Home Buying in Fremont>Question Details

Dreams, Home Buyer in Fremont, CA

Inspection report shows lots of flaws after bid getting accepted!!

Asked by Dreams, Fremont, CA Fri Mar 28, 2014

What a buyer can do after his bid getting accepted in an ' as is' property but later there are tons if flaws/ lackings in the house in inspection report ?
What will be the consequence of backing out..

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Answers

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If you have written an offer with “no contingencies” you have written an offer that says “I am offering to buy your house in its current condition no matter what that condition is and in spite of the fact that I do not know what the condition is at this time.”

In retrospect, that does not sound like it was a very good move given that you now find what you consider to be significant flaws with the property.

I know that this is a challenging market for buyers, there are commonly multiple offers on many properties, offering amounts are going way over the asking prices and buyers are struggling to have their offers accepted. Waiving contingencies made your offer attractive to the seller and may have been the reason your offer was accepted. I am sure it seemed like a good idea at the time. Now you are seeking a way to change the offer that you wrote or cancel it.

Of course, you can cancel and forfeit your deposit but I know that is not the advice that you are looking for.

What does the person who wrote the offer for you advise you to do?
1 vote Thank Flag Link Sat Mar 29, 2014
An attorney may be able to use the misleading advertising as a way to negotiate you out of your contract. Maybe not. And…attorneys cost money, too. Perhaps a local real estate attorney will provide you with a free consultation to see if you complaint has any merit…in a legal sense.
0 votes Thank Flag Link Sun Mar 30, 2014
In short, the terms of your agreement will dictate what you can do without penalty. Most "AS IS" agreements have an "inspection period" that allows the buyer to back out without penalty....however, there are conditions and deadlines associated with this.

Refer to your document and contact your agent or an attorney for the support you require.

Good luck,

Bill
0 votes Thank Flag Link Sun Mar 30, 2014
Hi, Bill. You did not read from the beginning. The purchase was made with "no contingencies".
Flag Sun Mar 30, 2014
Dream,
The only information you have provided is you offered to purchase a home with NO CONTINGENCIES.
This is the magic sauce that makes these offers work...No CONTINGENCIES.
A clean offer such as the one you made, No CONTINGENCIES, are more likely to be accepted.
The strategy WORKED!
CONGRATULATIONS!
You own a home because you were decisive and strategic.

You fail to disclose the situation of the sale such as auction or foreclosure an any of the many methods of disposing of distressed real estate. The available options depend on the situation and the situation suggest the contracts you have signed.

In ALL of these distressed sales the buyer must understand they are responsible for their due diligence. That means do your homework before you throw your money into the ring.

Now, pick up the phone and call a few contractors and get those things fixed that you can not do yourself. Celebrate your cleverness and the great deal you got.

Don't destroy your victory by filling your gardens with seeds of regret.
Celebrate and move on to the next chapter of your life.

By the way, soliciting the opinion of strangers on the internet, INSTEAD of turning towards the guidance of the one YOU HIRED, your REALTOR, to guide you, suggests there are other issues in play.
0 votes Thank Flag Link Sun Mar 30, 2014
If you back out during the mandated inspection period (it's in the contract you signed and is generally between 10-14 days long then noting happens and your deposit will be returned. Otherwise you can still walk away but you lose your deposit. You may attempt to renegotiate with he seller but in general the people hired to "manage" these assets have exceptionally high levels of arrogance coupled with remarkably high levels of stupidity. This is always a terrible combination in terms of actually working things out If you're not sure what your rights are under the contract and aren't working with an experienced buyer broker you can consult with, then you should immediately find a real estate attorney tomorrow and have them quickly tell you whether you can terminate now and get your deposit money back or whether you'll lose it if you terminate.

Here's what you and every buyer reading this needs to grasp. There are virtually no deals at all when buying foreclosures or bank owned properties. Repeat after me: There are no deals to be had buying a bank owned property. I say this based on 25 years of experience as a Realtor and someone with extensive building experience. I have been buying and flipping homes off and on for close to 35 years, I'm in the business and still I have never bought a bank owned property for myself. Why? Because there are no deals to be had in buying bank owned properties.

If buyers would like a deal for assuming the additional risks inherent in buying bank owned properties, then you're going to have to stop bidding on them for the next couple of years and allow the bank to choke on them.

When you buy a property "as-is" then 99.9% of the time it means just that, "as-is" I have helped many dozens of buyers successfully purchase these types of properties (after telling them their not going to be getting a deal) I know this to be true. I actually have gotten so fed up with the people who are hired to sell these properties that I have simply stopped dealing with them and will no longer work with buyers who insist on pursuing them. Without fail buyers underestimate the amount of work and the cost of correcting the problems these homes have. It's not that most are bad deals, they are not, most are at bet fair deals, the question is why would anyone want to pay market price to get a fair deal that's going to require a lot of work and money.
0 votes Thank Flag Link Sun Mar 30, 2014
In general, Larry, I agree with your comments. But, specific to his question, Dreams did not say this purchase is of a REO.
Flag Sun Mar 30, 2014
@John and Michelle
Our agent telling us to go with the property as all the flaws are repairable and house is worth to get. We are upset because the seller published in the ad words like completely rebuilt and brand new... But it is not like that.
0 votes Thank Flag Link Sun Mar 30, 2014
Hi Dreams,

So what did you decide to do? How did it work out for you?

Best regards,

Russ and Michelle
Flag Thu Apr 3, 2014
We never advise our clients to write an offer with "no contingencies" at all if the seller doesn't already have a complete set of inspections and disclosures for the buyer to review available prior to offer deadline and our buyer is paying cash. Even when they do, it is best to have a minimal contingency (e.g. 3 days).

In your situation, did you receive a Seller Property Questionnaire (SPQ) and/or Real Estate Transfer Disclosure Statement (TDS) from the seller prior to making your offer? How about a Natural Hazard Disclosure (NHD)? The TDS and NHD are both required by state law, unless you purchase a Bank-Owned property (REO).

Paragraph 6.A.(4) of the CAR Residential Purchase Agreement reads:

"If any disclosure or notice specified in 6A(1), or subsequent or amended disclosure or notice is Delivered to Buyer after the offer is Signed, Buyer shall have the right to cancel this Agreement within 3 Days After Delivery in person, or 5 Days After Delivery by deposit in the mail, by giving written notice of cancellation to Seller or Seller's agent."

I believe this overrides your "no contingencies", so this would be one way to get out of your contract and get your deposit back.

If you DID receive the above TDS (and an SPQ) prior to submitting your offer, another question for you is: did the seller disclose defects likely to affect the value or desirability of the property that should have been know to the seller? These would be significant flaws revealed by your inspections. If so, you may have grounds to cancel based upon the seller neglecting to disclosure relevant facts. However, this sort of thing requires legal advice, which we cannot provide.

Regardless of your specific facts, whenever the possibility of losing your 3% deposit is involved, we strongly suggest you seek the advice of a good attorney who specializes in real estate matters.

Assuming your 3% initial deposit is held in escrow, they will release it to the seller in one of 3 ways:

1. You sign to voluntarily give it up, either before or after mediation.
2. An arbitrator awards it to the seller.
3. You don't have the arbitration clause initialed and a judge awards it to the seller.

Best of luck!

Russ and Michelle

PS. Also curious like John, what does your buyer's agent advise you to do? Did you buy it from the seller's agent?
0 votes Thank Flag Link Sat Mar 29, 2014
@Lance King
That's the issue... Offer had no contingency clause ...
0 votes Thank Flag Link Sat Mar 29, 2014
All that "as-is" means in terms of real estate is that the seller is saying they aren't going to give any credits or price reductions, although that often happens anyway.

I will assume that you had an inspection contingency. If this is true and you haven't removed it yet, then you can do one of the following:

1. Cancel the deal
2. Negotiate price reduction/repairs/credits, or some combination of them
3. Proceed with the deal.

If you haven't released the inspection contingency yet then there should be no consequence for backing out, other than any money spent on due diligence.
0 votes Thank Flag Link Sat Mar 29, 2014
Hi Dreams you also have three days right of recession after you (or your Realtor if you have one) receives the TCS from the seller.... Dawn
Web Reference: http://DawnRivera4Homes.com
0 votes Thank Flag Link Fri Mar 28, 2014
Dear Dreams,

If you have released your inspection contingency, then you are in a tight place. However, if your inspection contingency is still intact, just because you are buying the property in an "as is condition" - you are entitled to know what "as is" is. It basically is saying that I will not turn around and ask the owner for repairs, however, you should be okay with the repairs that need to be done. I would seek wise counsel if you are not working with an agent before you cancel the agreement , because your deposit maybe jeopardized.

Hope that helps,
0 votes Thank Flag Link Fri Mar 28, 2014
It really depends if you have removed the inspection contingency or not. If you have then you are at risk of loosing your em deposit. Did you not have a Realtor? I would highly recommend you to ask your realtor this question as he/she is more familiar with your purchase contract.
0 votes Thank Flag Link Fri Mar 28, 2014
Dear Dreams:

In one of your posts, you said there are no contingencies and you are buying it "as is". This is unfortunate. You should discuss this with your real estate agent. If you need a real estate agent, there are many of us who can give you advice before you write an offer. This is why real estate agents are involved in the buying and selling of real estate.

Without looking at the purchase agreement, it is difficult for a real estate agent, a friend, a real estate attorney, or anyone else to answer your question of "what will be the consequences of backing out?"

Good luck.

Sally Blaze
Alain Pinel Realtors
Lic # 01856137
sblaze@apr.com
0 votes Thank Flag Link Fri Mar 28, 2014
Hi Dreams, there are many answers to your question. The main question being can you back out. If you have not released your inspection contingencies then you can back out without losing your deposit. Dawn
Web Reference: http://DawnRivera4Homes.com
0 votes Thank Flag Link Fri Mar 28, 2014
I would encourage any home buyer to have a Realtor assist them with the purchase of any property. That being said, there may be an opportunity to back out if there is a contingency in the contract that states that the offer is based on a satisfactory home inspection. If that doesn't work, you may just have to have a conversation with the seller in order to have them fix what's wrong before closing. You may want to talk to a Realtor in your area to see what your options are. Hope this helps!
0 votes Thank Flag Link Fri Mar 28, 2014
This is why people get real estate agents. If you have one you are paying them to answer these questions for you and if you don't I would be more than happy to recommend one to you because you need one. Just send me an email if you have any further questions.

Alex Greer
Loan Officer
NMLS #1056079

http://www.TheMortgageOutlet.com
408-352-5147
AGreer@TheMortgageOutlet.com
0 votes Thank Flag Link Fri Mar 28, 2014
Are these flaws you can live with? If they are small issue that wont cost a whole lot to fix and you really like the home it might be worth moving forward. If you see multiple issue you can't look past than opt out.

Are you working with a agent currently? These are questions you should be addressing with them they are working for you in your best interest.
0 votes Thank Flag Link Fri Mar 28, 2014
Also there is 'no contingency' in the contract..
0 votes Thank Flag Link Fri Mar 28, 2014
The question here is what you want to do... If you want to back out and it is still within your inspe tion period (usually 17 days) - there should be no consequences and you should get your deposit back.
0 votes Thank Flag Link Fri Mar 28, 2014
What type of sales transaction is this? Auction? Normal sales transactions provide buyers 17 days due diligence to review all reports and inspections. If the sales contract was written to protect you (the buyer) then you can cancel the contract and your earnest money deposit will be returned to you.
0 votes Thank Flag Link Fri Mar 28, 2014
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