Home Selling in Tucson>Question Details

gmisystems, Home Seller in Tucson, AZ

after acepting an offer for our house "as is" a BINSR was sent reducing the amount of the original offer claiming needed repairs. After

Asked by gmisystems, Tucson, AZ Wed May 29, 2013

three days from receiving the BINSR the buyer cancelled the deal. Can he do this?

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Answers

14
Hi gmisystems,

The BINSR (Buyer's Inspection Notice and Seller's Response) is not supposed to be used to request a price reduction. If the seller offers to reduce the price in lieu of repairs, that's one thing, but the BINSR should only be used to request repairs.

The Arizona Association of Realtors Purchase Contract says the seller has five days after receipt of the BINSR to agree to do all, some or none of the requested repairs. If the seller doesn't respond in five days, or the seller does not agree to do all the requested repairs, the buyer has five days after receipt of the seller's response (or expiration of the seller's five day response time) to decide whether to accept as is or cancel the contract.

The Purchase Contract does not provide an opportunity for the buyer to cancel the contract before the seller either responds within the five day response period or allows five day response period to pass with no response. If the seller agrees to do all requested repairs, the BINSR does not provide the buyer an opportunity to cancel the Purchase Contract.

When you say you accepted the offer as is, I am assuming the AAR As Is Addendum was used. Oddly enough, the As Is Addendum says the buyer retains the rights in Section 6j of the Purchase Contract, i.e., the buyer can ask for repairs. The As Is Addendum only says that the seller is not *obligated* to make any repairs, including repairs to "warranted items": heating, cooling, mechanical, plumbing and electrical systems, pool, spa, free-standing oven/range and built in appliances. Without the As Is Addendum, the seller is obligated to fix the warranted items per Section 5a of the Purchase Contract.

I hope you have a real estate agent representing you. At this point, your agent and the buyer's agent will discuss the options, including release of the buyer's earnest money. If the agents can't resolve this, typically their sales managers get involved.

Best of luck

Donna Moulton
Associate Broker
Tierra Antigua Realty
http://www.SweetDesertHome.com
2 votes Thank Flag Link Wed May 29, 2013
I enjoyed your reply. I am sorry to say that the never ending (and self serving) advise (your "pitch" ) to consult an agent it transparent and dilutes your credibility. This is a little like the endless beckoning on TV to "ask your doctor" . It can take as little as 2 weeks of training to be a real estate agent ... and 80% are part time. I enjoyed your article though.
Flag Tue Nov 11, 2014
With the full understanding that I am a real estate agent and not an attorney ....

It would appear that you have three questions.

1. Can the buyer still submit a BINSR and ask for repairs? Answer: Yes. As-is only means you intend to do no repairs. Buyer has not waived their right to ask for repairs.

2. Can buyer demand price reduction? Answer: Emphatic NO!!!!!!!!!!!! BINSR is the form to allow the buyer to either accept house as-is, cancel and get earnest money refunded, or provide the seller an opportunity to correct items. Correcting items is not reducing the price.

This is also not negotiating in good faith.

3. Can buyer turn in a BINSR and then cancel later on? Answer: maybe. As I discuss below, I feel this is a completely invalid BINSR and thus should be treated as if it does not exist. That said, did the cancelation come within the Due Diligence period? If so, they might be eligible to get earnest money refunded. If past the Due Diligence period, then their earnest money might be subject to forfeiture (depending on if there were other contingencies used to cancel) You might have responded to BINSR, thus validating it in which case they would also have a right to cancel if you did not agree to all their terms.

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Buyer does not have the right to re-negotiate terms during the Due Diligence period, only to accept, cancel, or ask seller to correct items.

It would appear that this is an invalid BINSR. I had this arise a few years back when I was representing a seller. After receiving the BINSR, I confirmed with my broker and my seller, then contacted the other agent and informed them that the BINSR was invalid. I informed the other agent that after discussions with my seller (who could have accepted and thus validated it), my seller had informed me that they had no intention of responding to an invalid BINSR, but that they were going to allow the buyer and their agent to re-submit a valid BINSR (buyer was still within Due Diligence period).

Buyer's agent refused and insisted it was valid. Seller ignored it. After 5 days, buyers delivered a cancelation due to seller lack of response on BINSR. We argued that their BINSR was invalid, their Due Diligence period expired without them requesting anything, and thus if they canceled at that point, their earnest money would be subject to forfeiture.

Buyer's agent went nuts. It took two weeks for the lawyers at the escrow company to review everything but in the end, they awarded the earnest money to my seller.

Oh, and we put the house back on the market and sold it for more than the other offer.

Bottom line recommendation? Talk to your agent, your agent's broker, and if you still have questions, talk to your attorney.


Matthew Tennyson, CRS, GRI
Associate Broker
Certified Residential Specialist
Graduate Realtor Institute
Keller Williams Southern Arizona
(520) 631-0032 (cell phone)
(520) 318-5393 (fax)
matt@HUDSinTucson.com
http://www.HUDSinTucson.com
1 vote Thank Flag Link Thu May 30, 2013
Matthew,
in regards to your statement "Can buyer demand price reduction? Answer: Emphatic NO!!!!!!!!!!!! BINSR is the form to allow the buyer to either accept house as-is, cancel and get earnest money refunded, or provide the seller an opportunity to correct items. "

my question is, in response to the "opportunity" to correct items, using the BINSR can the buyer request a credit in the amount the repairs will add up to rather than re-negotiating or lowering the purchase price, or is that still frown upon?
I'm asking for credit because the property i'm purchasing is bank owned, so they will not perform any repairs and the appraisal came in at 120k and while the contract is for 118k the repairs needed make this a bad deal (needs roofing and had water pipe problems in both restrooms among other things).

or what is the best way to approach this situation?
Flag Tue Dec 23, 2014
As Jim and Doug pointed out, this practice is not uncommon. (in Florida)
The stage for this outcome is set when the buyer submits an offer without seeing the property. Here in FL there are no less than THREE investor groups buying as many 3/2/2 SFH as they can. These folks have multi-BILLION dollar budgets. These three are offering Fair Market VALUE.....without seeing the home. In my personal expereince, the subsequent inspection revealed 'cosmetics' and the sale was SUCCESSFUL! With these groups I have completed multiple sales. No buyer will commit to a purchase without building or exercising an exit strategy.
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When the name on the purchase agreement is unknown to me, I assume they will behave in the same manner as the buyer you describe. When encountering such a buyer the seller will present the option of using the inspection report available or waiving the inspection requirement, or completing their due dliegence before submitting a purchase offer.
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As the owner and seller, you soon realize the table is tilted to protect and benefit the buyer. The cost to you of removing your home from the market can be significant and have longer term remifications.
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This is where the expericince, knowledge and network of the professional you hired become invaluable. However, you do need recongnize the professional you hired knows what they are talking about and choose to follow their directions.

Best of success to you,
Annette Lawrence, Broker/Associate
Remax Realtec Group
Palm Harbor, Fl
727.420.4041

http://RealEstateMadeEZ.us
1 vote Thank Flag Link Thu May 30, 2013
Yes, they can do this. As is means you do not intend to do repairs. Unfortunately, many unscrupulous investor buyers are telling the agents to bid up the house to win the bid and shut out other investors. Then they intend to lower the price using a BINSR. Often the buyer has not even looked at the home. You can protect yourself by asking the buyers agent if the buyer has visited the site, and by posting a SPDS listing all you know is wrong. Then the Buyer cant claim he discovered something if it is disclosed.
Another way you can protect yourself is to have a clear idea of what the property is actually worth. Sell to the best buyer, not necessarily the one who runs the price up. Once you accept an offer, you have essentially taken the home off the market and lost your momentum.
Finally, checking out each offer and posting that offers will not be reviewed for 5 days will get several offers and allow them to be compared and evaluated, then put out for best and final offer.
Good luck
Doug Seemann
520-370-8907
doug@SeeSeemannFirst4Homes.com
1 vote Thank Flag Link Wed May 29, 2013
Please remember; now you know of repairs needed you need to up date your Sellers Property Disclosure Statement with that information for the next potential buyer. Keep yourself safe.

Kat Carr
Broker/Owner
Homes of The Old Pueblo, LLC
A Gift from Sheila
Cell (520) 245-4002
Fax (520) 318-5391
1 vote Thank Flag Link Wed May 29, 2013
Ah, this is so tough. Yes, in fact, the buyer can. This is so hard when you are the seller! Section B on the AS IS addendum, upholds the Buyer's rights that are in Section 6 of the residential purchase contract. Section 6 advises the buyers to conduct inspections. And, in 6j, you will see that after the inpsection/s, they still have the right to cancel the contract. When they agree to "AS IS" they typically know you will not be doing any work. However, they can then decide that home is needing more work/money/time than they expected, and they have the option to cancel. So sorry this has happened.
1 vote Thank Flag Link Wed May 29, 2013
The BINSR is only to ask for repairs and is not a negotiating tool for price reductions. If they buyer rejects the home while in the due dillegence period they can walk away. If you don't approve the BINSR even if it has something that shouldn't be in there they can reject the house and walk away. If you really want to go deeper, then a Real estate Attorney should be hired. It just sounds like a case of cold feet and the buyer was going to walk no matter what. If the price reduction is not warranted then you are better off not dealing with them. In Tucson's market a correctly price home should sell in under 60 days.
0 votes Thank Flag Link Fri May 31, 2013
Yes, the buyer can cancel if it was during their inspection period per contract. I am sorry this happened to you! I tell my sellers that the Buyer's Inspection Notice is the second phase of negotiations, so they expect that it is not over at offer. In your case the BINSR was used improperly, because it should be used to ask only for repairs. The SELLER can counter offering a price reduction if they choose to do so in lieu of repairs. This is one of those situations where I hope you have a terrific Realtor to advise you! Good advice from your hired Realtor can prepare you for some of the possible outcomes in a business where many unpredictable things happen!

Kat Tyree, Associate Broker
Long Realty
TucsonKat@gmail.com
520-730-5540
0 votes Thank Flag Link Thu May 30, 2013
This is a precarious situation but a great question! First and foremost, the negotiations do not end when you think they do. The deal is constantly evolving and subsequently being RE-NEGOTIATED throughout the course of the transaction. The initial deal/contract only sets the tone for the rest of the transaction.

In this case, a BINSR is not intended to adjust the purchase price but rather used as an instrument to advise the seller of the buyers intentions after the inspection period. There are multiple outcomes: the buyer can accept the property and move forward with out requesting repairs or he or she can request repairs and the seller has an opportunity to respond once to this request.

After this, the buyer then decides whether or not to proceed with the transaction based upon the seller response or to can cancel the deal and move forward. On the other hand, the buyer can ATTEMPT to renegotiate the purchase price based upon their discoveries during the inspection period. Often, this is done in leu of repairs. Even though the deal might have been negotiated originally as an AS-IS transaction, it does not mean the buyer can not try to push the sellers hand depending upon the situation.
0 votes Thank Flag Link Thu May 30, 2013
Donna provided a really helpful, informative answer.

As a practical matter, though, in many parts of the country the inspection is used to open the door to price reductions. That's especially true for "as is" houses--in which the buyer figures the seller won't correct the problems, can't afford to correct the problems, or simply doesn't want the seller to do so.

Still, it sounds--from Donna's answer--that proper procedures weren't followed.

Check with your Realtor for possible steps you can take.
0 votes Thank Flag Link Thu May 30, 2013
Don Tepper, Real Estate Pro in Fairfax, VA
MVP'08
Contact
Do you have a Realtor you are working with on this transaction? This question should be reviewed and answered by them, if you do not have a Realtor you are working with then I suggest you seek legal counsel vs free advice from a board online.
0 votes Thank Flag Link Thu May 30, 2013
Boy, from the sounds of this, I'm glad I'm a Realtor in Florida and not Arizona! Bottom line, though, whether the agent followed the precise contract procedure or not, the buyer had the option to cancel the contract, which gives him leverage over price (ie: lower the price or give me a credit in lieu of repairs or I'm going to walk"). Sleazy? Maybe. Effective? Likely. Best of luck in resurrecting your deal...
0 votes Thank Flag Link Thu May 30, 2013
The buyer can't renegotiate the contract in the BINSR (Buyer's Inspection Notice and Seller's Response) so if they did on the first try.. you probably have rights, buyer is probably in breach. Talk to your broker then to an attorney. javascript:{}
0 votes Thank Flag Link Thu May 30, 2013
BINSR is not the place to renegotiate sale price. If you are asking for a credit in lieu of repairs, state it as such and list repairs.
0 votes Thank Flag Link Wed May 29, 2013
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