Now we have progressed to the end of the seventeen day contingency period. What to do, what to do?
First a little review. The Residential Purchase Agreement developed by the California Association of Realtors states right there in black and white that the house is being sold in its PRESENT physical condition, meaning you (Seller) are under no obligation to make any repairs to the property. You do have a responsibility to maintain the property in the present condition as it was on the date of acceptance.
The Buyers have presented you with a list of items that need correcting. Usually these come from a recap page in which the Home Inspector summarizes all of the issues they have with the house. Understand that Home Inspectors are paid to find problems and no matter how insignificant the problem may seem, it will probably make the list. Also many homes here in Pasadena are eighty years old or more. Many have deferred maintenance and will surely require repairs. Condominiums and townhomes usually have fewer problems because they are newer construction and there is no access under the structure or in the attic. Inspectors cannot inspect what they cannot see.
When the Buyer presents a “Request for Repair”, you have a few options. Option #1 is to fix nothing. Option #2 is to fix everything. Option #3 is to fix some of the items and Option #4 is to provide a credit issued at the close of escrow in lieu of repairs.
Depending upon the request, most Buyers and Sellers usually agree to meet in the middle and fix some of the negotiated items. Usually these are minor issues and can sometimes be handled much easier with an offsetting credit. Why a credit instead of the actual repair? People’s perception of how an item may be fixed or corrected can easily be disputed. If actual repairs are to be made they should be performed by a licensed contractor and should provide a receipt and a warranty. Credits on the other hand cannot be disputed.
If both parties fail to reach an agreement, the Buyer can usually cancel the purchase contract and typically the Seller has to refund the good faith deposit. If this happens, you reset the clock and start over, so it’s always in everyone’s best interest to try and reach an agreement.
In my opinion the purpose of the repair list is not to make the house new again, but to address faulty or safety related issues. Most request’s are reasonable, but I have seen the Buyer ask the Seller to install all new plumbing at a cost of $3500. Much of what happens will be dependent upon the specific situation. How long has the house been listed for sale? What price did the parties agree to?
Of all the Buyer contingencies we discussed in part one, the Inspection Contingency can be the most difficult to overcome. The reason is money. A potential purchaser may weigh all the costs of buying the house along with the changes they would like to make and decide that they are spending more than planned.
In part 3, we will look at ways Sellers can insure their home inspections precede more smoothly. We will also examine opportunities to possibly reduce the number of days a Buyer has for an inspection.
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