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.
For Sellers:
If you are selling a home and you list as the included components of that home items such as a sprinkler system, central air and heat, gas range, etc., AND you have furthermore noted on your Seller’s Disclosure Notice that all of the major mechanical items of your home are in good working condition and without defect, it is not unreasonable of your buyer to request that the home be delivered at closing as it was represented at the time of the initial price negotiation. This, to me, is reasonable.
So, if the inspection reveals that the sprinkler system has multiple leaks and broken heads, it’s NOT unreasonable that the buyer asks for it to be repaired, or for a price adjustment to fund the repairs after closing. The buyer may in fact have picked your home over another just because of the sprinkler system, for crying out loud. And now you want to pucker up, get angry and say, “well, I’m not paying to fix that”? Why should the buyer pay, I ask? You said in your Seller Disclosure it was working, which was a misrepresentation of fact. You need to fix it or pay the cost of fixing it to the buyer at closing.
If it turns out that the HVAC system that you represented as working and without defect instead is found to have the a leaking condenser coil, is low on freon, and the drain pan is rusted through, it’s not unreasonable that the buyer would want that system returned to good working order prior to closing. And it’s not unreasonable that you, the seller, absorb the cost of this remedy, even if it means having the unit replaced with a new one.
You represented these items as being in good working order and the buyer did not factor in these potential expenses when she agree to the final sales price. It is therefore not reasonable to expect a buyer to pay the necessary costs to remedy items that were misrepresented by you (knowingly or not) or to absorb the financial consequences of your neglect and failure to properly maintain your property and its equipment. By not properly maintaining your home while you owned it, the maintenance expenses remained in your pocket. You don’t get to keep the money you thought you saved by not properly maintaining your home. You’ll have to spend it now, plus some, to put things back into order for the buyer.
When presented with a repair amendment based on this logic, or way of thinking, neither you nor your agent should, in my opinion, become angry or insulted. There is nothing unreasonable or insulting about a buyers request to cure items that you represented as being in good working order and which negatively affect the value of the home.
For Buyers:
The Option Period is intended to be a period of time during which you can have the home inspected and verify that the home does not have latent defects or condition items which could not have been anticipated or assumed based on the visible condition and/or age of the home. You want to make sure that the home doesn’t have “big ticket” mechanical and condition repairs, which may affect you financially in the near term, and which you were not aware of when you agreed on the sales price.
Examples would be failing or near-failing HVAC equipment, plumbing leaks, damaged roof, leaking roof, foundation issues, non-functioning appliances, dangerous electrical or mechanical conditions, etc.
Should such items be discovered, the value of the home has changed. A $200,000 home that contains potentially $12,000 in urgent deferred maintenance is no longer worth $200,000. It can easily cost $5,000 to $10,000 to replace a bad roof. It can cost $2,000 to $8,000 to repair/replace failing HVAC equipment. It can cost $500 to $1,000 to put a neglected sprinkler system back into proper working order.
All of these items must be mentally added to the price you are paying for the home, and it’s our job as your buyer agent to make sure you understand the TOTAL cost of purchasing+owning the home and to prevent you from paying too much.
It is not unreasonable as a buyer to seek remedy or price adjustments for such items. Additionally, items not functioning at the time of closing are excluded from the Home Warranty you are receiving from the seller when you purchase the the home. So don’t let the seller or agent tell you “the Home Warranty will replace that after closing”. It won’t. It has to be fixed. It has to be in working order at closing to be covered by your home warranty, otherwise, your coverage will be void and you will be stuck paying for the new A/C system.
What is Unreasonable?
What IS unreasonable is to expect a seller to cure low level, knickknack repair items. No home is perfect, and any home you buy will have minor defects and problems. Even newer homes have minor problems and defects. The older the home, the more of this you should expect and be prepared to accept without fuss.
It’s unreasonable to expect sellers to cure code items in older homes, when those items were not required at the time the home was built. We had a buyer on one of our 1970s listings once send a laundry list of requested repairs which essentially represent a remodel and code upgrade of the entire home to present day standards, including the entire electrical system and all the aluminum wiring. That was a ridiculous request and, as we suspected, both the buyer and the agent were newbie first timers who knew nothing about the home purchase or inspection process. Our seller of course refused and the buyers missed out on a great home which someone else quickly purchased with no fuss over the inspection (the house was in fantastic condition for its age).
Yes, the inspector may flag things on the inspection as “safety” issues, such as missing GFI outlets, or the flex gas line supplying your furnace (which really should be converted to solid pipe at your expense after you buy), but that’s the way the house was built when it was new, it met code at that time, and the seller did not agree to “upgrade” or modify the home to current building standards when your offer was accepted. When you choose to buy an older home, you should know and accept this, and your agent should help you understand what to expect.
Most agent, buyers and sellers are in fact reasonable. We tell sellers before accepting an offer that you should mentally be prepared to give up at least $500 in repair concessions if asked and justified, so factor that into the price you are willing to accept. It simply lubricates the deal and keeps things moving, as we know we will almost always receive some sort of repair request no matter what.
Same with buyers, we tell you that you should be ready and prepared to accept at least $500 in needed repairs that a seller may not be willing to cure, plus the smaller knickknack stuff and code upgrade items. Factor that into the price you agree to pay so you won’t have to get stressed out when the seller balks at or counter-offers your repair request items with less than you deem is fair.
Finally, there can be exceptions, to what is ordinarily considered a “reasonable” repair request. If the buyer has absolutely hammered the seller on price right at the outset, you can’t come and hammer them again on repairs. Likewise, if the seller holds out for at or above market value, full price on the sale, expect to be a bit more flexible on the repairs, as the buyer will want the full price home to be in “full price condition”, which means no major problems.
If everybody would approach their deals this way, there would be fewer instances of buyers and seller letting emotion and unreasonable expectations infect and derail what could otherwise be a win/win, smooth transaction. I’ve experienced listing agents literally act like someone off their medication when presented with normal and well justified repair remedy requests. Same with buyer agents when told that the seller isn’t going to do free code upgrades to the home for the buyer.
They breathe heaving breaths of dismay, “well, I just don’t see how your buyer can be asking for anything at the price they’re paying”. And I’ll say, “The agreed price is fair market value and doesn’t factor in all of these unknown defects and mechanical issues. That changes the value of the home”.
Some agents, frankly, let their ego get in the way, and make all sorts of comments about the request before they’ve even presented it to the seller. I understand, and it happens to me too (though I refrain from initial comment to the other agent until I talk with the seller). I want my seller to receive the best price possible, and I feel personally distressed at the prospect of that not happening.
But the transaction isn’t about me or my ego. It’s not my decision as to what terms and conditions the seller is willing to accept in order to keep the deal moving. So I simply present the request, offer my opinion as to its reasonableness, and let the seller decide. I wish other agents would do the same.
yes…yes…yes…yes… !!!!
talking about taking the words from my mouth!!!
human nature is what it is…
human emotions are what they are…
examples:
multi-multi multi millionaire finds the perfect house… i always use the “hide $2,500 under your mattress for the repair issues the seller may refuse to fix”… the inspection turns up virtually nothing!!!…. cept the few windows looking out to the lake that are fogged (only at certain times of the day/year/sun position…)… $1,900 estimate to replace these widow glasses!!!…. the seller says “we came down to meet your offer price… we will not fix the windows… we have lived here since the home was built and NEVER have seen any problem with the windows”… so i talk with the buyer about that $2,500 under their mattress… the buyer says “i am not going to buy this guys house!!!”…. (contract terminated… both buyer and seller have remorse… i get them talking… they both apologize… go to closing)… i forgot to mention the fact that the seller also used the fact that they spent $6,800 on an outdoor grille… and that the buyer should be happy with the fact that the grille was conveying… BUT the buyer replied back (against my suggestions) that they didn’t give a hoot about the grille… SO THE SELLER TOOK A SLEDGE HAMMER TO THE GRILLE!!!!!
but… SO many other deals have just died…. EMOTIONS run rampart… intelligent thought disappears…
i could go on for another 100 pages….
some get to closing… some don’t…
one other “deal”:…. retired military buyer… contral FREAK!!!…. we find the perfect house…. $100,000 under valued (buyer knew it upon first step into the property)… everything going ok…. a little rough during option/inspection…. we get through it… 1 week from closing the buyer calls me to tell me that they are NOT going to buy the house if the seller does NOT fix the deck where the hot tub was removed (1 year old $12,000 hot tub)… buyer just didn’t want it… contract called for seller to remove it…. I SCREWED up and did’nt addess deck repairs after removal!!!… (live and learn!!)… buyer was adament…. terminated contract… threatened to sue seller for earnest money (past option period)… buyers wife almost had a nervous breakdown…. she KNEW this was a 1 in a million bargain!!!…. she actually took off 1 week from work and cried!!!!…. the seller IMMEDIATELY got another full price offer…. … … … … … listing agent called me 3 weeks later to tell me the unthinkable happened… new buyer lost job!!!!…. i called my buyers to tell them…. AND HUSBAND STILL INSISTED on seller repairing deck!!!!!!!!!!!!!!!!!!!!!!!!!……. long story short… I paid the $1,500 out of my pocket to fix the deck!!!!…………
PEOPLE!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Steve,
Maybe it is just a difference in business practices between real estate practitioners in California (SIlicon Valley) with those of Texas, but our listing agent’s typically have the seller get pre-listing inspections prior to putting the home on the market. This gives the seller a better idea of potential costs/issues that might come up. These are also given to the buyer prior to any offer presentation so that the buyer has an idea as to the home’s conditoin prior to writing an offer.
Pre-listing inspections fon’t proclude the buyer from doing his/her own inspections, but rather it adds the seller’s disclosure on the property’s condition. The more information, the more comfortable the buyer feels about his/her purchase.
Once a contract is ratified, it is more likely to close because there are less unknowns about the property. I highly recommend having my seller’s spend $600-$800 up front to eliminate substantial costs (could be in the thousands of dollars) down the line because the buyer wants to re-negotiate.
Hi Dave,
Yes, I wish pre-inspections were common practice in Texas. It makes a lot of sense. We have seller perform one when the property has a lot of deferred maintenance, but it’s fairly rare to see pre-inspections in our market.
Steve
Of course, the buying/selling process is generally one that is emotionally influenced despite the best intentions of the parties. Add to this that pricing is always a little suspect — once you get out of the cookie cutter house, it is almost impossible to say what the comparative market value of a house is down to the last dollar. This leaves a large gray area in negotitations where emotions can drive the process.
Case in point — when we bought our house last year, the sellers has already moved out and had a temporary tenant. The house had been on the market for nearly a year; overpriced and already had a $50k reduction when we came along. We saw a house that had had some updating but still had much left to do, and there were quite a few deferred maintenance issues (the loose gutter by the entrance and overgrown landscaping obvious ones). So our view was that we were buying a project house with good bones. We negotiated somewhat agressively on price to get a good, not great deal according to our agent and the available comparables.
Of course, from the sellers’ perspective, they had a house in great condition that they had renovated and were giving away. Our inspection came up with a long list of items, some of them of the type Steve say shouldn’t be included like out of code items. But others were maintenance problems or issues due to faulty workmanship in the previous renovations. The repair cost came out to $12k — very reasonable from my perspective. Not to the sellers, of course. If I hadn’t been very flexible on assuming most of the repair costs, it is very possible the deal wouldn’t have gone through. In the end, I got a reasonble closing price on a house that was good for us — but that remains a series of improvement projects. The sellers, I am sure, feel they gave the house away (especially given the high initial asking price).
So, long story short, it is good to have a discussion about reasonable things to ask for, but these issues are rarely cut and dried given the imprecision in pricing and issues that come with older homes.
As a buyer, send the inspection report on over to the seller after its done. Then, they pretty much have to disclose the issues if the deal falls through. This might be close to strong-arm tactics in some sellers/realtors books, but not mine. Buyers, you really should be at the inspection! You are paying for it and its a great way to learn about your house. If you know a thing or two, you may even spot issues that the inspector doesn’t.
As for your 1970s house example with Aluminum wiring, it is reasonable to ask for an electrician to double check things, especially the junction box and possible have it replaced. A crummy (or incorrect, say one for copper wiring) junction box is the case of many of problems with Aluminum wiring. Sometimes tightening the screws in the box is in order to sure things are safe.
Sellers, be prepared for a long list of things the buyer might want fixed. You probably asked the same of the previous seller. Its all part of the game with all the parties that are involved (far too many if you ask me – realtors, title company, lawyers, banks/mortgage brokers, home inspectors, insurance agents, county tax assessors, city of austin now).
I am curious to know your opinion. You said that you did not think it was reasonable to ask for “safety” items that were up to code when the house was originally built, but does not conform to current code requirements. What if that home has been flipped and upgraded but the sellers chose to only update certain things? It seems to me that if they have done any upgrading, then the missing GFI outlets, or the flex gas line supplying the furnace should have been taken care of. I don’t think that it is unreasonable to expect the sellers to pay for those things if they are trying to sell you an “upgraded” home, even if it is an older home.
Hi Kristen,
I agree with you on this point. If a home is advertised as “fully remodelled”, there are certain aspects of a remodel that are assumed. But in the end, we see a lot of “rehabs” that are simply cosmetic treatments that leave the underlying components of the home in original condition. It still comes down to a negotiation between the buyer and seller.
Steve
Steve,
Interesting article. I’m from the east coast and currently in the negotiation process resulting from the home inspection. Our inspector identified some major issues with what I like to call the “lifeblood” of the home. For example, a 22 year old furnance (2 years past its useful lifecycle IMO), a 22 year old hot water heater (10-12 years past its lifecycle IMO), a AC unit approaching 15 years old (15-17 yr lifecycle IMO), and a 75ft tree that is clearly dying. We actually submitted a request to replace the HVAC, hot water heater and remove the tree. We figured if we are about to pay Ferrari prices why should we be stuck with the impending bill to replace old, outdated and soon to be less than efficient systems in addition to a major safety hazard.
Of course I don’t expect the seller to agree to this, but never expected the realtor to lose his cool with my realtor before he even discussed it with his clients. In your opinion were we out of bounds or were we doing nothing more than any other person would do wrt identifying major flaws with a home priced in the mid 600K range with the expectation that we ask for it all knowing we’ll be negotiating a viable solution for all parties involved?
Hi John,
It doesn’t surprise me that the listing Realtor lost his cool. I would simply have your agent present your rationale, and try to leave emotion out of it. It helps if you have a strong number 2 choice that you can pursue. Sometimes stubborn sellers get their way because the buyer has already emotionally attached themselves to the home and is loathe to walk away.
I’d simply add up all the unexpected costs, add that amount to the contract price, and ask yourself if you are willing to pay that amount for the home. Is the home still worth it?
On the other hand, if what you describe is what might be found in the next home you pursue, walking away might not be wise. But it is VERY important to know and understand what you are really paying for the home, and that cost includes the curing of neglected mechanical equipment.
Good Luck,
Steve
John,
Hopefully you were able to resolve your option-period repairs.This will always be a subjective issue. Sellers want to spend as little as possible and buyers want to get as much as possible for their hard-earned money (regardless of price) In my opinion, however, you were not out of bounds asking for those big-price items to be corrected. Why would a “new” owner have to pay for deferred maintanace?
Good Luck,
Raul
Do you think it’s reasonable to ask the seller for needed foundation work per our structural engineer on a 50 year old home? We’ve had two bids so far and the estimate amount is $12,000. We are still in our option period and not sure what to expect. Has this ever happened to you on either end? Also, if FHA doesn’t approve our loan because of this foundation situation, doesn’t the seller HAVE to repair the foundation for us? I know this all might sound ‘green’ to you but I’m just a little ol’ buyer with a newbie agent and need some expertise.
Thanks.
Dana,
If the bad slab was unknown and not factored into the offer price, it’s not unreasonable. It would be an expected request for the seller to cure it, or compensate for the cost.
On the other hand, the seller is required to do nothing. Your recourse is to terminate the deal. Yours and the seller’s agent should be able to help you and the seller negotiate a win/win.
Steve
I’m presently in negotiations with the seller and his agent to repair a deck that the inspector considers is out of code. He states that the deck should not be repaired but totally replaced. We have been back and forth with this issue for almost 2 weeks because the seller doesn’t want to spend the money. The seller states that he wants to reinforce and secure the deck with new boards and to anchor the deck to the house. I asked the inspector if this was reasonable and he said “absolutely not”. I’m at a standstill because this is the only issue that I have with the house that the seller seems to be unreasonable. What should I do? Also, let me add, I am purchasing the home with an FHA loan and was told it may not be approved because of the deck. I need help from an expert.
Thanks in advance
Hi Dee,
I can’t comment on or advise your negotiations. Your agent should be able to do that. But I do wish you luck.
Steve
Is it fair to let buyer to pay the option fee for inspection during option period since buyer need spend inspection fee no matter whether he’ll buy the property because of poor inspection? Is inspection a contingency in a purchase contract? In my opinion, It is fair to pay option fee to have more time to bid other houses but not for inpection alone. What do you think?
Hi Jan,
The Option Period is intended to provide an inspection and due diligence period, though it does serve as a “walk-away-for-any-reason” clause. Yes, it’s fair as it compensates the seller for removing the home from the market and also serves to make buyers think twice about trying up multiple properties with offers, since they have to cough up earnest money and Option Fee on each one.
If you found a house you like, why would you want to keep bidding others?
Steve
Hi – We are selling a 100-year-old home in the Boston area. It is a two-family gambrel roof Victorian split down the middle front to back by a firewall. We negotiated a price with the buyers, a couple who is not in a hurry to move in because they want to do some renovations. Their inspector reported 77 pages of minor and significant problems, some reasonable like foundation stones needing repointing, an electrical service upgrade, etc. The critical issue is that the rafters supporting the roof of this third-floor structure have pulled away slightly from the their attachment at the top of the firewall. we have seen no cracks or any other signs of movement of the overall structure in the 18 years we’ve lived there, although there is some slope to the upper floor especially..
the buyers then hired a structural engineer who said the second and third floors are insufficiently supported, with most of the weight transferring to the side porch that runs 2/3 of house, and which probably has subsided a bit over the years. their engineer insists that there needs to be a foundation poured under the porch ( or possibly sonotubes), the rafters need to be reattached (obviously) but that in addition, the walls need to be opened up and beams and posts be installed to support the second and third floor. The buyers want $70,000 knocked off the agreed on price of $675,000 to pay for all of this.
We have consulted an historical renovation architect who has done work on our house, a high-end builder (friend) who does a lot of renovations, and, today, a structural engineer who looked at the house. All agree that shoring the porch foundation and reattaching the rafters, along with some other basement rafter work, is sufficient, and they see no need for additional supports and beams. (The other side of the building is a mirror image, and they have had no problems.) We have had estimates that $20-$22,000 in repairs are needed.
However, the buyers’ engineer won’t back off his assessment, and the buyers say they will walk if we don’t come down the full $70,000. We’re in a real bind because after a long search we found a home we love in a great location and have to go to purchase and sale next week, or we’ll lose it. We feel the buyers aren’t acting in good faith or willing to compromise, so regrettably we will have to let them walk, do the repairs ourselves, and start the whole process over again frmo square one.
This is a very upsetting epidsode but shows you what happens when engineers disagree and buyers play hardball.
thanks for listening
richard
Am I being unreasonable?
We got a contract on our 5 year old home. The buyers failed to get the inspection until the day AFTER the inspection period and we went ahead and granted them the extension. The same day we granted the inspection we got a full price CASH backup offer on the house.
The inspection notice came in today and the the inspector must have been justifying his existence.
here were their requests.
1. fireplace must be operational. (the inspector couldnt figure out how to turn it on) other than he must have missed the fact that there is a loop on a frame that covers the fireplace to reduce drafts I have no idea why he could not figure out how to turn on a self contained gas fireplace. Our response.. The fire place is operational. verbal explanation to buyer. Remove the cover, pull down the grill, light the pilot light, turn it on. It worked all winter when the house was on the market.
2. Level AC unit. It sits on a gravel pad some rock has slid out from under the plastic “pad”. Our respones… No.
3. Bolt deck to house. It a 5 yo house the deck is solid. it has 5 columns to the ground and stairs. The bolts are $2.59 a piece and IF i were EXTRA OCD I’d have to put 40 in for a total of $100… Our response… No
I think these are as you mentioned knick nack things that really are not life safety. the house is not going to burn down and the mechanical system is fine.
Am I wrong? The difference between the offers is only $5000 so its not like i’m looking for a way out. Closing for either of our contracts are within 3 days of each other so we are still out of the house by the end of May.
Any feedback would be greatly appreciated.
I’m in the process buying a 19 yr old home where the seller listed no problems on the disclosure statement. Yet, when the cl-100 inspector came, he noticed cracked present to wall at front left corner of structure. This was obvious to anyone. Active leaks present a 20 2″ drain line at a bathroom below floor level. Hvac duct insulation is torn/deteriorated at various areas and existing moisture barrier is disturbed throughout the crawl space, faucet spewing brown water when it turned it on in kitchen, signs of water entry evevident at various foundation vents. I’m getting wary of these issues. Tomorrow, the home inspection, whom I hired will do the inspection. Additionally, she lists a fireplace as one of the features in the home which she says she never operated it.
Additionally, she is selling the house for approx $10,000 less than her purchase price. I smell a rat here. The single roof is 19 yrs old with a life span of 10-15 yrs old. Think I have a dud here. Need your expert opinion going forward. First time home buyer and a senior citizen living on a fixed income. Can’t deal with costly repairs in a year or two. Thank you.
cannot see comments
I have a problem with my realtor as I bought a home and he was fighting me all the way when I sent in an offer under the asking price. Sellers were asking $325k and dropped it $5k after it was on the market for 140 days and no offers. I offered $275k which is a fair 10% off their $320k price. They only came down to $310k and then I countered with $185,500, then they came down to $300k but I was only willing to go to $190k but realtor told me that was their lowest. I came up to $300k but made them throw in washer/dryer. Now the inspection found broken and slipped tiles as well as a plumbing leak in kitchen cabinet. By realtor is glossing it over like no big deal sort of like he is in fear of asking for an adjustment on price for repairs or having them make the repairs. He is trying to appease me about the roof saying he will take care of it but I called the company he is going to have fix it and they never return my calls and I think his plan is to get it past the point of no return and then Im stuck with it being broken. My realtor never calls me back with information I need and it almost seems like I am doing his job for him. Hell, I found the house I put the offer on not him and it was his job to do this…
I managed to get my foundation repaired before the flooding here in Texas. I moved here only 3 years ago, and at the time, I hadn’t paid as close attention as i should have when buying. I’m just lucky that i had the foundation done when I did, or it would have been a whole lot more expensive.
I am so glad I found this article. We are selling our home and our potential buyer is being completely unreasonable. Asking for an entire grocery list of items to be repaired that she saw before she put in her contract. After the inspection she had done she’s asking we replace ceiling tiles, trim trees, replace guttering…Etc. It’s an 83 year old home! Everything else is in working order. We came down $14,000 off of our asking price and she is getting brand new appliances with the home.
What is a reasonable time frame for the sellers to receive the repair request?
we are the sellers of a 1978 townhouse. we have an accepted offer no papers were signed as of yet. After inspection they wanted all the outlets replaced since some were painted over. A GL outlet. Bathroom vents to be repaired. and anew front door lock. Inspection of heater and ac ( which is down twice a year) carbon dioxsyned on every floor and smoke alarms on every floor. we had on the web site two car garage included. They wanted us to repair doors which do work we just don’t have electric doors. What do you think
We are buyers of a house that had some issues after inspection. We asked for certain items to be fixed. The seller signed the addendum stating that she would fix them. When my husband was invited over to the house to go over one of the items with the contractor, he noticed that nothing had been done with just over a week left before closing. He then learned that the seller had no intention of doing one of the items. She claimed to have misunderstand the issue and with a lot of back and forth was willing to pay half of the cost. Now, a day before closing she refuses to fix another issue. This issue is a deal breaker. I just don’t know what to do.
Lynne, and others. In every repair adjustment amendment I try to boil it down to dollars instead of repairs. Dollars are non-subjective and simple. Your scenario, Lynne, is exactly why I advise every client to get into repairs. The completion of repairs is fraught with issues. The exception being a 1-vendor, 1-off thing like “licensed plumber to replace water heater to code”, or something straight forward and non-subjective like that. But even then, I’d rather, if I’m on the buyer side, get my buyer a $1,200 credit for new water heater and let him control the job himself after closing.
Good luck.
Steve
Old post but still relevant. Sadly, folks seem to get pickier and crazier as time goes on. This is partially due to the average home buyer’s complete ignorance about anything to do with a home, combined with their ability to google something and declare themselves an expert. Mole hills become mountains easily when one has zero understanding of homes. Sellers also can cause problems by not knowing how to maintain a home properly.
I wish we could go back to the days when buyers would just take a reasonable credit for items needing repair and keep life simple. However, the lack of knowledge about homes and fear of having to lift a finger for anything, most folks I have encountered don’t want the credit even if it’s generous, they want everything fixed to their picky standards by “certified this and that” and ready to go with no effort on their part. This creates muddy waters and difficult negotiations that are totally unnecessary. But alas, this is the age we’re in.
I once had a request on a resale for a “certified plumber” to replace a set screw on a perfectly functioning faucet from a plumbing stand point. The plumbers response? “It doesn’t take a damn plumber to screw in a screw.” This was a multi-generational family plumbing company with great service we have used for many projects. To appease this ridiculous request that plumber refused to do, the plumber had to write a statement saying that replacing a screw did “not require a plumbers skill set” allowing a “non-certified yada yada” to screw in one tiny screw. I would much rather have given a credit for the 10 cents it cost for the replacement screw, and an extra 50 dollars to buyer to compensate for the 3 seconds it took to screw it in and solve the problem. But of course, this was made into multiple conversations and more difficult due to ignorance, the going flavor in today’s homeowners.
Agree with most of your points. When I sold my home recently…the buyer wanted a $500 credit for a set of side steps that weren’t built on pilings. In the northeast, the rule is 4′ down, and these were just built on bricks. Problem? House was built code compliant many decades ago.
But I agreed, given paltry some. And I think that was the right thing to do. So my only addition would be sellers might consider agreeing to *unreasonable* corrections that are nominal in terms of impact.
While those stairs were in great shape, newly painted, no rot, etc…everyone wants to feel like they’ve ‘won’…and throwing the buyers a bone seemed a good idea.
Thanks for this write up.
If you’re a first-time home buyer (like me and my wife), you should know a few of things. First, don’t just take your realtor’s word for everything. While that person will be a good source of information, they have an agenda just like you do.
Second, any kind of inspection you pay for (particularly the home inspection) should be worth you attending. I found an issue with the HVAC system that a seasoned home inspector couldn’t find. This will end up saving me likely hundreds (if not thousands) of dollars in heating/ cooling expenses.
Finally, when it comes to the negotiation, your realtor may want you to be willing to give up on certain things. Mine wanted me to let weather stripping go, for example. Weather stripping is fairly cheap and can be done on a DIY basis. However, a vapor barrier in the crawlspace of the house or a cracked chimney are different matters entirely. Make your realtor earn that percentage!!! And, no matter what you put into buying a house, always be willing to back out even if it costs you a few thousand to do it. You can recover from $5000 a lot quicker than you can $200,000 plus interest and repairs.
Steve – what is customary for systems (roof, AC, ?!) that are in working order — but older?
Example: shingle roof & AC are 15 Y.O (Carrier units). Standardly considered 75% “used up”…. how do you factor this into a negotiation? Thanks
@jack – It’s just all negotiable depending on context, market, etc. What I tell buyers is that any expected nearterm costs should be added (in their mind) to the price being paid for the property. If a home has $15K in expenses about to happen, then that should be considered. 12-18 year old major mechanical falls into the category.
Please help me with your thoughts. We are selling a 1965 4800sq/ft home, with many updates, but no updated kitchen or baths. New hardwood flooring on the entire main level, new sun room, landscaped lawn. Within 15 min of two major metro cities and big 10 university. We started on the market with our house at $460,000 and continued to drop the price, with no shows until we hit $430,000. We had one offer but the buyer offered $415 and wanted radon mitigation, new roof and all new windows. Our insurance co. is replacing the roof due to discovered hail damage. Windows are original but not unacceptable. That sale fell through. Now we have another offer for $420 and now they want radon mitigation, the roof is getting done, they want us to take out the hot tub in the sun room (will cost us about $1000 to get a company to remove the wall to get it out), they want a large evergreen that died this past winter removed, windows reglazed, asbestos managed even tho it was in our disclosure. In total all requests amount to $6500. Our realtor seems to be pushing this deal. It seems to me no one is managing the buyers requests. He is just going down the inspection report and ticking off everything. We want to sell badly but at what cost. Is this reasonable. The roof is a given and we will have to do the radon I guess. The hot tub was a shock. Your opinion?
Hi Michelle,
Sounds like a tough negotiation. I can’t give an opinion about an ongoing deal involving other Realtors, other than to say that if both you and the buyer want it to happen, that motivation will get you over the finish line.
Good luck!
Steve
Hi Steve,
Great article. Was wondering if you could give us some guidance. We are selling a house that per the buyer inspection, has a “Heater that appears to be 11 years old and in excellent working condition” (all quotes come from the buyer inspection) “but upon further inspection found it to be 24 years old (end of life expectancy)” and should be replaced, “No visible leaking in basement…back patio may have a sloping issue and might need replacing to eliminate leaking into basement”, “Electric Panel appears to no longer be up to code and should be looked at by an electrician and potentially upgraded for safety”, “Stove is hardwired and should be changed to be plugged into an outlet”, “Sump Pump appears to function correctly and no issues with water…Sump pump appears to be makeshift and should be replaced with a new model.” and “The water Heater is 8 years old and working fine, but average life expectancy is 15 years and should be considered for replacement.”. All of these contradictory things in the inspection have brought the buyers back to ask for $10K in repairs (on a $180K house) after being talked down by their Realtor from $12-15 K. I think these asks are absurd, but want to make sure its not just my emotions kicking in. None of these things appear to actually state there was an issue. The biggest concern they had was the Heater (which works perfectly and as even the inspector said appears much newer than it is). To me, this is like deciding you need to replace your Perfect car that has no issues at all because it is 5 years old and on average, people start having major problems at 5 years – not because there are issues, only because its at the average. We also, as part of the negotiation, already removed a Hot Tub from inside the house because we had available time to do it and other potential buyers had said it might be an issue. Thank you.
John, I would seek guidance from your Realtor if you have one. But I always try to avoid getting into lists of things. I’d offer a dollar amount and start negotiating dollars instead of repairs. Then the new buyer can do what they want after the deal closes and the dollars will offset the expenses.
Good luck,
Steve
Thank you. We do have a Realtor, but I wanted to make sure I was being realistic. The buyer agent just gave a dollar amount (but noted they were talked down from what they originally wanted). The list came from the inspection and their dollar amount was based on the inspector’s list. Their Realtor duplicated the part of the list that was a concern and where their total came from. Everything in the inspector report was oddly worded like I mentioned above (though as a buyer inspector, it was very buyer focused). “This is fine”…”You should do that to avoid having problems”… I guess my biggest question is that if the Heater is working fine (and looks much newer than it is) but it is at the end of the average life cycle, is asking us to pay for replacement (in the form of a 5.5% reduction in the price) really a reasonable request? None of the things listed are (in my opinion) NEEDED repairs. They are not asking the repairs be made, only that we drop the price.
Steve,
You replied to Jack several months ago in regards to his question about “used up,” that it’s “all negotiable.” I think we, as an industry, need to have something a little more concrete so that expectations can be set for ALL parties. Your article (good, by the way), points out some of what I would consider common sense requests from either side of the table that the opposing party finds objectionable.
However, it is the items that that Jack refers to that I have been having the most difficulty with lately. Sellers want to defer maintenance or replacement endlessly. Then, when it comes time to sell their home, they don’t feel they should take into consideration the fact that there is a very real possibility that major systems will fail in the near-term.
I regularly receive inspection reports stating that an item is “beyond it’s useful life.” The industries in question (HVAC, roof, etc.) have statistics on life expectancy, and these are perfectly valid as is the concept of depreciation. If a roof is a “20 year” roof, and we are now in year 25, a seller should not be surprised to be asked to replace the roof! The same is true with a 20 year old HVAC system.
And yet, I will get indignant responses from both the sellers who are my clients as well as from sellers represented by other agents that they are offended that such a thing is being asked of them. I have literally been told, “I haven’t had a leak in that roof for 25 years,” and “My air conditioning has been fine for 22 years, why should I replace it now?” As if those items are going to last forever….?
My point is that we probably need to utilize a consistent process like a depreciation factor. Accountants do it in business all the time. For example, if we use straight-line depreciation. We take that 20 year item, divide it by 20, multiply by the number of years that it has been in service (with a 20 year limit), and that’s what the seller should expect to be asked to cover post-inspection. Why? Because that is the amount the seller has used! And, he/she should pay for it, not the buyer.
I can hear the screams already. Yes, if those things were considered from the very beginning, and the house was priced properly, then fine. But let’s be realistic. That is rarely the case. Sellers look at what their neighbor sold for and think they should get the same thing regardless of condition.
I’d like to hear your input and maybe a little more methodical approach to calculating specific dollars in various scenarios like the one Jack brought up.
I hear you Mark. But it’s still just “negotiable”. In a hot market with limited inventory, sellers don’t have to fix much of anything. Buyer walks away at risk of finding nothing better. So the “market” determines the value of a home in its present condition. I would be against any sort of pre-established process or rules.
In Texas, a seller has absolutely no obligation to fix anything whatsoever, and a buyer has, for a very small Option Fee, the 100% unilateral right to walk away from that home following inspection. This works well enough, though I do wish there was an informal set of understandings, as I outlined in the article, which would make negotiation less painful.
Don’t get me wrong. EVERYTHING is negotiable. And as an economics guy, I fully recognize supply and demand. What I would like to see is the EXPECTATION set properly, and I think at least some method of getting to that expectation/agreement would be helpful.
I absolutely agree that sellers are not required to sell, and buyers are not required to buy, but they WANT to, and that’s what we are trying to facilitate. I seem to be picking on sellers here…not intentional, because I represent sellers too. All I’m saying is a seller should be educated (by us?) that they can either pay for items as they go along (maintenance/replacement) or they can pay for it on the back-end when they try to sell, but (pardon the well-worn expression), they can’t have their cake and eat it too.
Thanks for your input. Putting “pen to paper” has allowed me to organize some thoughts on dealing with a couple of stubborn clients!
Great article, but I’m curious if you have any information on what the typical repair credit ends being in your market.
Of course sometimes there’s a big ticket item like a roof or foundation repair, but excluding these, is there a dollar amount range or a certain percentage of the sales price that you typically see buyers and sellers eventually settle for as a friendly concession to keep the deal moving? I’m sure it varies but I’d guess motivated buyers and sellers land somewhere between $500 and $2500 for a typical Austin house.
Also what are the conditions where sellers get away with less concession and the conditions where buyers are able to win large credits?
We had a buyer who wanted us to fix EVERTYHING on the inspection report. We, of course, refused and agreed to fix only some stuff. They in return demanded 10K credit to fix ‘everything’.
In the end they backed out because of ‘too much work’. (first time buyers?)
I know my house. It is in a great condition for its age. Everything is functional and operational. It is a move-in ready property. I know that the buyer-wife really wanted the house. I feel so sad that she did not get her dream house because of wrong perceptions.
Sometimes buyers get too emotional about inspection reports, act unreasonable and walk away from a good deal. Sad reality.