Subtract what the expenses will be and consider the real offer is at that number. For example if they offered your list price of $1,200,000 but want $20,000 in concessions, you really have an offer of $1,180,000. If this is acceptable to you, consider taking it.
One other consideration however, this buyer is asking you to pay for the inspections? At most I would offer to reimburse them for these expenses at closing. If they have no investment, and you pay for several inspections they can walk away and leave you with the bill.
You have a number of questions here. Here are my answers:
Q: Is this standard?
A: In Palo Alto, not really. Grace has provided a good outline of what is standard practice in Santa Clara County. The only difference between Santa Clara County and other bay area counties is that the seller pays title and escrow fees in Santa Clara County. Anyone who has work in this area for a while should know that. As an example, I live 10 minutes away from Palo Alto and know the area well. All other expenses are handled the same as other local counties. What is totally baffling to me is the number of out-of-area agents who have responded to this question.
Q: I'm currently selling my home for $1.2m. I've received an offer for asking price but feel I'm being taken advantage of by being asked to pay escrow fees, title fees, county transfer tax, home warranty, multiple inspections, as well as upgrade allowance of $5k. The allowance doesn't bother me and I realize I may be responsible for some of the items listed but how do I find out what is standard practice?
A: When you receive an offer, there is really no such thing as â€œbeing taken advantage ofâ€ because itâ€™s simply the buyerâ€™s request. You have an opportunity to counter with your response to their request. You have the right to say no. And they have the right to walk away if they donâ€™t like your response. And your agent should be coaching you as to a proper â€œarea-specificâ€ response. If, however, you run into a buyer that begins to bully you once you are in contract, thatâ€™s a different matter altogether.
There are many schools of thought here: in many cases, for a home in your price range, we do â€œpreemptiveâ€ inspections (property, termite, roof and anything else recommended in the property inspection, ie. foundation) at the sellerâ€™s expense so that we can (1) understand any potential issues upfront and (2) provide as full a disclosure as possible. It helps us manage the process a bit better because we know all the variables going in. It also helps a buyer make a more informed decision at offer time because they have a complete understanding of the propertyâ€™s condition. And in reality, the cost of these inspections is a drop in the bucket compared to the purchase price. The buyer then has a choice to accept these inspections or they can choose to do their own IN ADDITION to yours. If they choose to do their own, itâ€™s always at their expense. However, if the seller DOES NOT provide inspections up front, then normal practice if for the buyer to pay for any inspections they order themselves. You donâ€™t want to give a buyer a blank slate here: they could start ordering mold, lead, asbestos, soils and endless other inspections at your expense if the contract is not carefully worded.
As for the â€˜upgrade allowanceâ€™, most lenders will not allow this per se â€“ it would have to come in the form of a credit for closing costs. To be honest, a credit for this amount is a bit unusual on a home in your price range. If they cannot afford the house, loan, down payment and closing costs, why are they shopping in this price range? Or why not just knock $5,000 off the price? As mentioned below, the main issue is net price to you, not whether or not they are asking for a credit. However, you asked if this is normal. The answers is, for a home in your price range and in your area, â€œNot really.â€
Q: I think my realtor (from out of town) wants me to sell quick to make the sale.
A: As stated below, itâ€™s just not a good idea to have your home listed by an â€œout-of-townâ€ Realtor (unless they list in your area with regularity â€“ in which case they are technically no longer â€˜out-of-townâ€™). Which brings up another question; â€œWhy choose an out of area Realtor anyway?â€ If itâ€™s a friend or relative, or they are providing you a sharp discount on commission, there is a very real chance they are not able to represent you objectively. When I sell a home out of area (and I do this for investment properties), I look for the top-rated Realtor in that area and then hire them. I pay the going rate for commission and expect top-notch results.
Grace's explanation below is correct.
When I see questions like this on Trulia, I often wonder why buyers and sellers work with agents they clearly don't trust. I have been in real estate since 1978 and in my mind, trust and confidence in one's agent is clearly of great importance.
Would you go to a doctor and not trust his advice? If there answer is Yes, then you should find another doctor.
Everything is negotiatiable.
As a seller, the bottom line net proceeds is what counts.
So if the offer is $1,200,0000 and buyer is asking you to pay $10,000 of let's say NON STANDARD FEES, then offer is really $1,190,000.
I would not get hung up on the fees but rather the "net" price of $1,190,000 and focus on that.
But again, you are paying your agent a good sum of money to handle this sale for you.
If you don't trust that agent then why are you working with him or her?
My advice is next time, find a local agent that you trust and things wil go smoother.
Thanks for your post, and I'm sorry that your agent was not aware of the standard selling practices here in Santa Clara County. It is one of the reasons that I often recommend to both my buyers and sellers that they work with a Realtor who is both knowledgeable in real estate as well as versed in the practices of the geographic region. Typically, the Realtor should have provided you with an "estimated net sheet", which often details the types and kinds of expenses that you're likely to be asked to pay as the seller.
Santa Clara County is only one of three counties in the entire state where the seller traditionally pays for 1) escrow fees and 2) title charges. In addition, in all counties, the county transfer taxes are paid by the seller here in California and the seller and buyer will split any city transfer taxes.
As for inspections, the responsibility for both obtaining the inspections as well as paying for the same inspections may be negotiated, but is typically paid for by the buyers. Many Sellers obtain inspections in advance of the home listing to ensure that homeowners have full disclosure of the repairs to the home since the CAR contract (the typical California Association of Realtors Purchase Contract) is an "as is" contract. At the time of purchase, the buyers can then agree to accept the inspections completed by the Seller or may opt to pay, at their own expense, any additional inspections for the home. The only report that here in Santa Clara, the Seller typically provides is the natural hazard report and CLUE (Casualty Loss Underwriters Experience) insurance claims report.
Finally, regarding the "upgrade allowance", you can choose to or not to accept to pay for upgrades. Again, the CAR contract is an "as is" contract, and provided you already disclosed these items to the buyer, you have the option of not agreeing to pay for repairs for which the buyers are already aware,. Again, it's one of the reasons that we, Realtors, recommend obtaining reports prior to listing to ensure that buyers have knowledge of the condition of the home.
As with all things, work with your Realtor regarding the above issues. Most importantly, work with a Realtor you trust and for which you have confidence will help you sell your home fairly, honestly and with your best interests at heart. If you don't feel that this individual is helping you properly, stop and ask the broker for another agent.
Grace Morioka, SRES
Area Pro Realty
Tel (408) 426-1616
Listings at 1.5%, Rebates to Buyers up to 2% of Sales Price
You have the right to refuse any of the request. I would give on some of them or you can have your Realtor put in contingencies or stipulations on how much you are willing to pay toward anything. If you are against paying for the home inspection or repeated inspections say so. We are only Realtors after all we do as we are told and if you don't voice your concerns to them then we are none the wiser. So tell your Realtor what's on your mind. God Bless and happy selling.