Home Buying in 01850>Question Details

Ssgirrrl, Home Buyer in 01850

we offered on a house and it was accepted. We paid earnest $ till closing. the house is on the market and 15k less. it failed inspection today..?

Asked by Ssgirrrl, 01850 Wed Apr 27, 2011

The house was on the market after our offer was accepted. thats fine, but... they lowered the price...I think thats odd. today we found out the house failed its inspection with about 2,000 dollars worth of things that need to be fixed. Nothing major, but enough to hold up the lender. My issue is, we can legally pull out of the contract since the house isn't up to code and we get our earnest money back. But the repars are less than the new "lowered" price. How can we negotiate this? Or should we null the contract and reoffer at the new lower price? Im confused why they would have lowered the price anyway since they had an offer and I feel something fishy is going on. The agent called today and asked us to send a letter stating WE were terminating the contract...is this a scam to keep the earnest money and get a free inspection?

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No, that "isn't fine." The house should not be on the market after your offer was accepted complete with signed copies provided back to you. Yes, if you're using a MA standard Offer form, the home inspection is a valid way for you to receive your deposit back. In order for you to purchase the house at the new, lower, price, yes, you do have to officially withdraw the first contract - by using your failed home inspection contingency. If you "feel something fishy going on," then trust your gut instincts, get your deposit back, and get another agent or broker to represent you on the buyer's side. As for anyone getting a "free" inspection, only you should have received a copy of the report if you were the one paying for it in the first place. Your current agent "should" draw up a form to withdraw your offer based on the failed inspection so that the escrow agent can return your deposit. Further, I would not re-submit a new offer until you get your deposit back - UNLESS, as mentioned, you really want the house. If that's the case, then, get another RE agent or broker to represent you and write up a new offer using the same amount of escrow, same check number, and same reference to the deposit you already sent in, to be credited toward the purchase price. And, if you can't get a conventional loan, ask your mortgage rep about a 203k streamline loan. That will take care of the minor repairs.
0 votes Thank Flag Link Sat Mar 30, 2013
I know its been a while, but I was curious because I am new to Massachusetts. I recently was looking at a house. I was interested, but slow in thinking about an offer. The selling agent called me, said there was an accepted offer on the house and asked if I wanted to make a "backup" offer. He said that my offer would go in, I would pay escrow, and be bound to a contract that would remain until the house closed, one way or another. I told him I didn't feel at all comfortable with that. My question is, is this legal? If so, is it normal in MA? It got even stranger when about six months later I saw another house listed by this same broker. I contacted him to look at the house and he said that he remembered me and said because I wouldn't sign a contract on the sold house he would only show me the house if I brought a preapproval letter, escrow money, and was willing to sign a contract when he showed it. Again, is that normal? If it weren't for the fact that it's a major broker...
Flag Thu Nov 7, 2013
The situation you are mentioning seems very odd to me. If you were under contract the house should have been put under agreement.

Is the agent you put the offer in on the house representing you or the seller? or you?

There are three things you can to do, depending on the terms of the contract. Always go back to the contract to understand the terms.

1- Ask the seller to do the necessary repairs.
2- Accept the house as is.
3-Pull out of the deal based upon home inspection issues. (again consult an attorney and or your contract to see what ramifications there may be)

As far as the inspection goes, it is your inspection, you have paid for it and you are under no obligation to share it with the seller.
0 votes Thank Flag Link Thu Apr 28, 2011
If you terminate due to home inspection you can get your money back as long as you have kept to your dates on the offer. Waht would hold up a lender unless you are FHA
0 votes Thank Flag Link Thu Apr 28, 2011
Some points to clarify. As mentioned in one of the previous answers, who is representing you? Who selected the home inspector? Did you pay for the inspection? What specifically occurred that the lender got involved with inspection results? Mechanical system bad, plumbing problems, etc? Did you receive any seller's disclosures prior to inspection on the condition of the house, systems, etc? Generally if you did not state in the contract that you were purchasing the property "as is" or waiving your inspection contingency, you have the right to ask for $2000 in repairs and that those repairs be completed and re-inspected prior to closing. Assuming everything was being handled in good faith up until the inspection results, I would assume the sellers would have been suprised by the inspection results also. If they refuse to do any repairs or offer a credit, then both parties can mutually agree to terminate the contract and you are refunded your earnest money. The lowering the price after your offer does not make sense, in New Mexico, once a seller accepts a purchase agreement, it is placed in a "Pending" status until it closes or the contract is terminated for some reason. Also, in New Mexico, a termination agreement is a document that is signed by both seller and buyer and specifically outlines terms of the agreement; how earnest money is distributed, when it is distributed, etc. Finally, your agent should be looking to guide you in a direction that has the most favorable outcome for you. Please consider all the questions, concerns raised in the answers you received, and I would suggest there are some deals that you need to walk away from. Get your earnest money back, get a Buyer's Agent who will work in your best interest, and move on with your search. Please let me know if you have any additional questions. Chris
0 votes Thank Flag Link Thu Apr 28, 2011
Do you have an attorney? Are you working with a buyer's representative? They would be in a better position to know your situation because it depends on how your offer was worded.

If there was a well stated Offer to Puchase Contingency for Home Inspection, then the failure to pass Home Inspection would be cause for you to either take back the offer (and get your earnest money released back to you in full) OR you can renegotiate ... and yes, you absolutely can factor the new lowered price into the negotiations.

You still have the advantage cuz your next step is signing a P&S with possibly only a mortgage contingency left whereas pretty much everyone else would at least one step away from signing a P&S.

So start negotiating ... the failed Home Inspection (assuming that you had a Home Inspection contingency and that this all falls within those conditions) allows you to open everything up for discussion again.

Good luck!
0 votes Thank Flag Link Thu Apr 28, 2011
I'm not an agent, so I can't comment on the contract piece, but I will tell you... I have a REPAIR ESCROW LOAN, that will allow you to finance up to $5,000.00 in repairs that are needed to get the appraisal passed and acceptable.

We can use this repair escrow on ANY loan: FHA, VA, Conventional, Jumbo. You name it, we can do it.

This will save your buyer from having to either invest for the repairs out of pocket, BEFORE settlement, and have a reinspect OR dealing with asking the seller to make the repairs in order to close. As well, it saves the buyer from NEEDING to do a 203k or other renovation loan.

Please give me a ring. I would be delighted to help.

b
Web Reference: http://www.203kworld.com
0 votes Thank Flag Link Thu Apr 28, 2011
In Arizona our purchase contract has an inspection clause that gives a buyer the right to walk away if the seller does not fix the repairs the buyer requests after receiving the inspection report. The buyer is not stuck with a lemon and gets the earnest money back. What does your contract say? Take another good look and if you have any question ask your title company or attorney, depending how your state deals with escrow. Any potentials pitfalls, consequenses, or 'what ifs' should have been discussed between the agent and you before submitting a contract. Is the agent who called you representing you, the seller or acting as a dual agent (bad idea) supposedly representing you and the seller. As for the free inspection - in Arizona, the buyer pays for the inspection and the report belongs to the buyer. Any problems or code violations become public knowledge and must be disclosed to another potential buyer. Lowering the price after your offer is accepted is strange. Were you given the lower price as a 'working price'? Again, your situation in Arizona would make you the owner of the inspection and if the seller does not agree to the repairs (by a qualified or licensed repair person) you could walk away without losing your earnest money. Does your state go through escrow via a title company or an attorney? Hope this gets resolved to your satisfaction. Doris Turner, OK Realty, Inc. Bisbee Arizona
0 votes Thank Flag Link Thu Apr 28, 2011
You should be able to get your earnest money deposit back if you have not removed your inspection contingency. You can ask for a $2000 price reduction or a repair credit, but they can always say no...

Just because they dropped the price does not mean they have to accept the lower price - they could just be trying to get more offers and start a bidding war to drive up the price! Also, you don't state if this is a standard sale, short sale or REO - what they are doing with the listing price would mean something different in each case.

I'm a little confused though - your buyer's agent asked you to terminate the contract? Or is this a dual agent who also represents the seller? Keep in mind it costs you nothing to have a buyer's agent working for you... Your agent could have brought up the price reduction and the unchanged listing status for you with the listing agent when it happened and negotiated for you!
0 votes Thank Flag Link Wed Apr 27, 2011
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