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real estate transaction puzzle
Old 04-14-2006, 11:35 PM   #1
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real estate transaction puzzle

We hit a little snag in our real estate transaction. I think it's resolved, but I'm curious to hear what others would do in this situation.

Buyer makes an offer with the standard inspection contingency.

Their inspector finds the usual minor things, but indicates that the deck (about 800 sq ft) is near the end of its useful life and recommends replacement.

Ugh. We had already replaced rotten wood and repainted the deck as part of the staging, so we've got $1000 into it, and the buyers are basically asking to sink that cost and credit them $10K for a new deck. We get a couple of deck guys to look at it, and consensus is that there is no safety issue and decking has between 2 and 5 years of life left in it.

My position is that this is a resale, not a new house. We'll address code violations, safety issues, etc, but we're not going to upgrade wear-and-tear stuff to new condition.

Buyers are freaked by the tone of the inspection report, so they want a new deck.

Would you:

a) hold firm, and possibly kill the deal?
b) give them a new deck?
c) split the cost?
d) ask an internet forum what to do?
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Re: real estate transaction puzzle
Old 04-14-2006, 11:57 PM   #2
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Re: real estate transaction puzzle

WAB
Amazing how a simple thing gets complicated. What does your RE agent say?
One issue you might have to address in putting back on the market is now you are required to disclose the deck condition.
If market is still good, do you have the patience to deal with it again?
Would you had taken an offer 10k less than list? If so, make it all inclusive--no other allowances period and/or offer to split the cost--5k.
Other Options include besides the ones you listed:
1. Offer a lower partial allowance--say 2500
2. Get agents to take some off commission from both sides to make deal go through--suspect a half point from each side will cover the cost
Good Dealing
nwsteve
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Re: real estate transaction puzzle
Old 04-15-2006, 12:10 AM   #3
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Re: real estate transaction puzzle

Agents on both sides obviously want the deal to close.* *Bird in the hand, and all that.

We're probably going to throw the buyers a bone in the form of a partial credit, but falling out of the deal is tempting simply as a matter of principle.* * I don't believe we'd need to disclose anything about the deck to a new buyer since it's really a wear-and-tear issue, not a material defect.

In the end, the credit will be a small fraction of the selling price, and the buyers made a full-price offer, so that makes it a bit less painful.

I considered asking the agents to share the pain, but they weren't at fault, so I didn't raise it.* * It would have been nice to find a way to have their inspector share some of the pain, though.
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Re: real estate transaction puzzle
Old 04-15-2006, 12:25 AM   #4
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Re: real estate transaction puzzle

Quote:
Originally Posted by wab
I considered asking the agents to share the pain, but they weren't at fault, so I didn't raise it.* *
Wab
Not sure there is an "at fault" question here.* Agents get a benefit of making the deal work.* Ultimately you are paying both agents.* I am guessing your place went for well over 700k--1% (.5 for each) and you pitch-in the* balance of the 10k and everybody could be happy.
Believe neither agent wants to do it again.* The Buy side may not have the next buyer and the Sell side has do the whole deal and qualifying all over--time better spent doing another full commission deal.
Don't be bashfu--the most they can do is say NO.
Good Luck
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Re: real estate transaction puzzle
Old 04-15-2006, 12:32 AM   #5
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Re: real estate transaction puzzle

When my kid sold his house in Portland in August the buyer's inspector said that the roof was nearing the end of its useful life. The buyer's stuff was in a moving van. Son told his realtor "This is not a new house, the roof is sound and of disclosed age. Let's look again at that backup offer." The buyer's agent folded and the sale closed on time.
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Re: real estate transaction puzzle
Old 04-15-2006, 01:34 AM   #6
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Re: real estate transaction puzzle

This pretty well devolves to the classic negotiators question. "What is the next best thing to this deal?"

Since a very average house in a decent Seattle neighborhood sells for $1Mil, and you have described your place as an enchanted house in the forest, you are really talking about a very small discount here. If you like the deal, I would put on a tutu and do a dance if that is what the buyers wanted. Just be sure that this is not the lead attack of a series of attacks on your position.

Also, I agree with the others, let the agents eat some of this doo-doo. If I were the agent, I would be getting out my fork.

ha
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Re: real estate transaction puzzle
Old 04-15-2006, 01:46 AM   #7
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Re: real estate transaction puzzle

The first time I sold my house I ran into a similar issue. *The buyer's "inspector" was completely out to lunch. *As an example, I had put a light and motion sensor on the front porch light. *We left the switch turned on all the time, but the light only went on if someone approached the house in the dark. *The inspector had come during daylight hours, switched on the light switch and noted it did not work. *His conclusion was that the entire house needed re-wiring. *

Despite the fact that their inspector was nuts, I learned that I could choose to 1) stop the deal, give up the earnest money, and put the house back on the market, 2) satisfy the buyers to the tune of about $10k at closing, or 3) do whatever repairs I thought necessary (about $10 worth of effort) and pay for a second inspection by the same guy. *

In my case, I think the buyers were trying to scam me out of the purchase price after making an offer. *The experience taught me that earnest money means nothing to a buyer who knows what they're doing. *

My second house sale also attracted a buyer who tried to whittle down the price after making the original offer. *In that case, the buyer decided they wanted me to pay for several inspections they wanted to see done after they had made an offer. * *

I told both buyers to take a hike and made a deal with someone who really wanted the houses within a few days. *

My feeling is that if the buyer shows any signs of cold feet, they are the wrong buyer. *Once a buyer gets cold feet, things are likely to spiral downhill. *Find someone who wants the house. *
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Re: real estate transaction puzzle
Old 04-15-2006, 06:58 AM   #8
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Re: real estate transaction puzzle

I had similare problems about 7 years ago when I sold my last place...30 year old house, well maintained etc, but obviously not new...so obviously I am selling it as a "used" house and its priced accordingly...

Buyers inspector comes up with a bunch of things: gutters on the porch, needs new roof in 2-3 years, a small building code violation in the cellar from a recent remodel etc. Screen doors needed replacing etc.

I agreed to fix the building code violation (cost me about $200 in materials and 6 hours of labor) and basically said "screw you" to the rest of the buyers demands...she ended up buying the place anyway, as is, and I beleive the re agents threw a bone her way to to cover some of the costs out of their cut...

Tell the buyers you'll fix the deck if they want, but then add the cost to the selling price...or they can do it themselves.

Assuming you can afford to lose the sale for now, On principle I wouldn't cave..I really don't understand how buyers want to buy a used house but expect the sellers to fix every little thing that isn't quite right.

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Re: real estate transaction puzzle
Old 04-15-2006, 07:50 AM   #9
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Re: real estate transaction puzzle

Just went into our kitchen to refill my coffee and mentioned this thread topic to my DH eating his breakfast. (NOTE - DH "retired" last year after close to 30 years in construction. We had a small constr. business that exclusively did custom additions on single family homes for 24 years.) His solutuon? Without missing a beat, he replied "Rip the deck off - no problem!" Gave me a chuckle! Funny thing is he would do it! Or at least that would be his counter offer to our RE agent!

Wab - your Realtor would much rather kick in some bucks to this stupid buyer than lose this deal - ditto for the selling agent. They do this stuff ALL the time. Don't let them eat too much of your money - this is total BS from the home inspector and I would make sure it gets known that he was responsible for (almost?) blowing this deal.

BTW - you said you think it is resolved - can you explain?

Whatever happens, like Mikey said, money in the hand and all that - you still can laugh your way to the bank!

Good luck!

Jane
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Re: real estate transaction puzzle
Old 04-15-2006, 11:13 AM   #10
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Re: real estate transaction puzzle

Quote:
Originally Posted by Jane_Doe
BTW - you said you think it is resolved - can you explain?*
For the most part, I agree with Mikey and I'll put on a tutu to ensure that the deal closes. We've responded to the buyers' demands and offered them a partial credit, so we're just waiting for their response, but the vibe is positive.

Since we're moving to a smaller place, we offered to sell them some of the furnishings, and it looks like they're interested in some of it, so that will offset a good chunk of the proposed concession.

It's interesting that everybody suggests dinging the agents commission on the deal. I find their fees to be extremely fat, but we agreed to those fees up-front, and they both did bring me a full-price buyer in a very short period, so I'm happy with the service. I have no doubt that if there was a serious chance of the deal falling apart, the realtors would be happy to take a hit on their commission to save the deal, but I'm OK with taking the hit and letting them keep their full commission.
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Re: real estate transaction puzzle
Old 04-15-2006, 11:24 AM   #11
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Re: real estate transaction puzzle

Since the county taxes the sale (and the realtors get their %)see if you can reduce the house price and have them pay for the furnishings.

I know this is penny pinching...

When we go to sell I have a large early Le Roy Setziol relief to negotiate with.
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Re: real estate transaction puzzle
Old 04-15-2006, 11:27 AM   #12
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Re: real estate transaction puzzle

The bottom line is that you're selling a house, not a new deck. If I were satisfied with using the deck in its present condition for the forseeable future (3-5 years) as it sounds like you are, I'd tell them that any cosmetic aspect of the deck was well within view and that you're satisfied with it being structurally sound. I doubt they'd walk away.

But on the other hands, its nuts to sink a good deal over something thats small 'taters. But I wouldnt offer them more than half. In fact, i'd offer them half minus the money already spent to improve the deck.

As far as money out of the agents pockets, that usually happens when you get an irrational buyer or seller who threatens to sink the deal in the 11th hour. Its expedient for the agents to resolve it if its a small issue and get things moved along. That doesnt seem to be the case here. I had a seller who had a chimney leak they were supposed to resolve, and repair some leak damaged drywall, by the close. Instead of replacing the flashing and the drywall, they had a guy jam black roofing gunk into the seam where the flashing was improperly done, and the day before the closing said they would NOT do the $500 drywall repair. They had already agreed to properly address both but now refused to do so. I would not complete the transaction until the work they agreed to do was done. The agents ended up paying for it out of their fees because the seller was adamant about not living up to his agreement, and I sure as hell wasnt going to eat it.

Can we get a photo of you in the tutu?
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Re: real estate transaction puzzle
Old 04-15-2006, 12:05 PM   #13
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Re: real estate transaction puzzle

A dollar isn't always a dollar it seems.* Some dollars have more emotion attached to them than others........*

When selling my dad's house to settle his estate, the market was slow and offers few and far between.* We finally got something close to the asking price from a cash buyer who needed immediate possession.* Since the house was empty, dad had passed away, we grabbed it.* Then, of course, we ran into similar house inspection issues amounting to about 1% of the asking price.* One of the items didn't make sense and I balked and let emotions get involved.

Fortunately, the realtor representing us got me on the side and settled me down.* He asked if the current bottom line, offer minus repairs, was satifactory.* I said it was.* In fact, more than we figured we would get in the slow market.* But, I was pissed because the failed inspection items didn't make sense.* Slowly the realtor reeled me in to focusing on the bottom line, the very satisfactory net from the sale.* I calmed down, dropped the emotions, and accepted the check.

You need to do the same.* If you think another full price, or above, buyer can be quickly located who won't* bring up silly inspection results, tell the current buyer you won't budge.* If you think it could be a problem to locate a replacement buyer who'll pay full price with no repairs required, I'd take this offer to the bank.

The bottom line is the bottom line.* Net is net.* Don't let lack of logic by the buyer or emotions get involved. It doesn't matter if the inspector is the biggest jerk in the world, if you're satisfied with what you're going to walk away with, take it. If not, don't.* No personalities, no emotion, no "getting even."

Anyway, that's what I learned from my deal.
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Re: real estate transaction puzzle
Old 04-15-2006, 12:36 PM   #14
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Re: real estate transaction puzzle

If the house has been sitting on the market longer than most take to sell then you might want to negotiate (split the cost).

Otherwise just say "no".

Couple years back I had the same issue with a roof ... but the house was on the market less than a month. I said no ... they walked. I ended up renting the place for another year; then sold it for 20k more than the prior offer (no home inspection either!).

The rising tide lifts all boats.
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Re: real estate transaction puzzle
Old 04-15-2006, 05:50 PM   #15
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Re: real estate transaction puzzle

When I put my old house on the market this January, I had 2 buyers bidding on it. Neither showed any interest in having the house inspected. The final buyer didn't even have a termite inspection which would be the norm in my location.
I got the contracted selling price at the closing. I was happy.
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Re: real estate transaction puzzle
Old 04-15-2006, 06:29 PM   #16
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Re: real estate transaction puzzle

It in the practice in the west to have an offer subject to inspection. In the South Bay the seller has the home inspected, leaves a copy with the realtor, and displays it when the house is shown. If a purchaser makes an offer the only exit inspection-wise is if the inspection was materially deficient.

Further up north offers are made subject to the purchaser's inspection. Then the buyer tries to negotiate down from their offer price.
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Re: real estate transaction puzzle
Old 04-15-2006, 06:32 PM   #17
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Re: real estate transaction puzzle

Quote:
Originally Posted by tryan
The rising tide lifts all boats.
all but the sunken ones and the ones tied too tight.

Quote:
Originally Posted by wab
My position is that this is a resale, not a new house. We'll address code violations, safety issues, etc, but we're not going to upgrade wear-and-tear stuff to new condition.
i wouldn't address any issues and sell as-is but in my area even in this market i could get away with that. from what you describe, i agree with your position though i don't know if your market (or price) agrees.
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Re: real estate transaction puzzle
Old 04-15-2006, 07:25 PM   #18
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Re: real estate transaction puzzle

Here are a couple things to consider. What is the sale price for your home? (if its a $900k house, fix the deck and move on) or (if its a 200K house maybe offer to credit the buyer with part of the cost of a new deck). What is the market like in your area? If its Hot then stand firm, if it has started to cool then you may want to meet in the middle and not risk losing this buyer. Did you come down on your asking price for this contract? If you did then you can say you have already conceeded all you will conceed because it is not a structural issue with the house and not a safety issue.
I am not a lawyer, I am a RE agent so please don't take this as legal advice. Good Luck
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Re: real estate transaction puzzle
Old 04-15-2006, 08:31 PM   #19
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Re: real estate transaction puzzle

This is a 1.1M house.
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Re: real estate transaction puzzle
Old 04-15-2006, 09:01 PM   #20
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Re: real estate transaction puzzle

It's a 1.1 mil house and you are willing to blow the sale on a 5 k credt on a deck.

You sound like me on Thursday I almost told a buyer to stuff it over spliting the cost of main electric service line running for the utility tap to the meter estimated repair cost $1200 my share $600.

This was on a full price offer and was 5k more than what we thought we would get.

But the buyer annoyed the crap out of us with all the little annoying things they wanted us to fix shower head, electric outlet that had been painted, missing insulation around ac pipe. The frickin house is 50 yrs old get over it.

The market where the house is is still pretty hat and we actually go the offer after 2 days using an mls listing service so we had no sellers agent and we were only paying the buyers agent 2%. So we couldn't her up.

We figured we could probably use the report that the buyer paid for as a punch list make all the fixes listed and raise the price 10k sell it for 5k more and end up $2000 richer.

But we decided to offer to split the cost just to be nice and hope it comes back 10 fold. Besides it will be nice to get the sale over with.

If the market is really hot tell them to pound sand fix the deck and raise the price. If it is warm and cooling offer to split the cost of the repair. It is only .5% of the sale price so 99.5 % is still pretty much full price offer and then you will be over and done with the sale and can get busy spending all those gains
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