Home Selling in 20854>Question Details

Bernadette, Both Buyer and Seller in Maryland

how to avoid continuing negotiation after ratified contract?

Asked by Bernadette, Maryland Wed Sep 5, 2012

Seek suggestions for Home Seller on how to write the contract to avoid/limit the buyer from continuing to find defects (sometimes just cosmetic items) in the property to justify a price reduction or credit, or improved sales AFTER the ratified contract? Thank you

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I would suggest allowing a "General Inspection" contingency. Go one step further and specify, in a written addendum, that any repair items are limited solely to appliances, electrical, plumbing and HVAC. No cosmetic repairs. Keep the contractor invoices to show proof that repairs were made.

Also, if you decide to agree to any cosmetic repairs, just agree on a dollar credit. It's a much easier and faster way than having to arrange the repair, and the buyer won't question the contractor, or how the repair was completed.

Good luck and success!

John Pobiak
Principal Broker
0 votes Thank Flag Link Thu Sep 6, 2012
This is a common complaint I hear. I work in the DC Metro market and you can convey the property in As-Is condition but the draw back is you may not get top dollar for your property. The other thing I have seen successfully utilized is what is referred to as a "GENERAL INSPECTION CONTINGENCY (NO RIGHT TO NEGOTIATE)". This contingency offers protection to the buyer in case something major is discovered during the home inspection by way of right to Void the Contract but limits the buyers ability to ask for repairs.
Another option is to just say "NO" to all or some of the requested repairs or credits that are not required under the existing contract. This option can take some negotiation skill as not to loose the buyer and their offer.
Best of Luck! Greg
0 votes Thank Flag Link Thu Sep 6, 2012
Hi Bernadette,

The MAR standard home inspection addendum allows for a certain time period in which the buyer has to have all of their inspections done. It also contains a standard clause noting that reads..."

SCOPE AND LIMITATION OF INSPECTION" The purpose of any inspection(s) selected below is to discover significate and material defects or adverse or dangerous conditions, if any of the components and systems of the property and any other items indentified in the subsections below. The future condition and performace of the above systems and components are not warranted by Seller or inspector and are to be to considered subject to this addendum.

This addendum and the inspection(s) provided herein is NOT for the purpose of making items of a routine maintenance and/or cosmetic nature the sunject of further price negotiations between Buyer and Seller.

I just had a deal fall through because the buyer kept asking for items that were well beyond the scope of the contract. Don't be bullied into doing more work than is contractually required but also be reasonable. If you are talking a small amount of work or money it might work to your advantage to be the bigger person and just knock it out!

Best of luck.
0 votes Thank Flag Link Wed Sep 5, 2012
Ah, yes, the old negotiation. As mentioned below, "As-Is" is probably the best option to reduce the amount of negotiation. But realistically, in real estate, everything is negotiable. And up until you have signed your closing documents and the keys and money have changed hands, anything is possible.

You just have to decide if you are in a strong position to tell the buyer to stop, or go fly a kite, or if they are in a position of power because you have had the house on the market "forever" and they are the only buyers that have ever expressed any interest. This is a delicate dance that can send either party sideways. It is the job of your Realtor to take you through the steps and tell you what you can get away with and where you will likely have to compromise.

When I work with my clients, if a buyer wants to open up negotiations after ratification, I open up all the terms of the contract. After all, if they want to negotiate from where you are, you have to negotiate back. If they want a credit for something, raise the price of the house by that amount. Their monthly costs are minimally affected, but they get the cash to do the repairs. If you don't have a strong agent on YOUR side for the negotiations, you probably didn't save as much money as you thought by getting them to work for less.

A lot of sellers think that getting an agent to work for less means they are going to make more money. But this is exactly why working with an agent that will only work for a full commission is worth his/her weight in gold. Negotiations can make or cost you money. A strong agent with strong negotiating skills is critical. And if they can't negotiate their commission, why would you think they can negotiate these items to your favor?
0 votes Thank Flag Link Wed Sep 5, 2012
Bernadette, at the end of the day, there really is no way to avoid it without the buyer paying cash and having Zero contingencies. Even if you sign an "as-is" addendum, there would have to be no inspections of any kind. If the buyer has an inspection and finds something wrong with the house that they couldn't have known, then they have the right to walk - or you could lower the price/give them a credit/make the repair to keep them in the deal.

Best advice below is to talk it over with your agent.
0 votes Thank Flag Link Wed Sep 5, 2012
Hi Bernadette, you should really discuss this question with your agent. There are pros & cons to listing a home for sale "as-is". Your agent will also help with negotiations - generally cosmetic items are not included in the home inspection contingency but, just as Bruce pointed out, you can't control the buyer's actions.

He/she is free to ask for whatever they want - whether it fits your needs/wants and you accept/decline/counter is a different story and your agent will help you decide on the best course of action.
0 votes Thank Flag Link Wed Sep 5, 2012
There's normally only two reasons to open up negotiation after ratification: appraisal issues, and home inspection.

With your contract, negotiate the contract "as-is" with a 'general inspection contingency'. Doing this will allow the buyer to inspect the property, and either accept the home or void the contract without negotiation. However, even if you do this, you cannot prevent the buyer from asking you to address defects to cover perceived home issues. They can still come back and put a request, that if not met, the contract will be void.

So what do you do? Basically - you can only control what you can control. You can't control the buyer's actions. When the contract is ratified, make it clear that you will not negotiate for any inspection items. And if they request home inspection items, just tell them they can void the contract, and you'll find another buyer. It's as simple as that. In this position, would it make sense to void a great contract for a thousand dollars worth of reasonable repairs? That will be your call.

Make sure you understand all contract language related to property condition (termites, well, septic, etc.) Good luck.
0 votes Thank Flag Link Wed Sep 5, 2012
Put in the contract an "as is" addendum meaning you are not going to do any repairs or address any cosmetic concerns to the property. This needs to be part of the ratified contract. If you have a ratified
contract and it was contingent on a home inspection then you have to read what the home inspection addendum says. Do you have an agent representing you?
0 votes Thank Flag Link Wed Sep 5, 2012
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