Posted by Jane on June 29, 2003, 11:30 am
When I recently sold a home, there were a few items that came up at
the inspection that we compromised with the buyer. We ended up
crediting the buyer with $1500 at closing. The buy/sell agreement
usually is pending outcome of the inspection. It seems you are now in
a position to re-negotiate the price of the house. Do you have a
realtor? Our realtor guided us through the steps. We did not credit
the buyer with the entire cost of the fixes. I think we ended up
crediting about 1/2 the estimated cost. Jane
damsel@petepetersen.com (DanceRat) wrote in message
> I had a home inspected today which I had placed an Offer for Sale and
> Purchase for about 170,000.00 It turns out that it needs a new
> furnace, (the old one was dead), and numerous other items which total
> up to about 7000.00. My husband and I are willing to do the work, we
> really like the house, but obviously the seller needs to come down in
> price. Is it usual to ask the seller to lower the price or to give
> the money back as a credit to the buyer after close of escrow? We are
> wording it so that it is an option to the seller, we don't really care
> either way as long as the purchase price is reduced in some way.
>
> Thanks!
Posted by John R Weiss on June 29, 2003, 3:07 pm
> I had a home inspected today which I had placed an Offer for Sale and
> Purchase for about 170,000.00 It turns out that it needs a new
> furnace, (the old one was dead), and numerous other items which total
> up to about 7000.00. My husband and I are willing to do the work, we
> really like the house, but obviously the seller needs to come down in
> price. Is it usual to ask the seller to lower the price or to give
> the money back as a credit to the buyer after close of escrow? We are
> wording it so that it is an option to the seller, we don't really care
> either way as long as the purchase price is reduced in some way.
It is definitely "normal" to ask the seller to either fix the defects or reduce
the price when an inspection discovers problems. Often it will be a combination
of both. In any case, everything (repairs and/or agreement to modify the
purchase price) should be in place BEFORE close of escrow!
Assuming your original offer had a normal "contingent on successful inspection"
clause, make a modified offer for $163,000 based on the inspection results and
estimates to repair. The seller may come back with a counter that they will fix
some of it (if they can do it less expensively). Your realtor and/or attorney
should be able to help you in a matter of a few minutes.
You have significantly fewer rights and options after close of escrow. Don't
wait!
Posted by DanceRat on June 30, 2003, 2:50 am
I was under the impression that it was common to have the seller
credit funds to the buyer at the close of escrow - so basically they
are paying for the amount of our closing costs, and we agree to pay
for the repairs. We decided to do this, rather than have our sale
posted as a lower price. I will let you know how it turns out.
Posted by John R Weiss on June 30, 2003, 3:03 pm
> I was under the impression that it was common to have the seller
> credit funds to the buyer at the close of escrow - so basically they
> are paying for the amount of our closing costs, and we agree to pay
> for the repairs. We decided to do this, rather than have our sale
> posted as a lower price.
As long as you're happy with the result, and all is complete at closing, it
works.
However, in the future remember that all costs that hinge on the sale price
(realtors' commissions, taxes, mortgage, etc) will be higher with the higher
sales price. So will the likelihood of the next property tax assessment. You
should take those factors into account when making the decision.
Posted by David W. on June 30, 2003, 10:14 pm
>> I was under the impression that it was common to have the seller
>> credit funds to the buyer at the close of escrow - so basically they
>> are paying for the amount of our closing costs, and we agree to pay
>> for the repairs. We decided to do this, rather than have our sale
>> posted as a lower price.
>
> As long as you're happy with the result, and all is complete at
> closing, it works.
>
> However, in the future remember that all costs that hinge on the sale
> price (realtors' commissions, taxes, mortgage, etc) will be higher
> with the higher sales price. So will the likelihood of the next
> property tax assessment. You should take those factors into account
> when making the decision.
>
Perhaps true, but in most cases, the difference is only a couple $K, and
won't make much difference in the taxes. Obviously, if you're talking about
big-ticket items it could be significant, but it'll typically catch up at
the next assessment anyway.
My personal preference is to never allow the seller to do repairs or
replacements. You're pretty well gauranteed of low-bid products, and
installation by the best friend's second cousin Bubba who was sure he
knowed how to do it. Whether the solution is escrowed funds, price
reduction or credit at closing depends on what the seller is willing to do.
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> Purchase for about 170,000.00 It turns out that it needs a new
> furnace, (the old one was dead), and numerous other items which total
> up to about 7000.00. My husband and I are willing to do the work, we
> really like the house, but obviously the seller needs to come down in
> price. Is it usual to ask the seller to lower the price or to give
> the money back as a credit to the buyer after close of escrow? We are
> wording it so that it is an option to the seller, we don't really care
> either way as long as the purchase price is reduced in some way.
>
> Thanks!