Having owned an historic house for many years (and Iâ€™m talking about plaque on wall historic) and having sold it after over 25 years of ownership, I can sympathize with you in your effort to sell.
You mention that you have basically accepted an offer $30,000 below your list price and countered with a verbal acceptance AS-IS. Now you have found that the buyers have had their inspection (have I got this right?) and want $15,000 worth of repairs.
You tell us that your agent is a dual agent and is urging your acceptance of this deal, although it will result in a net loss and the contribution of cash from your other assets at closing. I hope you have other assets or you canâ€™t even contemplate the deal.
This situation actually has NOTHING to do with the historic nature of the house. All houses that are not new construction could be in a similar situation, if you stop to think about it. ALL RESALE HOSES ARE SOLD AS-IS! They all have wear and tear. In the case of most municipal entities in NJ, there are CO criteria. It does not include everything that a buyer might wish to have fixed. In most cases, the seller provides a clear CO, with violations all remediated.
This is not always the case and buyer can assume the responsibility for CO repairs and accept that the town will not allow residency before the repairs are satisfactorily completed.
I needed to get this background explained before I go to my real point here. That point is this: You own a house. You wish to sell. You have found at least one buyer. They want the house fixed in a certain way. You donâ€™t wish to fix it that way because you will loose money on your investment. I want a beer tree in my backyard. Two out of three are not going to get what they want and perhaps all three of us will not. When you accept a sales contract, the buyer has several contingencies that they can or must clear before they agree to close. One is private inspection. If they agree to as-is, they are agreeing to unknown repair needs and with the inspection they can see what they may be. They may then say, I donâ€™t want to buy the property any more but would if this and that were fixed. You can fix those things or move on to a new buyer, who may not be so demanding.
Your agent is a dual agent and must disclose all the fact that he knows to both sides. He cannot disclose your bargaining position or the other sides. Heâ€™s urging acceptance of the repairs. For all you know, he may be doing that because his buyer client has told him to do so, although he knows full well that they will knuckle under and accept as-is. He SHOULD do the same thing for you, telling the buyer that you wonâ€™t yield a cent, if thatâ€™s what you tell him to do, even if you have told him that you might yield in the end. This is the nature of dual agency.
What you might do is compromise and fix things that cost you little and skip the big things. The buyer may feel that they got a bit more out of the deal and be very happy at closing. On the other hand, they may truly have decided that fixing up your older house is something that they just donâ€™t want to tackle. You just donâ€™t know until the dust settles. You can only hope that this deal works out or that there is another around the corner.
I would like to first qualify that I am not a fan of dual agency.
But, I canâ€™t say that you might not be in the same situation even your agent was not a dual agent. Letâ€™s say that the buyer agent was from another brokerage. If a seller agent was only getting commission on one side, does that guarantee that the seller agent will now give unbiased advice in the sellersâ€™ best interest? Is it still not possible that a seller agent would encourage a seller to concedeâ€¦..for the right reasonsâ€¦.or the wrong reasons?
I am not defending dual agency. I am pointing out that it is possible this same problem could have arisen with a buyer and buyer broker from another brokerage.
I had a contract fall apart under similar circumstances. I was the sellerâ€™s agent and it was an â€œas isâ€ sale with no repairs or credits, inspections for information only and CO responsibility of the seller. We got the CO. After inspections, the buyers threatened to walk if the seller did not ante up a substantial credit. We negotiated it for over a week, and the deal fell apart.
I am glad I was not a dual agent, as the situation would have uncomfortable for me when the buyers changed their position. They werenâ€™t my buyers, though. Still, I had to review options with the seller and discuss the pros and cons about meeting the buyers demands, either partially or entirely, or walking away.
The information evaluated in the decision included
1) There is inherent damage in simply being a fall through - future prospective buyers will be guarded, and it may cause a fence sitter to walk away from making an offerâ€¦..or an offer may come in lower because of a fall through.
2) We had the CO, so this wasnâ€™t an issue. We did have to weather through getting another inspection and extension. Who was responsible for the CO? Were you? If so, are any of the repair items going to fall to your shoulders anyway because they will be needed for the CO?
3) Complete and accurate disclosure is mandatory, but what happens when an item in an inspection report is disputed as incorrect. Does the seller bring out another inspector to a second opinion? Does the seller disclose all items revealed in the inspection and notate his disagreements where they exist?
4) What is the likelihood of finding a replacement buyer that would put you in a better net position than meeting this buyerâ€™s demand or some negotiated settlement? This requires a candid review of past market activity, current market inventory and competition, seasonal activity adjustments, updated CMA, etc.
5) Historic homes typically have smaller buyer pools and often take longer to sell. We all love them, but many buyers are not up to making them their home.
Several posters here have indicated that it may well be in your best interest to work through this. Without knowing all the details, I wouldnâ€™t make a firm statement. I am more inclined to lean toward working through it.
While I am not defending nor supporting dual agencyâ€¦â€¦this may not have resulted from poor representation. Many buyers out there would and could arrive at the same place as your buyers did. Your agent may not be the reason. And, your agent may sincerely be giving you the best advice by suggesting you work through this.
It may not feel like he has your interest because the dual agency situation muddies things. I wonâ€™t say, unequivocally, that this challenging situation was caused by dual agency. Dual agency makes a difficult situation worse by casting greater doubts, though.
Best of luckâ€¦.
Deborah Madey - Broker
Peninsula Realty Group - New Jersey
Have you had ANY other offers (better or worse) on the property? How long has it been on the market? If the answers are NO other (better) offers and it's been on for a long while, then you need to think about a couple of things. 1) If this deal falls apart, how long will it take to get another offer? 2) How many more mortgage payments will you have to make until it's sold? 3) Are you heading towards a financial hardship and what if the next offer is $50,000 lower than your asking price?
What are the Comps that your agent provided and have they been updated recently? Why not ask the agent to have the Broker of their office provide comps directly to you as a friendly gesture just to get another opinion, - sort of like going to the doctor. If the Comps suggest the price ($30K under asking) is justifiable then deal with the repairs. Have you seen the inspection report and more specifically, the items they are asking for the credit to cover?
Two issues here - if you have seen or been told about the inspection report; 1) are the repairs in-line and priced appropriately or are they totally whacko? and; 2) Anything you now know about from the inspection report, you MUST DISCLOSE to any future buyer. So think about it, if you don't go through with this deal, you basically have to shoot yourself in the foot by disclosing everything that was found to any future buyer (if there ever is one).
I would try to work through this transaction. Maybe you split the difference on repairs @ $7,500.
No matter what, get all of your negotiations and counter offers in writing signed by both parties.
The biggest lessons to be learned here is NEVER allow Dual Representation - it never works.
Cheers to you,
Southern California & Houston, TX
2008 Chair, Pacific West AOR MLS Committe
2008 Member SoCal MLS Board of Directors
2008 Member SoCal MLS Steering Committee
2009 Member-elect, Pacific West AOR Board of Directors
2009 Member-elect SoCal MLS Board of Directors
This is what happens with dual agency. The deal becomes more important than any of the clients. You are going to have to be firm. Your agent is not in charge, you are. If you do not want to pay the additional extortion, just say no and put the house back on the market. That may prompt the buyers to stop playing around. You are taking a risk, but if you sold the house once, you'll sell it again. Or, since your agent is double ending you while not representing your interests, have him pay $10,000 out of his double commission and you'll pay $5,000. Let's see how anxious he is to close this deal if he is playing with his money, rather than yours.
How much is the house? $15,000 sounds like an awful lot of repairs to come up in an engineers inspection. If these repairs are structural, the same thing is going to come up in subsequent inspections, and now you are aware of them and will obligated to disclose them. Presumably, if these repairs are so huge, the buyers based their initial offer on the fact that the house had some problems. Have you done anything to negotiate the repairs? Agreed to do some, but not all, based on you have already come down 30,000? What repairs are they asking for?
I don't think this has anything to do with dual agency or your agent not working for you. It also has nothing to do with what you OWE. Again, if these are problems that are going to come up in subsequent inspections, you should try to do some negotiating.
Anyone can take a listing that is "as -is" but no contract truly is "as-is"
When a client tells me "as-is" I explain.. yes.. "as-is" unless it a problem that you would have to fix if you were to stay here.. like structural problems, radon or termites.. all of these you will have to address in order to sell the house to the next person. Did the attorney take out the inspection clause of the contract? If not, then the buyers with a dual agent or buyers agent have the right to do a home inspection and ask for what they want fixed.. if you choose not to fix it.. they can walk. End of story.
There is nothing that a buyers agent can do for you.. because at this stage of the contract neither agent has much input as the facts are presented to the attorneys for both parties ( buyer and seller) to discuss. Your agent is telling you what the story is, basically take it or leave it. There is no magic buyers agent wand that Marc could wave that is going to change that.
I just had the same situation with a listing.. no I was not a dual agent, but the buyers wanted $1,000 credit on the inspection. Both the seller and I could tell the home inspector was a know-it-all want to impress his buyer and collect his $400 fee type home inspector.. ( there are many, many like this in the home inspector / home appraiser field )
The report was presented to the attorney who read word for word what this person "found" and they wanted it fixed or they walk.
Guess what, it was our only offer in 6 months... and the seller sat with me and said.. now what? I told them that I think the inspector is wrong, there is nothing wrong with the house and what he has pointed out is bogus, I agree. You can tell them no, put the house back on the market and forge ahead.
Or we can give them their shakedown and sell the house and move on. Ultimately it is your descision.
Be prepared to make the descision and live with it. It is your home and the descision and all that is included in that. Your agent can help to talk to the other agent, But I have to say.. $15,000 sounds like a lot of issues and I would also be concerned moving forward with the sale in the future.
I hear you. I currently own multiple homes dating to turn of the century. These are unique homes and the buyer likely is attracted to that. If you dont have to sell, hold to your number. 30% is a large reduction off list (unless it is way over priced). Instead drop your list price 15% right now and show for back up offers. I suspect this will prompt the buyers to come up (yes your agent will not be happy as they stand a good chance of double ending, but it sounds as if you arent too happy with them anyway).
If you can't wait have your agent negotiate the $15,000 down to a more acceptable figure.
Because your agent represents both parties in this deal, he can divulge the buyers bottom line.
No one can make you sell your house for less money than you want. Keep in mind that one of the responsibilities your agent has involves telling you the truth, even when you don't want to hear it.
NJ is a state where sellers are required to disclose all problems they know about with a house. If the problems that they know about. If the items that the buyers are asking for credit for are something you knew about, you should have disclosed them up front. If you didn't know about them, you do now. If you don't got through with THIS contract you and your agent will have to disclose the condition issue from now on.
What does your real estate attorney say? If you're in a part of NJ that routinely uses them as closing agents, that verbal "as is" agreement should have been put into the contract. Buyers still regularly have a home inspection contingency that allows the buyer a chance to see what he's getting into. It isn't supposed to be used as an opportunity to renegotiate an agreed price (at the time more beneficial to them than the seller), but often that is what happens.
You say you can't afford to give a credit. Can you make some of the repairs yourself instead? Or offer them something other than money? Lawnmower? An antique carpet that fits perfectly in the living room? Can you change the closing date to something more convenient to them? Offer them less money (you're in negotiations here...) or a combination of the above.
What happens if you cancel this deal and the next offer, comes in $15,000 lower?
Or doesn't come in for another 6 months?
I love historic homes and have sold a lot of them. I always advise owners to have a home inspection of their own done before the house is listed. Then we provide the report to the buyers. That way the owner can correct little things if they want but say to the buyer prospects and their agents that the house is being sold "as is". Buyers are encouraged to have their own inspection, but you won't correct or make a credit for anything that was on YOUR inspection report. It costs you a few hundred dollars upfront, but it makes for a much smoother deal all around.
Another truth about selling in that in NJ, sales activity tends to decline in the fall. You may well still own the house when the spring market returns 6 months from now, and it is extremely unlikely that a house that sits on the market for a long time generates higher prices. It has to be a rampant seller's market for that to happen.
It really comes down to you can say no to the credit (nicely, of course), but can you afford to if the buyer walks away.
Joan Prout, MBA
RE/MAX Villa REALTORS
Jersey City, NJ