Home Buying in Seattle>Question Details

pmarquart60, Both Buyer and Seller in Stanwood, WA

Home Inspection. We accepted an offer on our home, and now it is inspection time. The inspector has come up with nickle-dime issues and one major one.

Asked by pmarquart60, Stanwood, WA Mon Jan 28, 2013

Are we required to fix ALL the items? We cant afford to fix these things. If the buyers leander requires these things to be fixed inorder to fund the loan, are we on the hook or can we just say no and let the deal fail?

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Dear PMaquarter60,
You can refuse...but why? If you have a good buyer (good credit and sure to fund loan)why not negotiate the repairs? You might be able to split the costs or 60/40 something like that and keep your sale. it's much better to work with an interested party in hand, then to search for another one.
0 votes Thank Flag Link Fri Feb 1, 2013
What type of agreement did you sign? "AS IS" or a standard contract? Standard contracts typically spell out repair costs, limits and guidelines as part of the agreement that both the buyer and seller agree to abide by.

Speak with your agent for a clarification of your options. Walking away could leave you with financial responsibilities beyond what you expect. Be sure you clearly understand your options before deciding on a direction.

Good luck,

0 votes Thank Flag Link Fri Feb 1, 2013
An inspector's job is not to try and talk a buyer out of buying a home. All they're responsible for is determining if the property is structurally safe. and to inspect the home for those potentially hazardous materials and problems such as radon, termites, carbon monoxide, lead paint, and septic systems.

Home Inspectors should be thorough, but not too picky. (For example, some inspectors will point out cosmetic repairs that need to be made, like the paint in the kitchen is chipping. That's not a make-or-break issue.) So you should determine if the repairs needed are major in which case you might have to undertake them before sale or deduct the cost of the repairs from the final price negotiations.
0 votes Thank Flag Link Fri Feb 1, 2013
You can just say no...but if you do you'll need to disclose these issues on the Form 17 Disclosure Statement. The appraiser will be the one to determine if the issues will need to be addressed to fund the loan.
0 votes Thank Flag Link Mon Jan 28, 2013
This is just another stage of negotiations. This is one of the reasons you hired a professional. Take a deep breath and let the pros do what pros do.
What you are experiencing is common to every home seller. You should have been prepared and your agent should have buffered you better regarding the strategy in play. Just like the appraisal, you need to be prepared for the gamesmanship that will occur.
Your agent knows what options the buyer has. Your agent, if they were paying attention, knows the motivation of the buyer. Your agent will know if there is an equivalent home this buyer could choose. Your agent knows the tangible assets of your home and that of the other homes. Let the data guide you. Put your emotions to rest.-
Buyers seem to accept the obligation to keep asking for more, the sun, the moon, the stars and little 'spot' too. My buyers are the same way. They feel obligated to keep asking for more until the seller says, NO!
Of course sellers, with the guidance of their agent will say NO the American way....."SURE!"
It's like when I ask my very closest friends to come along as I run a ultra race. Knowing this involves standing around for 6 hours...they respond to my inquiry, "Do you think you can make it?" They say 'Sure." They are nice that way.
Don't sweat the little stuff. Take a small step in their direction, then say, "SURE."
Now, if you've got yourself mucked up with an FHA backed buyer...you'll need to listen to your agent.
What ever you do, don't take it personal. It is a process. it's gamesmanship. Rely on your professional to take ownership of the situation and 'sure' your way to success.
Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, FL
0 votes Thank Flag Link Mon Jan 28, 2013
There is a fine balance between your sale price and the costs of repair / replacement. You can certainly let the deal fall by saying no to all, or you can renegotiate with the buyer. Are all items on the inspector's list critical? would they be a tipping point to the appraisal? Your real estate broker can help you work out a win/win situation.
0 votes Thank Flag Link Mon Jan 28, 2013
There is delicate balance between your sale price and the costs of repairs that the inspector had called for. You can certainly let the deal fall by saying no. You also have the option of renegotiating by looking into how many items needed repair/replacement and agree to the critical ones as far as appraisal is concerned. Your real estate broker can help you work out the best solution.
0 votes Thank Flag Link Mon Jan 28, 2013
Hello- Your response to the requests that the buyer makes after the inspection are totally negotiable. I would recommend fixing the major one and rejecting the less significant ones if you want to sell to these buyers. They have the option of rejecting your proposal and walking away if you don't agree to fix all the items. But chances are if they want to buy the home, they will accept you just fixing the major issue. If there is a problem with the buyers lender requiring the repairs, you can always suggest a hold-back to pay for the repairs or have the buyer switch to a rehab loan.
0 votes Thank Flag Link Mon Jan 28, 2013
If this issues uncovered are going to come back to bite you the next time around, you will likely be better off just to resolve it with this buyer.
Your options are to fix, offer a credit and or discount or take your chances on the next time. Remember too, now that you are aware of the major issue, you need to amend your seller's disclosure informing subsequent buyer's that the problem exists.
Your broker can hopefully discuss the issues in greater detail with the buyer’s broker to find out what combination of credit/discount/repair they may find acceptable.
Best of luck with your sale.
0 votes Thank Flag Link Mon Jan 28, 2013
I would bet you need to fix the major issue in order to avoid losing the sale with the buyer's or the buyer's lender. With that item fixed, the buyers may be willing to take the home with the nickel and dime repairs needed. The brokers will haggle through it and most brokers are good at trouble shooting and keeping the sale together. Realize that if you don't fix the major issue, it will just come up again with the next buyer. Or you may need to drop your price to compensate for the major repair.
0 votes Thank Flag Link Mon Jan 28, 2013
You might find a contractor willing to take payment at closing, there are many that are agreeing to this since they understand the situation (roofers in particular). You still run the risk of not getting the work up to snuff to pass re-inspection, the lender has the final say, their appraiser will be coming AFTER the negotiated repairs are complete and wanting to see the work. Lenders have never been more picky about things than they are now, putting their nose into all of the "buyer's business" as it is the lender's money buying the house so really it is the lender's business. They want to be making a good investment on a sound and safe property. It is possible that if this sale falls apart at this point you may get another offer - but the fact your property is at status "Pending Inspection" and then goes back to "Active" is a red flag, and buyers are going to be asking for an explanation before even writing up an offer and if it was material your agent has to disclose it. One of my recent home buyers made offers and had horrible inspections on three different properties at a cost of $1500 ($500/inspection) before finding the right property - which instead of being an older updated home where shoddy/unsafe work was done it is a newer home that was foreclosed on so the price was within their budget. The 3rd house they really wanted so we wrote up 4 pages of repairs needed, primarily related to water and plumbing issues. They agreed to a piddly amount of work and we walked, and that property has been off Pending inspection and back to Active three times!! I don't know why people keep writing up offers on the property, clearly there is a problem with the house and the seller won't deal with it. So that is what happens when a property goes on and off and back on market. You are on the market longer, and the same problems are going to be revealed, if not even more, since some inspectors are more thorough than others. You have some phone calls to make to see if you can someone to do the work and accept payment out of escrow - but your 3-day clock is ticking, so get on the horn and then make a decision based on new information. You might be surprised you can find someone to do the work.
0 votes Thank Flag Link Mon Jan 28, 2013
It is really a bad move to let the offer fail at the inspection point, especially if there are only "nickel and dime" issues. The reason being is that it sends a message to the rest of the Realtor community that you are either "inflexible as a seller" or that there was a major issue with your home. I would either extend a home warranty to the buyer to put them with ease on the small issues (average cost $325.00) and fix the large issue rather than let the house go back !on the market!
0 votes Thank Flag Link Mon Jan 28, 2013
Like everyone here has said, you are not required to fix anything, but the buyer can walk away. I have run into situations however where the bank (Wells Fargo) has required the inspection items to be fixed because they saw them on the inspection response in the paperwork for the deal even though the buyer and seller agreed not to fix everything. This is not the case with most banks, but it does depend on the buyers financing. If it is an FHA loan, they tend to be a little more picky. But traditionally banks do not require all inspection items to be fixed. Big things like a failed roof or major systems may be called out in an appraisal. Just take your brokers advice on this.
0 votes Thank Flag Link Mon Jan 28, 2013
Relax, you don't have to fix any items revealed by the inspection. The down side is, you could lose the sale if the buyer chooses to walk away. In addition, you may have to amend your Property Transfer Disclosure Statement if the inspection found material defects in your home. That means future buyers would need to be advised of any serious problems.

The question is; has the buyer asked for any repairs? Repairs are a point of negotiation. The buyer may ask for just the 'major' item to be repaired. My advice; DO NOT repair the major item. Instead, negotiate a sum of money to fix the major item from your proceeds at closing. That gives the buyer money to make the repair after closing and you pay nothing out-of-pocket. The buyer should be responsible for making the repair, not you. That way, the buyer can choose their own contractor and have the repair made to their satisfaction.

Your Broker will guide you through the negotiations over repair issues. Your Broker most likely has a lot of experience negotiating repair issues. So, trust your Broker to help you navigate this bump in the road. Good luck!
0 votes Thank Flag Link Mon Jan 28, 2013
You absolutely are not required to fix any of the items on the home inspection. I've never heard of a lender requiring repairs to be made based on home inspection results...lenders typically don't even require an inspection, it is the choice of the buyer in most cases.

If you are unable to make the repairs suggested by the home inspector, your buyer can buy your home as is at the agreed price knowing what needs to be fixed, ask for a price reduction in order to cover the costs of repairs needed to be made, or walk away.

Good luck! Try to keep the deal alive ...everything is negotiable.
0 votes Thank Flag Link Mon Jan 28, 2013
Your broker will need to guide you through this because you don't need to fix anything that isn't either health or safety related. And even some structural issues aren't safety related.
The buyer's lender is another issue. Your broker should be able to give you some ideas as to which issues will trigger the underwriter.
I'd be inclined to repair the lender issues but without a lot of detail that is pretty sketchy advice.

I HATE it when buyer's agents hand over the entire inspection report. It tends to take the focus away from what really matters as health and safety and frequently triggers a lender delay.
0 votes Thank Flag Link Mon Jan 28, 2013
You have no obligation to fix anything. However, the buyer has the right to rescind the contract if it is unhappy with your response. So you need to balance your willingness and ability to fix the defects against your desire to keep this contract together. But you are not "required" to fix anything. Yes, you can "Just say no" and let the deal fail.

As you note, it is also possible that you refuse to fix anything, the buyer backs down and accepts that response, but the buyer's lender then refuses to fund the loan based on one of those defects. First, and without getting into the details, there is a good chance the lender will not learn of the defect. But if it does, then the deal would fail and since financing failed the buyer would get the earnest money back (assuming there is a financing contingency).

Final thought: Generally it makes more sense to work with a current buyer than to kick the buyer to the curb and find another. The next buyer will likely find the same major defect. So it is probably in your interests to do what you can to keep this transaction together.
0 votes Thank Flag Link Mon Jan 28, 2013
Hi pmarquart60,

You can fix all, some or none of the items requested. However, if you don't and the buyer hasn't removed the contingency related to this, they can cancel contract. Then you just relist - have your Realtor state in the MLS - "As Is" if you don't want to do any repairs. Now, if the repair(s) are safety issues, lenders may require they be fixed. In that case, try to find an all cash buyer or possibly a conventional loan buyer (depending what the repairs are).

Shanna Rogers
SR Realty
0 votes Thank Flag Link Mon Jan 28, 2013
The two realities are the MAJOR ISSUE, and your inability to fix it:

You, (and the Buyer), have three choices;
Lower the PRICE to allow for the repairs
Sell it As-Is and let the Buyer contend with it, or,
Chance losing the Deal.

Good luck and may God bless
0 votes Thank Flag Link Mon Jan 28, 2013
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