Buyer demands at closing

Asked by colin, Chicago, IL Tue Apr 29, 2014

I was selling a house to a buyer with a VA loan (last time I will ever do that), and I was required to make some repairs, including one involving a beam in the garage for $750. Repairs were made and paid for.

The buyer did not do a walk-through until the day of the closing and showed up to the closing demanding that this repair be done a second time (he didn't like the way it looked or something to that end). He also demanded some additional cosmetic nonsense like the removal of leaves form the front lawn, etc. My attorney was not present (decided he wanted to do it over the phone).

My initial response was to refuse these demands, but i was then told by my attorney that because there was a mandatory arbitration clause in the purchase contract, if I refused to close, the house would be taken off the market for months while the whole thing went to arbitration (that I would have to pay for). I was therefore forced to fork over $1000 in repairs at the closing table. Is this right?

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Dorene Slavi…, Agent, Torrance, CA
Wed May 28, 2014
Yes VA does require certain repairs before funding, however, other banks also want to know that health and safety features are taken care of as well.
I would not endeavor to go against your attorney's advice.He is more qualified to advise you on the possible court outcome.
Whenever there is a "repair request or issue" it seems to work out better to exchange money for the work, rather then have the work done. Somehow it's always an issue that the work is not done to the satisfaction of one of the parties.
Not a pleasant situation for you this time, hopefully you won't come up against it again.
I do have one question..where was your Realtor in all of this?
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Seth Captain, Agent, Chicago, IL
Wed May 14, 2014
VA loans get a bad rep, and your story will not help them. From your telling of the events, it seems like your bigger issue was a slacker listing agent if you even had one, and an equally lax attorney.

As a seller, you have the right and ability, with a knowledgeable agent, to negotiate the VA repair waiver so that the buyer is responsible. This isn't unreasonable in the current seller's market.

A similar negotiating tactic can occur with FHA loans since they also can require additional repairs. In a market full of cash buyers and big down payments, a seller should not dismiss FHA offers but simply require the buyer to sign the rider claiming they will pay for any requested repairs (or pay up to certain amount with option to cancel contract if above).

In the end, you hopefully made a lot more money on your home than the extra 1k you spent, or at a minimum were able to move on with your life.

For as bad as a rep that realtors (brokers, agents, all the same in essence) get, a seasoned agent (and corresponding legal team) could have protected you from this while simultaneously preventing the further bad mouth that these worthwhile loans receive.
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Mike Opyd, Agent, Chicago, IL
Wed May 7, 2014
Your attorney is correct on this and it would likely cost you more in arbitration. $1000 to get it over with a and move on in the long run will likely be worth not having to deal with the headache and costs in the future.
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Ron Krauch, Agent, Crestwood, IL
Wed May 7, 2014
Whether it is morally right is another question, but your attorney is correct. Yours is a cautionary tale for others to make sure they (and their attorneys) understand the provisions of the contract.

Ordinarily, if the repairs were performed by a licensed contractor, met the current local building code and proof in the form of a paid receipt, cancelled check AND... Aaaand... A release of lien from the contractor are provided, the buyer has little recourse. I would be surprised if the title company did not require the release of lien.

In this case, to get the closing done and avoid the perils of arbitration, the extra $1,000.00 was probably cheap. I'm sorry you had to experience that.
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