or a reduction in price to match the diminution of value of the defect.

Posted by Gary Frimann, REALTOR and Broker (Eagle Ridge Realty / Signature Homes & Estates) almost 6 years ago
Same here in NC. We had a similar situation this week and the seller decided to renegotiate the contract up to a much higher price. Sometimes this can be a bad move on the buyers side.
Posted by Patricia Puckridge, GRI, CRS, ABR, PHP, SRES, Keller Williams ( pat@patanddonna.com/828-691-9625) almost 6 years ago

Well, that's your opinion. Yes the seller can move on if repairs/credits are requested. Explain that to the buyers and then also explain that they can, and probably should ask for repairs/credits if something unexpected has been revealed. 

Posted by Robert Slick, NRBA, RDCPro, Trident/CCAR MLS (Beach and River Homes) almost 6 years ago

Definitely something that Buyer's Agents need to keep in mind, as well, since they are putting their buyer at risk of a rejected contract when they push the buyers to renegotiate the contract.  They may end up losing the money they spent on the home inspection, and losing the house as well.

Posted by Michelle Fradella-Barfuss, Author of "Top 10 Mistakes Agents Make When Market (Marketing Coach - ERA Brokers Consolidated) almost 6 years ago

The reason buyers have an inspection is to uncover defects with the property and to know what they are truly getting into.  If there are defects a seller was not aware of, why should the buyer have to just suck it up and pay for them after they own the home?  The inspection should absolutely be looked at as a potential renegotiation depending upon the results.  This is not to say the buyer should nickel and dime the seller to death or to expect new construction quality on an existing home, but the seller should also be informed and expect that if there are for example thousands of dollars in necessary repairs, they may need to renegotiate to keep the contract moving forward.   They can either address those items for the buyer they are under contract with, or they must redisclose and will end up paying for them in the long run most likely and will also add to their time on market by now having to find a new buyer.  To tell the seller not to renegotiate in all circumstances is not providing them good service or advice.

Posted by Julie Nikolaou (RPM Homes, LLC) almost 6 years ago

As a home inspector I tell my buyers that their report is to inform them of the condition of the house which will enable them to make a more informed buying desision.  Also if repairs are needed I would rather have the repairman working for me than for the seller.

I recommend that sellers have a prelisting inspection so they can do any needed repairs, to avoid having to renegotiate with the buyer. 

Posted by Walter Wilson almost 6 years ago

Thank you #115...you are correct,

This has nothing to do with the state laws, only contract law...and that is universal.

Posted by Mike & Eve Alexander, Exclusively Representing ONLY Orlando Home Buyers (Buyers Broker of Florida ) almost 6 years ago

Hi Pam,

You bring up a good point, but in my opinion only with regard to asking for incidental repairs. The buyers hire inspectors to determine if there are unrecognized issues. For me, the key is setting expectation. Prior to the inspections I let the buyer know 'we have the right to ask for anything and the seller has the right to say no'. I let them know that nearly always I ask for health & safety items, but other handyman repairs should be conisdered as a part of buying a previously owned house. Expectation PRIOR to inspections is vital.

Posted by Rhonda Fee - REALTOR®, @ Aspire Realty Services (Luxury Property Agent, Home Sales, Relocation) almost 6 years ago

In Arizona, after the inspections are complete, the buyer sends the seller a Buyer Inspection Seller Response. This is where the buyer asks the seller  to make or not make repairs. This does not give the seller an out of the contract. They can say yes or no and then the buyer has to decide if they are alright with the response and either move forward or not.

Posted by Angela N Kidd almost 6 years ago

Interesting post but we often ask for repairs or credit if major issues come up and we usually work something out because the seller has learned about a problem that he will now have to deal with regardless of who buys the home.

Posted by Terry McCarley, REALTOR, SRES, CDPE - Cape Coral, FL (REMAX Realty Team - Cape Coral FL) almost 6 years ago

The common theme of comments with the variety of state to state contract and also the culture of the area. In Washington, when dealing with non distressed or REO properties, it is common practice to ask for responable repairs and if their are majors the buyers tend to ask yet understand that they can either stay or withdrawal their offer. I haven't seen a offer die just because repairs were asked for, however, legally speaking that could be the case (I'm not an attorney I only play one on TV LOL).

Posted by Toby Barnett, Toby Barnett (KW Northwest) almost 6 years ago
I always advise my buyers that if they ask for repairs, the seller has the right to say no. At that point it is up to the buyer to decide if they want the home or are not willing to pay for the repairs. Recently I had buyers walk away from a purchase because the sellers painted the roof to make it look good. A new roof for the home would have been costly, along with the other needed fixes the "flipper" didn't make. Sometimes negotiation is necessary....isn't that part of the service we are supposed to provide to our clients?
Posted by Kelly Rossi, e-PRO , CN (Solutions Real Estate) almost 6 years ago

If the buyer want repairs made for obvious defects, they should be informed that those repairs have already been factored in to the asking price, if in the their agent's opinion they have. If the buyer still wants a price reduction, they should be invited to make an offer on a better home available at the same price.

Posted by David Herren (Best Atlanta Properties, LLC) almost 6 years ago

I would also have to disagree. Imagine if YOU were under contract to buy a home and found out the house was infested with termites. Would you not want to renegotiate your original deal?

If that is the case bring your buyers to Houston. We have over 60k properties on the mls and EVER seller and listing agent would LOVE to sell their homes "as is" to your buyers.

:-)

Posted by Greg Nino, Houston, Texas (RE/MAX Compass, formerly RE/MAX WHP) almost 6 years ago

Anyone else from Massachusetts care to comment if this is in fact that their contracts allow sellers to cancel a deal simply because a buyer ASKED for repairs? I've never heard of that before.  This is certainly not the case in Connecticut.

And, to Margaret in #45 - In Connecticut, the change of status from Active to CTS (Continue to Show) or Under Deposit or Pending is an MLS requirement within 48 hours of accepting an offer.  You cannot leave a listing with an Active status once there is an accepted offer.  The buyer agents are correct in demanding you change the status.

Posted by Don Fabrizio-Garcia, Owner/Broker/Trainer - Fab Real Estate (Fab Real Estate) almost 6 years ago

Your contracts must be different than ours.

A buyer asking for something, even in writing, does not nullify the binding contract. The seller can say no to what is asked... but they can't then say, "so I'm no longer selling to you."

The existing contract remains in force and effect as written.

Posted by Benjamin Clark, Buyer's Agent - Certified Negotiation Expert (Homebuyer Representation, Inc.) almost 6 years ago

Most of these problems could be avoided if the sellers have a thorough pre-listing inspection.  With the inspection report, they can either get the repairs done ahead of time, which gives them a chance to get a better deal by shopping around, or they can disclose the issues and say up front that these items will not be repaired.  After the buyer has theier home inspection, any itmes found are likely to be very minor.

 

That would remove much of the tension for both the buyer and the seller, not to mention the realtors involved.

Posted by Robert Sole (REM Inspections LLC) almost 6 years ago

There is a HUGE piece of this discussion missing. For those of you that don't deal in MA, it is typically a TWO contract state. Buyers and sellers sign an Offer To Purchase, which gives a time frame for inspections and usually involves a $1,000 or $500 deposit. Afterwards a Purchase and Sales agreement is drawn up where the remainder of 5% is deposited. The P&S is commonly modified to address issues that arose at the inspection. I agree with Pam that a lot of people use the Offer to lock up a new property that hit the market by going in at asking price, and then try to use the inspection to give the offer they planned on giving originally.

Posted by George DiGregorio almost 6 years ago

Hi Pam,

When both sides are acting in “good faith” things work out and everyone is reasonable about what needs to be done.  

If the seller is unaware of some important issues (foundation, roof leaks etc) that were NOT disclosed on the TDS, then the buyer has every right to ask for repairs if they really want the property.

Some sellers (motivated ones) get their own inspection prior to listing their property so there is FULL disclosure.

Thanks for the post.   

Posted by Dimitri Matsis-REALTOR® (818) 599-6083 (Troop Real Estate Inc. Westlake Village CA) almost 6 years ago

While your premise is correct that the prospective buyers are absolutely opening up the opportunity for the sellers to walk away from the deal, I vehemently disagree with the premise that the results of a home inspection shouldn't be the reason to re-negotiate a deal.  The reality is that many times a home inspection uncovers some very serious issues that could give a prospective buyer(s) cause for concern and/or the motivation to walk away from the transaction.  I think that another really important point here is that if the prospective buyers uncover issues during a home inspection that cause them not to move forward, the sellers are now required to disclose all of these issues to any other prospective buyers.

 

John

Posted by John White (Atlantic & Pacific Real Estate (US) LLC) almost 6 years ago

Good advice, and that is how an inspection should be presented to a buyer.

Posted by Liane Thomas -Top Listing Agent, Bringing you Home! (BROKER Allison James Estates & Homes BRE 01885684) almost 6 years ago

George in #138:  I have never worked in the MA market.  Fort Worth, Texas is my market area.  I have never heard of the "TWO contract" process that you describe.  From what you are saying, the second "contract" sounds like it simply formalizes all the negotiations of what you call your Offer to Purchase.  Am I correct in that ?

But... what surprises me is your reference to "the remainder of the 5%" being then deposited.  I work with primarily first, second and sometimes third time buyers... and have never had a buyer use a 5% earnest money amount.  Five percent down payment, yes... but never a five percent earnest money.  Never.  Perhaps it might be used in much higher selling prices of homes... I do not know.

The idea of "locking up" a property that hits the market with a full-price offer... and then using an inspection to do anything else but provide for allowances along the lines of what the repairs may be worth... honestly... sounds downright crazy.  I don't know how you can work under a system like that... but I guess you just end up getting used to it.

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) almost 6 years ago

Very Hot Topic indeed! In California a request for repairs does not allow the seller to back out of the contract. The seller has 3 options: 1. Do the repairs 2. Give a dollar credit or 3. Do nothing. Then the Buyer has a choice to accept the seller response or no. The transaction does not end if the buyer does not like the response of the seller - the Request for Repairs is just withdrawn.

Posted by Steve Davis, Carlsbad CA (Davis Coastal Properties) almost 6 years ago

Dana_re

 

Pam et al,

 In our state it is already a contract. The inspection is a contingency that can be go/no-go if the buyer wants it to be but is usually negotiated. If there are items that feel significant enough the buyer can as that they be repaired or money given back for later repairs by the buyers. Now the seller can say "no", "yes" or "I will do only this part" at that time the buyers can say "OK" or "see ya later". Most of the time the safety items are fixed by the sellers with no arguments and other items may or may not be considered. A lot of this is dependent on how good of a deal the buyers got on the house and how motivated the sellers are to keep the deal together. I does not threaten the deal just to ask.

 

Posted by Dana Basiliere, Making deals "Happen" (Rossi & Riina Real Estate) almost 6 years ago

Sorry, I must say that your conclusion has no basis in contract law.

During an offer/counter situation, you are 100% correct. If you counter, the seller has the right to terminate the contract. HOWEVER, in the situation of an addendum, such as after an inspection,  this only changes the status of the underlying contract IF both parties agree. If the parties do not agree to the addendum, the underlying contract remains in full force. The seller, or buyer, can only terminate the contract under the terms contained in the original agreement.

DISCLOSURE: I an not an attorney, yet. . . Please seek legal advise for any contract questions.

Posted by Richard Foster, Broker, ABR/M, CREN, CRS, GRI, RRG, SFR (Nevada Perfect Homes) almost 6 years ago

@ Karen Anne Stone, First let me state that I am not a realtor, I am a Mortgage Originator, so  the exact specifics of how the contracts play out aren't my area of expertise, but it is generally 5% held as earnest money. In the case of some homes a flat amount of $10,000 is what I see as well. On FHA it is 3.5% and on USDA/VA purchases it is some mutually agreed upon figure of a few thousand dollars.

    I guarantee there are all sorts of goofy things clients tell their realtor that they don't tell me, and  vice versa. People have actually told me that their plan is to get an accepted offer, and then negotiate the "real" price after the inspection. I have seen some sellers capitulate and bend to every whim and others that tell people to go pound sand. Now this isn't every deal, but is more common than you would think. As for your understanding of the Offer and P&S, that is pretty much how it works.

 

Posted by George DiGregorio (Zenith Mortgage Advisors) almost 6 years ago

Amen!  Great post!  From time to time some hidden problems come up that can justify a repair request or price adjustment, but most times I suggest my buyer to accept the house as is if nothing come up out of the ordinary or unsafe. 

Posted by Bryan Tobiason (Keller Williams Partners, Inc.) almost 6 years ago

Dmitri in #139:  Please remember it can be puzzling when folks from one state use abbreviations and initials that you use on a daily basis.  What is a TDS, please ?

Posted by Karen Anne Stone, Fort Worth Real Estate (New Home Hunters of Fort Worth and Tarrant County) almost 6 years ago

In our area, we get all the inspections done by the seller before putting the property on the market.  We create a Disclosure Package that is sent out to intereted buyers.  When they submit their offer, they sign receipt of the disclosure package and sign off on the Termite report and home inspection.  If they really want the house, they might sign and intial every page of the package.  I always tell my buyers that we can negotiate for "surprises" - a foundation crack, a sprinkler system that should be working and isn't etc.   However, when the market was more buyer centric, some agents made a habit of aggressively going after credits and repair work. Even work that had been disclosed was now on the table.  Certain agents aquired reputations - now in the time of multiple offers, their offers tend to go to the bottom of the pile. 

Posted by Ann Wilkins, Oakland, Berkeley, Piedmont CA (Golden Gate Sotheby's International Realty) almost 6 years ago

This is not accurate information in California.

The buyer making a repair request is not a counter offer here.  Of course, you could write that into your contract if you wanted it to work that way I suppose.

Interesting to see the difference in different states. 

What a situation.  I would think that in that in your state it would then be general practice for sellers to do a home inspection before listing and provide it to the buyer before they make an offer. 

Posted by Tni LeBlanc, Realtor®, J.D., Tenacious Tni (805) 878-9879 (Mint Properties, Lic. #01871795) almost 6 years ago

In our real estate practice (Berkeley CA) homes inspections are the perfect opportunity to renegotiate the transaction. 

I tell my buyers that anything which has been disclosed (qualified) and cost estimates given (quantified) before making an offer are pretty much off the table.  That's why we provide a 200-300 page disclosure package on our listings for buyers to review and sign off on before making an offer.  It makes for much smoother transactions

 

It the seller discloses but doesn't quantify, we get cost estimates.

 

And when representing buyers, the best of all worlds is when the seller neither provides disclosure reports nor cost estimates.

 

Our highest price drop after inspections was $180,000 and we typically get $15-20,000 price drops or credits for our buyers.

 

Ans our sellers?  We typically sell for 5-15% above asking price with superb online marketing and powerful negotiations.

 

Ira 

Posted by Ira Serkes almost 6 years ago

For most cases I agree that the inspection report is for the buyer to understand what they are getting into. It is our job to educate the buyers before the inspections, but please do not forget that people are all different. If the buyer is a meticulous person or already a homeowner who takes very good of their property, they may have different expectations from the seller. Furthermore, the price range can also affect the approach of the buyers. In certain price ranges, buyers may have different and higher expectations. By the same token, the first time buyers are always scared that the home will fall on their head once they move-in, they are sometimes suspicious of every little item and they have a tendency to exaggerate the cost of the things because of lack of experience. Therefore the inspections and the repairs or re-negotiating the price of the home are a piece of mind for both parties.  If  the report suggests a high cost repair item which wasn't on the seller's disclosure, it is certainly the buyer's right to re-negotiate the contract and/or ask for the repairs. I don't think the seller needs to re-build the home for the buyer, but they should be open and willing to address the important issues if they want to sell their home. In Texas, the seller may not get out of the contract as a result of the inspections, however, they may push the buyer to terminate the contract by not cooperating and accepting to re-negotiate after the inspections (it would still be upto the buyer to terminate or not) . Then, it becomes the listing agent's job to explain the seller the consequences of losing a contract.

Posted by Elchin Kaleli almost 6 years ago

Pam - A controvertial post to say the least. In Pennsylvania we use the home inspection to inform and protect the buyers from material defects and safety issues that the sellers either weren't aware of or wanted to hide. Renegotiation is paramount at that point when a material defect is brought to light; e.g., over the 4.0 radon limit.

Pennsylvania Association of REALTOR Agreements of Sale do not allow the seller to terminate the offer based on the request of buyers who are asking for necessary repairs or credit. I'm not familiar with Massachusetts forms.

Isn't our agent fiduciary duty of disclosure to provide the necessary information for our clients to make a sound decision?

Posted by Suzanne Strickler, School is never out for the Succesful. (Realty Mark Associates) almost 6 years ago

Allrighty-roo.... I just consulted with one of our local real estate attorneys who said (and I'm paraphrasing here)...

While "yes", those who claim that it's NOT a counter-offer, and the whole thing is subject to Contract Law, which is black and white... and localities, regions and states don't matter (comment #115 for example):

Contract law is subject to local interpretation... and local courts have ruled that "yes", it can be considered a counter-offer...  but it can be very regional... as Cook County (where I am) District Court has ruled "yes" it could be a counter offer... but DuPage County District Court, not far from here, hasn't ruled on it at all.

If the Illinois Supreme Court were to rule on it, it would cover the entire state, but that hasn't happened.

So... I'm right... AND you're right!   (Sheesh, clear as mud!).

Posted by Alan May, Helping you find your way home. (Coldwell Banker Residential) almost 6 years ago

Interesting point, buyers are always thinking they can get sellers to cough up extra cash. do buyers want to start all over to find the next house? Not usually.

Posted by Janine Boulay-Seibert, NC & GA Real Estate Broker (Remax Town & Country) almost 6 years ago

Good post but I have to disagree. The buyer doesn't really know what they are buying until they have done a complete inspection of the property by a licensed and experienced inspector. The buyer's original offer is based on not knowing the existence of defects to the home. Instead of just walking away from an inspection issue, of course the buyer should be able to renegotiate either a price drop or have the seller take care of the repairs before closing. In my experience the Sellers Disclosure Statement is not not worth the paper it's written on so a true evaluation of the what the home is worth can only be ascertained after an inspection is completed. As long as the buyer is not nit-picking minor stuff then bigger items should be "re-negotiated".

Posted by Conor MacEvilly (RE/MAX On Market in Ballard. Seattle) almost 6 years ago

Hi Pam, we agree.  Recently had a buyer on an as-is want to negotiate a $200 item!

Posted by Bob Miller, The Ocala Dream Team (Keller Williams Cornerstone Realty) almost 6 years ago

Of course when a home goes under contract and comes back on due to a homes inspection sometimes a stigma gets attached to it.

Posted by Edward Gilmartin (CRE) almost 6 years ago

Pam, If something significant is revealed during the home inspection that the buyers did not anticipate, then I suggest we re-negotiate.

The reality is that once the seller knows about the deficiency, he is required by law to disclose it. It is to the sellers advantage to re-negotiate with the buyer already under contract rather than to take the risk of the deal not closing. Is he required to fix these items? No. Is he required to disclose them once he knows? Yes. So why wouldn't a seller do that?

That being said, buyers should go into the inspection process expecting to pay what they negotiated as the purchase price. However, if there is a big ticket item that would prevent them from making the purchase, they should ask the seller to fix rather than just walk away. You never know what a seller's response may be.

Posted by Tammie White, Broker, Franklin TN Homes for Sale (Franklin Homes Realty LLC) almost 6 years ago

I ALWAYS use inspection reports as tools to renegotiate when the property has flaws that are not seen in initial walk-throughs.  75% of the flaws found by professional inspectors are NOT disclosed by the seller in the disclosure documents used by buyers to set an offer price.  Sure, if the seller agrees to fix everything DURING AN EXTENDED INSPECTION CONTINGENCY PERIOD then there is no need to adjust the price.  But if the repairs need to be made and it will be on the buyer's nickel, the sale price should be adjusted.

Posted by John Souerbry, Homes, Land & Investments (Cordon Real Estate) almost 6 years ago

You are right of course from one perspective. But as I always tell my sellers, buyer can walk if seller refuses to do any repairs and do most sellers really want to "buy back" their home for the cost of some repairs. I recently had a seller who dug in her heels over $900 on a $350,000 sale. She lost the buyer and it took another 4 months to sell the home. The important part is to communicate what the options and penalties might be on both ends and negotiate something both parties can live with.

Posted by Nina Hollander, Your Charlotte/Ballantyne/Waxhaw/Fort Mill Realtor (RE/MAX Executive | Charlotte, NC) almost 6 years ago

AND THEN!  You have the buyer's agent that insists on asking for repairs or adjustments after agreeing that inspection is to be for 'Information Only'. 

Posted by Warren Earhart almost 6 years ago

Well in IL (like Alan) we consider it a counter offer.  There are many buyer agents that never state to the buyer clearly what our contract says.  Its says that things have to be operational - not perfect.  The perfection part is always what comes into interpretation.  Problems with perfection and with that perfectionist.

Great discussion here about this that I haven't seen for a long time here on AR.

Posted by Lyn Sims, Schaumburg IL Area Real Estate (RE/MAX Suburban) almost 6 years ago

I say to this: Why Not? And how do you know the seller made ALL the disclosures.... so I disagree.

Posted by Richard Bazinet /MBA, CRS, ABR, Phoenix Scottsdale. Sellers, Buyers & Relocations (AZuRE Team - Realty ONE Group) almost 6 years ago

Pam, this blog caught my eye. This just happened to me. We had a buyer, the house was priced at 275,000 they  started bidding at a riduclous amount of 185,000, finally we realized we just wanted out. The house is 38 years old and we bought it brand new, so yes, anything over a that was profit, but we didn't want to give it away either, so we went down to 247,000 thinking it was a very good deal all round.

The inspection came and the inspector found no structral damage. A few things where stated that was working but he felt that needed attention.

Mold that he thought was in the attic proved not when the report came back. The buyers wanted a french drain, new windows, new garage door for starters and there has been no water in the basement only when the pump died and that is something you can't help. The hurricane came thru and we were the only nhouse on the street without water, due to two industrial sump pumps in our house and a partial french drain. That was disclosused as well.

The demanded 7,500 in repairs. The inspection report stated repair or replace windows and garage door, we were willing to give a credit for that and the french drain, was not even in the report but as a good seller, we decided to give them another credit of 3000 to repair it, well it was 500 short of what they wanted and then the next list came in.

Driveway has a crack, replace it, shed needs repair, replace it, basketball court needs to be replaced, and a vent in the attic, another 7500 in repairs. At this point the attorneys had a lot of paper work....nothing in the report stated any of those items.

Buyers have to understand that if the inspection report states it must be replaced than it is the sellers responsibility, all cosmetic things are not. The contract clearly states AS IS. Sellers can be kind and offer a remedy but if the seller repaired or was giving credit for the repairs, then they have satisfied the cure of the inspection.

They cancelled the contract when they had no right in the state of New Jersey to do so. 

 

 

Posted by Nancy Larson (I am a licensed referral agent in NJ) almost 6 years ago

#148 Karen Anne, “Transfer Disclosure Statement”. Sorry, you’re absolutely right, in a hurry to leave comment and continue with the day.

Posted by Dimitri Matsis-REALTOR® (818) 599-6083 (Troop Real Estate Inc. Westlake Village CA) almost 6 years ago

I have to disagree with you. Here in South Florida, that is exactly what the inspection report is used for.

I feel sorry for the clients whose Realtors don't want to get the best deal for them. They are the same ones who cash the commission check though. After all, the buyer has to live in this home, not the Realtor.

The client should have all of the information, and that includes estimates for repairs, which I have been providing my clients with for over 20 years. I also feel sorry for the clients who now have to call tradesmen to tell them what it is going to cost to fix everything. If it were me, I might be asking, "Why did I hire this guy in the first place"?

In this market, everything is negotiable. I can't for the life of me figure out why an "as is" contact is ever written.

Posted by Eric Van De Ven almost 6 years ago

Eric above hits many of the points in our Florida contracts, we have a built-in inspection period and repair amount that gives the "buyer" the right to cancel or negotiate repairs needed. 

Posted by Steven Pahl, Real Estate Consultant Tampa, FL 813-319-6423 (Keller Williams Tampa Properties) almost 6 years ago

Pam,

Are the only two choices you have in MA are either to move forward or backout of a transaction after home inspections unearth issues with the home?

Here in Calif we have a "Request for Repair" form that can submitted to have issues resolved before COE, or a credit for specific items to the buyer.  Especially if it's a heath & safety item, like broken window, etc.

I'm actually submitting one today on behalf of my buyers due to a small roof issue with the home they're buying.  The Seller can agree to repair, give credit at closing, or decline, but at least my buyers have that chance to ask.  They certainly wouldn't want to cancel the deal over $200, but to not even ask?  Nothing ventured; nothing gained.

Posted by Randy Elliott, REALTOR : Lodi / Stockton, CA (RE/MAX Gold) almost 6 years ago

I've never heard of a seller being able to back out of a binding contract based on a request. Not in my area. They can say no, but not back out of the original deal

Posted by Karen Fiddler, Broker/Owner, Orange County & Lake Arrowhead, CA (949)510-2395 (Karen Parsons-Fiddler, Broker 949-510-2395) almost 6 years ago

For clarity, when people write "here in my state" we are referring to our being licensed to practice real estate in our representative states.  Personally and professionally, I am not licensed in another state, so I can only discuss real estate matters in the state I'm licensed.  We use forms that are the standard of practice for our local markets.  The language on our forms relative to this particular post is, in part:  

"Buyer shall have _____ business days (ten [10] if not filled in), after the date Buyer and Seller have signed this Agreement (hereinafter "the Inspection Period"), in which to complete all inspections and negotiations with Seller regarding any matters disclosed in any inspection report. However, during the Inspection Period, Seller shall not be required to modify any terms of this Agreement already reached with Buyer."

And the "and" (underlined and bolded) is in the contract.  Emphasis was not added by me.  

The thing that is NOT stated is that the SELLER can terminate the contract during the buyer's contractual Inspection Period (which is a contingency).  And as a licensed agent in Oregon who uses local forms which have the above printed in them, I am commenting that this post is not accurate.

"What most buyers who are purchasing a home do not understand is that once you ask the seller to do something as a result of the home inspection, you are renegotiating the binding contract, and the seller could decide not to sell anymore. The request for repair, rejects the original offer, and introduces a new offer. The seller does not have to accept the new offer, and further more does not need to sell to the buyer anymore."  [Emphasis added.]

This is NOT TRUE.

This post is not about how a real estate agent feels about buyer requested repairs, or the nick-picky nature of some buyers (and trust me, I've represented a few), etc, which a  lot of commenters are off-topic.

This poster makes blanket statments that aren't relative to buyers -- in my state (of licensure) who doesn't practice real estate here and doesn't  know the language contained in our (local) Sales Agreements.

Posted by Carla Muss-Jacobs, RETIRED (RETIRED / State License is Inactive) almost 6 years ago

Over the years I have had reports that I thought were misused to either terminate a deal or to try and renegotiate the selling price. I almost always refer a client to the buyer's agent for any questions of what might be appropriate to address with the seller.

In general, when pressed, I would comment that significant defective items that were not properly disclosed fall immediately in that category. Safety concerns, that were not requirement when the house was constructed, should also be seriously considered either to negotiate or address as soon as the sale is complete. Most. if not all, houses have a number of smaller defects that are largely blemishes. I have noted that individual's sensitivity to these varies greatly but buyers want these noted because these are issues that they can see and understand however irrelevant to the structural integrity of the house.

Posted by Marshall Brown, BSEE, CHI (Mid America Inspection Services, LLC) almost 6 years ago

The repairs or replacements of any major components within the first five years of the buyers purchase will actually in my opinion be part of their overall amount owed on the investment. The home inspection is based on condition and how much X+Z will amount to within a reasonable time period, ( five years ).

If you consider this to just be an escape goat for making a contract void then I believe that you may not understand the potential for the inspectors liability to represent and unknowing buyer for just how much expense a house can cost over and above the sellers price. Some folks just could not afford the surprises around the corner of the flywheel effect of old problems becoming new.

 So I guess really do not fully agree, however respect your opinion and your post.

You really got my attention on this one, good job!

Posted by Smart Move almost 6 years ago

You make a valid technical point Pam.  Of course, over the past few years either the seller (REO or Short Sale) could or would not make any repairs or the equity seller wokuld do almost anything to keep the deal alive.  With the shortage of inventory, the worm may soon turn and sellers coukld be in a position to do as you suggest.  Excellent food for thought.

Posted by Mike West, El Dorado Hills, CA CDPE, CNE, Licensed Loan Origi (Heritage Oak Properties) almost 6 years ago

As long as contingencies remain, there is no binding to a contract. Of course you can renegotiate a contract after performing inspections. Finding that the "as-is" condition has revealed things that were not diclosed up front by the seller is exactly why buyers have the time allotted to investigate matters relative to the condition of the home. If you don't like buyers requesting repairs, be certain that your seller has done pre-sale inspections of the home and pest inspections so the reports can be offered to buyers up front and streamline the process for both sides with no undisclosed surprises. If you are looking for contract language to protect the seller's undisclosed problems with any property, you may be in for more surprises than a simple negotiation of repairs. In Califonia the reports from buyer inspections become public information, so you will probably deal with those issues sooner or later.

Posted by Craig Cooper almost 6 years ago

I disagree about the inspection not being a reason to renegotiate the contract because when the buyer makes their initial offer and it is accepted by the seller they don't have the advantage of knowing the condition and defects in the property. If the seller provides an inspection up front, then they can negotiate from a position of knowledge. However, as we all know the buyer typically pays for the inspection after the price is set. In Texas, the seller does not have the right to terminate the contract. Only the buyer has that right. I always warn my sellers when I list their house and when a contract is accepted that there will probably be some type of repairs that the buyer will either ask for or ask to be negotiated off the price. It is typically better to try and work it out with the buyer because 1. you will have the same repairs on the next contract and 2. the inspection if provided by the buyer with a repair amendment now lives with the house for 4 years meaning it will have to be given up front to anyone else who makes an offer on the property.

Posted by Mike Schmitt almost 6 years ago

I explain to my buyers that the inspector will find problems - that is their job.  I then explain that they should not expect repairs or a price cut; unless it is a large and unknown issue that is revealed at inspection.

Posted by Gene Riemenschneider, Turning Houses into Homes (Home Point Real Estate) almost 6 years ago

wellllll, I would like to agree with this post, but it reality is in not the case. During an inspection, defective items may come up that are quite signifiicant, and this is cause to end the contract, but in most cases people would still want the place, provided there is some compensation for the serious defect(s). Our contracts read approximately that it is Subject to approving inspection where repairs to the place to do exceed a specified $ figure. This, to me, seems a little abiguous, but it is what it is. I always try to prepare buyers for the fact that 'this older house will not be perfect', but the inspection can still kill the deal.

Posted by Jordy Brisbin (Sutton Centre Realty) almost 6 years ago

As an Home Inspector I often hear from the buyer that they are going to use my report to beat up the seller on the price. I would rather them not use me for leverage since my report is my opinion of the condition and not a repair estimate. The fact is on average most buyers want 2-4k for every 1k in perceived repairs. People do this with cars and anything else used. Condition is everything to some and if the person selling has priced the house thinking it was one condition and the buyer sees it in a lesser condition they want a discount. I think that if more sellers were honest with the disclosures and pricing then this wouldn't happen as much. The only way to really prevent this is have the home inspected prior to listing and then give it an accurate price based on the condition. 

Posted by Rob Ernst, Reno, NV-775-410-4286 Inspector & Energy Auditor (Certified Structure Inspector) almost 6 years ago

Mike,

I am not saying that a buyer doesn't have a right to re negotiate, or at least try, what I am saying is they have to be educated that the seller has no obligation to do the repairs.  Furthermore, the seller could then say they no longer want to sell, because in our area of Massachusetts, we are doing inspections after signed offer but before purchase and sale.  You have to have a meeting of the minds to have an enforceable contract, and a request for repairs show negotiations are still in play, therefore no meetings of the minds.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

Great in theory but it truly depends on what the inspector finds.  If the house needs a ton of work, and both parties still want to do the deal then the inspection is a definite renegotiation tool.

Posted by Rob Arnold, Metro Orlando Full Service - Investor Friendly & F (Sand Dollar Realty Group, Inc.) almost 6 years ago

Wow, 181 comments and growing.  I ready the first 25-30 the other day and had to log back in to comment today and there were 181.  I don't have time to ready them all right now as I usually do prior to posting, but at least in Idaho, you are ammending the contract, not starting over.  Therefore, the seller can't accept other offers until the first offer's contingency is met or the offer terminated.

As a listing agent, I submit a statement that says the selller will only agree to fix/repair latent or material defects that were not known and therefore not disclosed at the time of the listing.  In other words, if we learn of a problem that will impact our ability to resell the home to then next buyer, we will address it (i.e. water in the crawl space, mold in the attic, etc.)  I do not allow the buyer to request mundane things like missing screens, soiled carpets (if they were that way when the buyer's looked at it), etc.

When I represent the buyer's I make sure the other agent knows that I only ask for those type of issues when we do our inspection as a way to get my offer accepted instead of another competing offer.

If you were buying a used car, would you ask the seller to rotate the tires, change the oil, wash and wax it, and fix the rock chip in the window prior to buying it?  A smart seller does that prior to putting it up for sale to get the best price but what you typically buy is what you see, not the dream of perfection that it COULD be.

Posted by Jim Paulson, Owner,Broker (Progressive Realty (Boise Idaho) www.Progressive-Realty.info) almost 6 years ago

Great Post Pam, I couldn't agree with you more, it irritates me when people agree on a deal and then proceed to see what kind of weaselly games they can play to get a bit more after the deal is sealed.

Posted by Bob Crane, Forestland Experts! 715-204-9671 (Woodland Management Service / Woodland Real Estate, Keller Williams fox cities) almost 6 years ago
Apparently there is a lot of opinion on this. As a rehabbed, I only go back to the seller if I find something significant so yes it is a renegotiation point. Contractors can find stuff that I don't because they are trained better than anyone IMHO to find everything wrong. And this is critical because a good contractor will tell us in advance what the home inspectors might gripe about later. That being said, it is my opinion it should only be done for significant items. Of course some people ask for silly stuff I know. Nhowever if I am selling the house and they are strong, it seems silly to me as a seller to walk over a small things. However every sellers situation is different so it is a judgment call. More often than not, it's not worth terminating a contract as a seller over small things though. It just depends!
Posted by Frank Iglesias, Atlanta, GA Real Estate Investor (Working With Houses, LLC - Atlanta Real Estate Investments) almost 6 years ago

It may not be for negotiation purposes but if they decide that the house does not suit them at the price they have agreed upon because they've discovered the house is not what they thought it was when they agreed upon that price AND they are willing to walk away from the house, then it does become a negotiating point if the seller wants to sell them the house and the buyer is willing to stay with the seller at a lower price.

Posted by 1 ~Judi & Don Barrett & Chassy Eastep - Integrity, BS Ed, Integrity Real Estate Services -IDABEL OK (Integrity Real Estate Services 118 SE AVE N, Idabel, OK 74745) almost 6 years ago

Judi,

You are absolutely correct.  However lately is seems as though the buyers think the seller has to negotiate, and they don't.  Furthermore, as our market starts to change, and we go back into multi offers, or values start to increase, it gives the seller the ability to say I'm not selling to you anymore.  The written request opens pandor's box.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

In our area repairs are part of the contract and the dollar amount for repairs can be negiotated. This way if the repairs fall into that category no negiotations are required. However our contracts also state that if repairs go over this amount then the contract can be renegotiated or both parties can proceed. Interesting how every area is very differnet.

 

This why REALTORS are so crucial so buyers and sellers know their rights.

Posted by Deborah Beran almost 6 years ago

I remember in the late 1990's we had a very hot seller's market in Dallas. Buyer's would get inspections and the seller would do nothing and they would close. Lender's were very forgivining on repairs. I then noticed in about 5 years when the market turned the new home owner's of the 1990's frenzy, had either not done any of the needed repairs or very few, so we then went into negotiating repairs more. So I guess it is really a function of your market.

Posted by Mike Schmitt almost 6 years ago

I reinforce the fact that the home inspection should be used as a learning tool for the new owner.  A good home inspector not only brings defects to the alert of the intended buyer but should show a home owner (especially first time buyer) how to maintain systems, i.e. shut water lines off, where gas comes into the house, etc and recommend course of general maintenance to maintain and improve upon the property.  Home inspection is usually between 100 and 200 per hour, the new home owner should utilize this timeframe for a great education on their new home.

Posted by MaryBeth Mills Muldowney, Massachusetts Broker Owner (TradeWinds Realty Group LLC) almost 6 years ago

Brilliant way to think of the home inspection MaryBeth!!!

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

You said it well.  I reblogged your article.  Thank you.

Posted by Debbie Solano, ALC, CRS -- Land & Country Estates near Tulsa (Coldwell Banker Select, Realtors -- Tulsa, Oklahoma) almost 6 years ago

Excellent aricle!! I warn my sellers what could be coming as a result of the engineer inspection so they won't get insulted or annoyed at the attempt at renegotiation and maybe even do that repair so they won't confront it . At the same time, I warn the buyers if their issues are anything other than safety related or serious structural matters, they can jeopardize the deal if they really love and want that home. Most of the time this works, UNTIL THE INLAWS OR PARENTS GET INVOLVED-THEN IT GETS REALLY STICKY!!

Posted by Deborah Bracco, NYS Licensed Realtor, Staten Island New York Home (Robert Defalco Realty) almost 6 years ago

Pam, good post. Though it is our job as Buyer Agent to ask for only selected repairs and not all. Also, even before submitting an offer, I always tell my clients that seller may refuse to do any or some repairs. And at that point you will have to make decision whether you still want to buy or walk away. If you decide to walk away, your inspection charges to waste. If seller has decided right from begining that (s)he will not do a single repairs, (s)he should better market the proerty "AS IS"

Posted by Nima Buva, Time is money and I save your time (South Carolina Home Corporation) almost 6 years ago

If there is a lot of work on the house, I suggest that my buyers do the home inspection first before they decide on the offering price. It means them commiting funds before they purchase but it also gives the seller the comfort that the offer was made with due diligence. Of course, it may be a different situation where the property / location / listing price will trigger a multiple offer situation.

Posted by Cyndi Carver, Issaquah & Bellevue Specialist (Northwest Real Estate) almost 6 years ago

Bottome line? Deal's nullified and it becomes a COUNTER OFFER.

Posted by John DL Arendsen, Crest Backyard Homes "ADU" dealer & Contractor (CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS) almost 6 years ago

Post very well taken.  I've yet to inspect a perfect property, not even new construction.

While I make it very clear that my inspection is not a "pass/fail" inspec tion, and what my Clients do with the findings is strictly their decision. the key points=, as I see it from an Inspector's point of view, is the degree to which issues found during an inspection are unepexted and significant.  

I have a duty of fairness to the Seller, which I clearly state on my web site.I do my best to provide as balanced reporting of the findings.  In fact, exaggerated reporting of issues could even backfire on them if they do end up buying the house.

As I see it, an inspection is intended to, as Pam stated, let my Client know better about the condition of the house on which they've submitted an offer, and -- to the point of possible renegotiation -- to spot any nasty suyrprises before they're stuck with them.

Posted by Frank Bartlo (Evergreen Home Inspections - SE Michigan) almost 6 years ago

Hello All, 

 Great topic. As a home inspector that has performed more than 7,000 inspections over the last nearly 20 years, allow me to present things from my view. Is the purpose of a home inspection to renogiate the deal? Here is the painful part....YES!  Its called Due Dilligence. A buyer makes an offer based on his perceptions of value. If there are items revealed that affect that value, why would anyone expect the buyer to not reopen negotiations? 

However, the Commonwealth of PA has a very siimple solution to all the problems with fussy buyers. Statute states the purpose of an inspection is to identify Material Defects. A “Material Defect” defect is defined by state regulation as a problem with a residential real property or any portion of it that would have a significant adverse impact on the value of the property or that involves an unreasonable risk to people on the property. That fact that a structural element, system or subsystem is near, at or beyond the end of the normal life of such a structural element, system or subsystem is not by itself a material defect.  So I have a question for the real estate professionals. It is unreasonable to expect a buyer to want to negotiate Material Defects that were not previously disclosed by the seller?  

I know, I know everybody goes through alot of trouble getting the deal on paper and then that Snidely Whiplash of a home inspection steps in and messing the whole thing up. Here is a very simple solution that can diffuse everything and actually make the whole process better for everyone...Have your sellers do an inspection prior to listing. 

Having an inspection performed by your seller does several things:

1. It allows the seller the chance to address items prior to listing.

2. It reveals items defects the seller may have no knowledge. 

3. A seller can price in what to expect from a potential buyer in the way of negotiations. 

4. It demonstrates an effort on the part of the seller to be open and honest to the marketplace. 

Several of the top producing agents in my marketplace have made this a standard practive and with great success I might add. 

I hope you all will take my comments in the spirit of which they were offered. I take pride in the fact that nearly all of my realtor referral base consists of top producing agents that want the best for everyone concerned. 

-Fritz Butler

President

Castle Inspection, Inc. 

Springfield, PA 19064

 

 

 

 

Posted by Fritz Butler almost 6 years ago

Very true Pam unless the repair allowance was previously negotiated in the contract (our contracts have this). Then it's not a re-negotiation but a fulfillment of the contract.

Posted by Ricky Beach, Reno Broker/Salesperson/Realtor (Keller Williams Realty Group One Inc.) almost 6 years ago

I strongly disagree.  In our market in NM, it is common practice to re-negotiate at this phase.  We use a specialty form called Objections, Waivers and Resolutions.  This doesn't change the original offer, but if there are a lot of repairs needed and the seller doesn't want to fix them, we will often times ask for a reduction in price of the home or a large credit at closing.  Our contact here does give the language to re-neogtaite at time of inspection report and I'm glad.  Yes, seller can walk too, but 99% won't.   They are saavy enough to know that if they don't fix it for this buyer, they will have to for the next AND now they have the legal responsibility to disclose the new defects. 

Posted by Mary Padilla (YES! Realty) almost 6 years ago

John Arendsen,

You are right on point with my blog.  The blog was not weather the buyer had the right to try to re negotiate.  It was that if the buyer chose to, they needed to understand that they voided the original agreement and have countered it.  Once you have a counter, it means you reject the original offer, and propose a new.  Neither party is obligated to go back to the original offer.

In this market, many sellers will conceed and do repairs, or reduce prices, but you cn not bank on that with 100% certainty.  You have to be willing to take the riskof  loosing the property.

Posted by Pam Crawford, Owner-RE/MAX Prof. Assoc.,MBA, CDPE, CRS, ABR (RE/MAX Professional Associates) almost 6 years ago

I think that now, (200 comments into the conversation) we're talking semantics. 

The inspection is not supposed to be a tool for renegotiating the contract.  It's a tool to find deficiencies that otherwise weren't apparent to the buyers, and adjust accordingly. 

Comment  #165 brought up a crack in the driveway.  That crack in the driveway was readily apparent when you wrote the offer... so we should not be renegotiating that aspect, unless the inspector is telling you that due to that crack, the driveway can no longer perform the function for which it was designed.

In our area, the inspection is designed to find defects in major components, not "minor repairs and routine maintenance items" ... and our contract states: "The fact that a functioning major component may be at the end of its useful life, shall not render such component defective for purposes of this paragraph", and it goes on to say "a major component shall be deemed to be in operating condition if it performs the function for which it is intended, regardless of age, and does not constitute a threat to health or safety."

Posted by Alan May, Helping you find your way home. (Coldwell Banker Residential) almost 6 years ago

I do not agree.  If a buyer submits it as a counter offer then yes the seller can walk.  If the buyer is asking and they are still within their inspection period they can ask all they want.  In our State once the seller knows of a defect he has to disclose it to all future buyers so he had better think twice before he jumps ship.  It is his house and you would think he would know if there are major problems . . . why did he not tell the buyer in the first place.  If he is going to be so upset when problems are found why don't you have your sellers get an inspection themselves before they put it on the market? 

I bet very few would want to do that.  They would rather have the buyer put up their own money to find out the  seller never took very good care of his house. We do a lot of 'As-Is" contracts and you better believe anyone would want to adjust the price if they found major problems that were not disclosed up front.  The price offered was for a home in working order unless the seller disclosed otherwise.

Now if you are talking about minor things that were easily observable when the buyer looked at the house then that is another thing.

Posted by Karen Mathers - Vero Beach FL, When it Matters, Choose Mathers! 772-532-3221 (Keller Williams Vero Beach) almost 6 years ago

This discussion points up that this is an open question across the nation - highly dependent on local contract language.

Based on the sum of all of these varying procedures:  a signed contract can never be viewed as a done deal (even sans the financing contingency) until the inspection period is over and repairs have been negotiated.

Any listing agent who does not so advise his or her seller is asking for troubles.

Posted by Jim Hale, Eugene Oregon's Best Home Search Website (ACTIONAGENTS.NET) almost 6 years ago

Moral:  Never count your chickens (commissions) until the inspection has roosted.

Posted by Jim Hale, Eugene Oregon's Best Home Search Website (ACTIONAGENTS.NET) almost 6 years ago

A seller may well blow off the deal over repairs - being unwilling to pay.

But it is far more likely that the buyer will quit the deal - being unable to pay.

Posted by Jim Hale, Eugene Oregon's Best Home Search Website (ACTIONAGENTS.NET) almost 6 years ago

In Florida, our contract has a section pertaining to repairs and it is negatioated as part of the contract, if any and how much to repair. It keeps it simple.

Posted by Diana Roca (Century 21 Camelot Realty Inc.) almost 6 years ago

In our contracts, it gives the buyers 10 days to inspect the property with an out if they do not want to proceed. However, if there is a hidden defect in the property discovered by an inspection, all bets are off as far as I am concerned unless it is something they can live with. Why wouldn't compensation for these defects be a legitimate reason to reconsider the price or repairs?

Posted by Nan Jester, Realtor, Exit Real Estate Gallery (Exit Real Estate Gallery Jacksonville Beach, FL ) almost 6 years ago

Very good post. I should make this a billboard and hand it to every buyer who gets an acceptance on their offer. It is amazing how they want to renegotiate the deal every step of the way.

Posted by John Martelotti, Your Staten Island, NY Real Estate Resouce! (Robert Defalco Realty) almost 6 years ago
Hi Pam, You're right that a request for repairs can reopen negotiations anmd cause the seller to move on, but it's also true that most sellers would like an opportunity to decide whether they want to contribute to repairs rather than having the buyer simply walk because of a needed repair. It really depends on whether the needed repair is a deal breaker for the buyer.
Posted by Susan Neal, Fair Oaks CA & Sacramento Area Real Estate Broker (RE/MAX Gold, Fair Oaks) almost 6 years ago

Very interesting discussion! As an inspector I often have clients ask me what items they should ask the seller to repair. My response: "My goal is to educate you on the condition of the home, but your Realtor can give you professional guidance on how to handle the request for repairs and any negotiations". I like to leave THAT to the Pros !

Posted by Eric Knight almost 6 years ago

Great post...this happens more and more often in my market. 

Posted by Gina Marie Bettenhauser, "We Move Properties from Sound to Shore" (Coldwell Banker Distinctive Homes) almost 6 years ago

This was interesting to read.  thanks for sharing.  Looks like they needed a <a href="http://wavelengthdevelopments.com">handyman nwa</a> to fix up that roof.  What caused that anyways?

Posted by Jordan over 5 years ago

I love our new florida contracts for the way they wrote in them that buyers cannot just walk away unless the seller is not willing to do the repairs.

Posted by Charles Stallions, 800-309-3414 - Pensacola, Pace or Gulf Breeze, Fl. (Charles Stallions Real Estate Services ) over 5 years ago

Interesting thoughts, both on the post and comments!! Wealth of knowledge everytime I log on to activerain.

Posted by Kathryn Gorham, Emerald Isle NC Crystal Coast (Green Key Realty) over 4 years ago

Okay, I'll admit it; I have spent a good deal of time reading a majority of the posts to this blog.  What have I learned?  If we take what Pam has stated about the contract that her Brokerage Firm, in her county of her state currently uses as accurate, its time for them to upgrade their contract!  It appears that 99.5 percent of the rest of the country uses a contract that allows the seller to say "No" if repairs are asked for but they have no right to back-out of the "Contract."  The right to back-out of the "Contract" belongs to the "buyer" if they ask for repairs and the seller says "No."  We have an uncanny way of making the simplest things seem almost incomprehensible. 

I was very happy to see the majority of agents sticking up for the rights of their buyers.  Hooray for the agents looking out for their buyers!

Posted by Paul A. Perry, Home Inspector - Crossville & Cookeville, TN (Certified Inspections, PC - Residential & Commercial Property Inspections ) over 4 years ago
Paul, I'm glad you read all the comments. In most cases the buyer and seller come to a mutual agreement. But in order to have a valid enforceable contract you have to have a meeting of the minds. When a buyer asks for something from a home inspection, one could argue there was no meeting of the minds, and therefore you do not have a valid contract. A lot of times buyers and/or buyers agents use inspections as a negotiating tool. They try to get more money off or get the seller to fix things. Negotiating is the key word. If you are still negotiating, you do not have a meeting of the minds. A buyer has a right to know what they are buying. If after home inspection is done, they have the right to back out of the transaction or proceed forward. They can ask for repairs or credits, however they just need to know that the seller has no obligation to do them. The seller could also at that time decide not to sell any more and it is in their right at that point. (Most of the time the seller does not do that) but the buyer needs to know that could happen. I usually suggest to the buyer to address items that are immediate safety concerns, would cause damage if not addressed prior to close, or would be so expensive that it would cause a financial hardship after they took ownership. If the seller says no to their request, the buyer would be better not to buy the house. If the seller says yes, then great they move forward.
Posted by Pam Crawford over 4 years ago

In NC, we have a due diligence period (with a due diligence fee) which allows the buyer to do their inspections to include a home inspection with a due diligence date (time being of the essence).  Of course the buyer can ask for repairs to be completed if they submit a repair request; however, the seller can absolutely say no to that request.  Repairs are not a contingency of closing unless it is something that has been noted and negotiated at contract.  If the buyer isn't satisfied with the home prior to the end of their due diligence period to include the seller's decision to repair or not, then the buyer can walk away from the contract.  The buyer does lose their due diligence fee paid directly to seller at the time of contract.  For the most part unless it's not visible, based on the age of he house you can anticipate some repairs.  A buyer should always take that into consideration (with the help of their real estate professional) when making their initial offer.  I agree with the response that referred to an update to the existing offer to purchase being in order.  

Posted by Amy Houston Helm, Open the Door to All Possibilities (Coldwell Banker Sea Coast Advantage ) over 4 years ago

I'm not an attorney but I do appear in court as a professional witness in construction and contract issues.  I don't know where this "meeting of the minds" idea came from but once both parties place their signature on the contract it doesn't matter where their minds are.  They have a "Binding Contract."  There will have to be verbiage in that contract that gives the seller or buyer the right to do certain things, such as the inspection process or a certain number of days to back-out.  If the specific verbiage is not in the contract that was signed, neither the seller nor the buyer can get out of the contract without mutual consent.  Please check with an attorney before continuing to spread miss-information.  Love to all.

Posted by Paul A. Perry, Home Inspector - Crossville & Cookeville, TN (Certified Inspections, PC - Residential & Commercial Property Inspections ) over 4 years ago

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