Home Buying in Palo Alto>Question Details

Potential Bu…, Both Buyer and Seller in 95014

Hi, We are thinking to write an offer for a single family house in Palo alto.

Asked by Potential Buyer, 95014 Sat May 22, 2010

To attract our offer, we think to put no financial cont. but put 10 days property cont., AS IS and $10000 higher of asking price.
We would like to do the property inspection even seller has it. Question: If we decide to resign the contract after the inspection (like we see main problem or structural problem in the house), can we get our deposit back even we have no financial cont. in our offer?
Thanks

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Potential Buyer:

Q: If we decide to resign the contract after the inspection (like we see main problem or structural problem in the house), can we get our deposit back even we have no financial cont. in our offer?

A: There are a number of components to your question – let me answer each piece separately.

(1) Your Loan and Appraisal contingencies have nothing to do with your Inspection Contingency. Your loan Contingency ONLY affects your loan.

(2) If you choose to purchase “AS-IS”, then your Inspections are for your information and safety ONLY.

(3) If you find issues that you are not willing to live with, then you can cancel the contract and get your deposit back – AS LONG AS YOU DO SO BEFORE THE 10 DAYS FOR THE INSPECTION CONTINGENCY HAVE EXPIRED.

(4) Time is of the essence – you are going to have to VERY fast to get your inspections and appraisal done within ten days.

(5) If you back out of the contract within your contingency removal period, you will still have to pay for your inspection costs and appraisal.

(6) As has been pointed out, even though you are buying “AS-IS”, IF you find significant issues you are not willing to live with, there is nothing to keep you from asking that they be taken care at the seller’s expense. We’ve seen many instances where sellers have been willing to deal with legitimate issues even though they are selling “AS-IS” IF it means staying in contract. JUST MAKE SURE that you deal with everything BEFORE your Inspection Contingency expires OR you get a written extension signed by both parties.
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1 vote Thank Flag Link Sat May 22, 2010
Carl says it best on question #6.

Keep in mind appraisers will call out some issues if significant, i.e. sloping floors etc. This can also become a loan issue. Something to keep in mind.

Best of luck.
Web Reference: http://www.loansquawk.com
0 votes Thank Flag Link Mon Aug 30, 2010
Your questions are very legitimate and should be answered by your Agent if you are using one. If you are representing yourself then I strongly suggest you consider getting legal help with writing it in accordance with your wishes.
You are dealing with an 8 page legal contract and your questions deal with just one small part of it. If you feel confident in your understanding of the rest of the contract, then your specific questions have been anwered by previous responders.
Be careful whose advice you use as out of state agents may not be familiar with California real estate contracts and laws.
Also, be aware that in Palo Alto area there are 2 different Purchase Contracts in common use. These are identified as the C.A.R. and the P.R.D.S. contracts and there are numerous differences.
Good luck
Bill
0 votes Thank Flag Link Sat May 22, 2010
Aileen gave you excellent advice. The reason to use a Buyer's agent is to give you the representation you need and want. It is their job to explain each of these points to you so that you can make an informed decision. If you are not comfortable with their answer I would question if you trust your agent and if it is a good match. The relationship between you and your agent is very important and he/she needs to know you are asking these questions to other agents. Make sure you keep your agent informed of your questions, concerns, etc.
Web Reference: http://www.terrivellios.com
0 votes Thank Flag Link Sat May 22, 2010
If you do not include the inspection contingency in your offer/contract, then you will not have its protection. I understand that you are trying to enhance the seller to accept your offer, but I do not suggest that you overlook your own rights. Consider retaining your inspection contingency rights, but give the seller your assurances that you will focus on what the inspection contingency is really meant to address - structural, safety, envionmental issues. What sellers are wary of is a buyer taking issue with matters that fall outside of this range of concerns and/or the possibility of the inspection discussion being turned into an attempt to renegotiate the price.

Also, hire really good resources - agent, inspector, attorney - it makes such a difference to the success or your transaction.

Good luck,
Jeanne Feenick
Unwavering Commitment to Service
Web Reference: http://www.feenick.com
0 votes Thank Flag Link Sat May 22, 2010
Hi,
As the other Agents pointed out as long as your inspection period has not expired you should be fine, I would make sure I did the inspections quickly, so that it leaves plenty of time for me to either cancel the contract or even better to re-negotiate the price even though it is an as-is contract, ( hey, you can always ask ) if you really wanted the home and the comps justified it.
I hope that helps, as always feel free to contact me with any questions.
Regards,
Allyson
408-705-6578
allyson@homesbyallyson.com
DRE# 01397256
0 votes Thank Flag Link Sat May 22, 2010
You can get your deposit back if you cancel before the property inspection contingency expires. If your agent submits PRDS Form RAIA, "As-Is Addendum", paragraph 4 says specifically that you retain rights to do whatever inspections you deem appropriate and to cancel within the stated cancellation period.
0 votes Thank Flag Link Sat May 22, 2010
Hi PB,
In general, contingencies allow a buyer to back out of a sales agreement . There could be more than one (and most likely are) agreed upon, e.g. financing, property condition, title matters, etc., they all stand on their own. Be sure to rely on your real estate agent's, or your attorney's advise when structuring your purchase offer and read and understand the contract before signing.
Best wishes for a successful home buying experience!
Kathy
0 votes Thank Flag Link Sat May 22, 2010
Hi 'Potential'
Your agent should be able to fully advise you on this.
If you don't have an agent, there is quite a bit more to it than can be fully explained here, and certainly more than an agent is allowed to advise you without a formalized relationship.
Generally speaking, however, a financial contingency only covers you if you cannot arrange finance for the property. Property inspections have no effect on this contingency.
If you were to want the protection of being able to get your own inspections (which is your right, and is strongly recommended) before being fully committed, you would need to ensure that you are covered by a Property Contingency.
Taking the property As-Is means that you're accepting it in the condition that you are aware of at the time of writing your offer. If you are covered by a property contingency and you find new information (i.e. from the inspection), you are not required to accept the newly discovered defects whether the contract is 'As-Is' or not.
Good luck :)
Aileen
Web Reference: http://www.Aileen4Homes.com
0 votes Thank Flag Link Sat May 22, 2010
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