Monday, September 25, 2006
By Dian Hymer
Inman News
Negotiating a purchase contract isn't easy when home sellers cling
to expectations based on last year's real estate market, and buyers refuse to
overpay. Equally challenging are the renegotiations that can occur after buyers
do inspections.
How do you successfully navigate the second round of negotiations?
The goal is to come away from the bargaining table feeling that you've struck a
good deal, ideally without alienating the sellers. After all, you may need to
impose on the sellers for return visits to the property before closing. And,
you hope the sellers will leave the place clean and tidy.
Before you begin a dialogue with the seller about who is to fix
what, you should have a clear understanding of your purchase agreement. For
example, does the seller warrant the condition of the property, or are you
buying the property in its present condition? Let's
say the contract states that the seller warrants the roof is free of leaks. You
ask a roofing contractor to inspect the roof. He says there is evidence of past
leaks and recommends replacing the roof before the next rainy season.
In this case, it's reasonable to expect the seller to provide a
leak-free roof at closing; it's in the contract. However, this may not mean
that you're entitled to a new roof. Most sellers would seek a second opinion.
Another roofer might recommend patching rather than replacing.
Transactions can break down over differences of opinion about the
extent of a problem and the appropriate remedy. It helps if both parties have
open minds and a willingness to cooperate on reaching a mutually satisfactory
solution.
In many cases, a seller warranty is not a part of the contract.
Instead, the buyer agrees to purchase the property in its present condition
subject to inspections.
Depending on how the inspection contingency is written, the buyer
may have the unilateral right to withdraw from the contract and have his
deposit returned, without even giving the seller the opportunity to repair
defects. Likewise, the sellers may be under no obligation to make repairs. If a
good faith effort is not made to work out a solution to property problems, the
deal is off and the buyer's deposit will probably have to be returned.
Negotiations over inspection issues often fall apart because one
party feels that the other is taking unfair advantage. A successful negotiation
involves give and take.
Many people think it's acceptable to ask home sellers to repair
health and safety issues. Even so, some sellers refuse to pay if they have
lived comfortably with these issues for years with no problems.
Sellers may feel a buyer is negotiating in bad faith is they ask
sellers to pay to correct a defect that they were aware of before they made
their offer.
Suppose you are buying "as is." You signed a seller
disclosure that said the roof needed to be replaced. An estimate to replace the
roof was included with the disclosure. When you removed your inspection
contingency, you made it conditioned on the sellers replacing the roof.
This kind of a request would enflame some sellers. Emotions can
run high during a residential home purchase transaction, particularly if the
sellers are still occupying the property.
Sellers are often offended when buyers lose sight of the big
picture and insist that the seller take care of minor defects. It's best to
focus on the major issues.
Make sure you understand what happens if the sellers turn down
your requests to repair defects, particularly if you don't want to lose the
house. In a popular purchase contract used in
THE CLOSING: He must issue a 24-hour notice to give the buyer a
chance to perform.
Dian Hymer is author of
"House Hunting, The Take-Along Workbook for Home Buyers" and
"Starting Out, The Complete Home Buyer's Guide," Chronicle Books.