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Real Estate Repair Negotiations – What is Reasonable?

I continue to be amazed at the number of agents who cannot grasp a simple concept when it comes to repair negotiations and who respond to reasonable, normal requests as if the sky is falling. My concept of reasonable is, in a nutshell, what would an ordinary buyer and seller consider reasonable, and what is fair to both parties?

In Texas, buyers have two bites at the apple when negotiating the terms and conditions of a residential real estate purchase. The initial negotiation is focused mainly on price and closing date. But your home isn’t necessarily sold just because it goes under contract. It has to survive the inspection and “Option Period” before we consider it a “hard” contract. That involves, in most cases, a second negotiation resulting from inspection items.

The second, final negotiation is completed during the Option Period after the buyer has had an inspection of the home performed. The buyer may then seek remedy or compensation for latent defects or repairs that were unknown and/or undisclosed at the time the initial contract was finalized. The buyer, through a final proposed amendment, essential tells the seller “if you agree to these additional terms and conditions, which are a direct result of the inspection or other discovery, we will waive our Termination Option and proceed to closing”.

Sellers in Texas have no contractual obligation to make any repairs whatsoever, period. All homes are sold “as-is”. However, a seller can refuse to work with a buyer on repair issues at risk of the buyer terminating the deal and seeking another home in better condition, or with a better price/condition relationship.

Sellers and their agents often fail to consider the fact that, if they let the current buyer walk away, the next reasonable buyer will probably ask for the same or similar repair remedies. In other words, those tree damaged roof shingles, leaking A/C coil, rusted out A/C drain pan, plumbing leaks and other items are not going to disappear upon the next buyer’s inspection. Furthermore, the next buyer may be even tougher in their requests than the current buyer.

So unless the buyer is completely unreasonable, ridiculous and over the top in the requests being made (as can indeed often be the case), it’s almost always going to be in a seller’s best interest to work with the buyer and make the deal happen – but to a limit.

This would be a lot easier if all buyers, sellers and agents had a common viewpoint or opinion of what constitutes “reasonable” repair requests. I have my own concept of what reasonable is, and I advise buyers and sellers according to this approach. But we often run into agents and buyers or sellers who have different ideas about what constitutes “reasonable” requests. When that happens, the final repair negotiations can become difficult, normally because of emotions, and sometimes deals fall apart because our buyer walks away from the unreasonable seller, or our reasonable seller tells the unreasonable buyer to take a hike. This isn’t a good outcome for either side, but neither is an outcome that is not win/win, and which has one party succumbing to the unreasonable demands of the other.

So what do I consider reasonable? Let go over it and see if you agree.
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Posted by Steve
8 years ago