What? A Request For Repair?

By
Real Estate Agent with Trident Realty Group

Have you ever had a seller wonder what this was all about? Chances are if you're a Rainmaker you've coached your clients well, both buyers and sellers alike. On occasion my sellers are blindsided with some creative requests. Here's how I coach both buyers and sellers to prevent this from happening. Note: Buyers and sellers reading this, you might impress your agent, pay attention...

Understand the part of the contract where "as is" is mentioned. In California the purchase contract specifically states "the property is sold in its present physical condition". What this means is it comes with the faux wooden beams, wood paneling, 1957 mirrored Elvis tile and the garden-hose-green shag carpeting. This doesn't stop buyers from asking for everything under the sun (and carpet), however. But buyers should be aware the seller loved their home at one time and is selling for an agreed upon price. If priced right, sellers have objectively taken into consideration the condition, fit and finish of their home and programmed that into their price.

If repairs are requested, negotiate based upon the end goal - sale of the property. Buyers often ask for items to see what they can "get away with" or how much they can beat a seller down while giving up their most prized possession. Conversely, sellers often feel their house is perfect and "how dare anyone ask me to fix or change anything?". There can be deal breakers coming from either side; ask, negotiate and respond fairly. An offer was written in good faith that the buyer wants to own this home, right? The seller should take a deep breath when reading a request and consider the buyer's perspective.

What is fair game to ask for? As mentioned before, the buyer can ask for everything and anything, including removal of the moon and star collection on the mirrored ceiling. Here in CA, the seller literally does not have to respond. This in and of itself can be a deal breaker, kind of like me asking my wife Barbara if I can go on a week long motorcycle ride over Christmas with the fellas; she'd just stare at me like a statue of Abe Lincoln. Can a buyer ask for cosmetic repairs? Absolutely! In all my years of asking and answering requests for repairs, I've said the same thing, "the buyer can ask for anything but the seller really should give priority to health and safety related issues".

What are health and safety related issues? First and foremost, both sides should not take this lightly or too serious. A seller might have been living in a house for years in certain conditions that might have warranted building code updates in recent years or standards that needed changing. Does this mean the house is instantly uninhabitable? Absolutely not! Common sense prevails. Here are a few examples of (but not limited to) issues where remedies could be asked for: mold, fire hazards, leaks (water or gas), broken glass, roofs, foundations, lead based paint, asbestos and falling hazards (human or inanimate objects). Some of you 100k plus point clubbers could add to this I'm sure but you get the point. Again, there are many things a buyer could ask for, these just tend to be important and pertinent to a buyers definition of habitability.

How can a seller respond? Simple - no, yes or yes to some. "Not only no but heck no" can cause a buyer to take their ball and go home. If a buyer was coached properly, these could be items they feel will tremendously impact their living experience in their new (old) home. Ask wisely and consider the seller's reason for saying no - "Read paragraph 7A silly" (the as-is paragraph), "this is cosmetic", "I don't have the money to do it (short sale or foreclosure)", "the item was only recommended by your home inspector, not mandated by anyone", "I'm part mule", etc. Yes answers - self explanatory. Yes to some, also self explanatory, refer back to "no" for the items not agreed upon. Make sense?

What happens next? Actual repair paid for by seller often happens in CA, refer to your contract defaults for repair standards. Here's what I recommend as listing agent, it's a little easier with a happy ending for all. At the beginning of the transaction I prime the buyers agent to not only conduct a home inspection but to have licensed, reliable contractor(s) inspect and give the buyers an estimate for repairs they might want - all are part of buyer's due diligence. This will help the seller arrive at an easy response to a request for repairs. At this point the seller can do one of two things, agree to repairs during the transaction OR agree to NO repairs and give a credit to buyer at closing. Call it a discount on the house (or closing costs) that happens to be the price on the written estimate, and the buyer can fix these issues under their ownership. Everyone should be happy at this point, buyer got a break, seller can move out without fixing the house they are leaving behind. Note: Seller CANNOT give buyer cash in hand from proceeds of sale if financing is involved, this is mortgage fraud. However, there is such a thing as a Rehab loan; ask your favorite lender or a fellow Rainmaker for details.

Is there a better way? Quite possibly, each situation is different. This particular approach has served my clients well in Chula Vista and all over San Diego for several years and I haven't heard any complaints after closing. I would like to hear your thoughts and as always, I'm open to suggestion...

Marvin de la Vega

Disclaimer: Consult with your local agent, broker or real estate attorney for specific guidance in your locale. While meant to be an illustration of what can happen in CA, this is by no means the rule for all transactions. For further back pedaling and an all encompassing disclaimer, refer to my profile page. Md

 

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Re-Bloggged 5 times:

Re-Blogged By Re-Blogged At
  1. Gabe Sanders 04/07/2009 06:46 AM
  2. Yvette & Dennis Gardner 04/07/2009 08:17 AM
  3. Norma Brandsberg 04/07/2009 08:50 AM
  4. Sandy and Jay Souilliard 10/23/2009 03:43 PM
  5. Paul Gapski 08/05/2012 08:20 AM
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Topic:
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CUSTOMER SERVICE
LATE NIGHT - EARLY MORNING AT ACTIVERAIN
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Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

I've seen PA contracts too, seems like all states have their sweet spots in their contracts. I like that idea, no muss, no fuss - dig it!

Thanks for adding your spin...welcome to CA!

April 07, 2009 12:09 PM
Ambassador
275,637
David M. Childress
I would love to be your Realtor® in Akron Ohio!
Howard Hanna Real Estate Services

Marvin, very well done and thought out. I am in the middle of a home inspection dispute as we speak and this gave me some pointers. Thank you.

Guess thats why I check in AR everyday.

April 07, 2009 12:54 PM
Rainmaker
1,369,668
Rebecca Gaujot, Realtor®
Lewisburg WV Real Estate, Greenbrier County
Coldwell Banker Stuart & Watts Real Estate

A good explanation of the process. And, look it has already provided tips for David Childress above.

April 07, 2009 03:28 PM
Ambassador
1,405,356
Anna Banana Kruchten
Phoenix Real Estate Agent, CRB, CRS 602-380-4886
Phoenix Property Shoppe

Great post Marvin. Here in AZ we have mostly 'as-is' transaction going on right now.  Before we write the contract we got over our company  as-is disclosure (particularily with foreclosures) and we have the standard state as -is addendum.  Alwasy a good idea to make it real clear right off the bat!

Thanks!  I will share your well written post with our agents.

Anna Banana

April 07, 2009 03:54 PM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

David - glad to be of service, here's to a happy ending. Cheers, Marv

Rebecca - aw shucks, ma'am...thanks.

Anna Banana - now there's a memorable company name. Funny, everywhere I've gone I've helped train agents, even when I was new. I think sharing this kind of info will make our industry a better place, thanks for passing it on. Md

 

April 07, 2009 04:26 PM
Ambassador
1,305,660
Robert (Vegas Bob) Swetz
Commercial & Residential Real Estate Agent
REALTY ONE GROUP - LAS VEGAS, NEVADA 702.443.7156

Marvin - Great post and a Gold Star from the "GODS" and another one at: CUSTOMER SERVICE

Keep up the great material my friend!

April 07, 2009 04:51 PM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

Once again, thanks Bob! I'm off to show property now and practice what I preach...see you soon. Oh yeah, I got the cards and letter. You rock! I'll pass them out for you - of course to potential clients, not free lunchers...

Marvin

April 07, 2009 05:19 PM
Rainmaker
558,659
Chris Olsen
Broker Owner Cleveland Ohio Real Estate
Olsen Ziegler Realty

Hi Marvin -- Great post.  It generally works the same way here in Ohio and our local customs are to ask that health and safety defects be remedied, provided they were not known ahead of time and it also depends where the buyer sits in the transaction.  Pay a premium, home should be in premium shape, etc.

April 07, 2009 06:12 PM
Rainer
32,333
Marie LaVoise, ABR, SFR, AHWD Certified Relocation Specialist
JKA Properties / Meli G Realty & Investment Group

Originally being from CA and now practicing in TN where I feel you spend more time on repair negotiations and addendum's then anything else. I can say it would be nice to have "as is" in the contract even if no one listened to it. The Tennessee Association of Realtor's had to make a change this year due to the amount of times Repair counter proposals went back and forth. Now you can only counter once then you accept or reject or I guess write a new contract.

April 07, 2009 06:12 PM
Anonymous #34
Anonymous
Anonymous

I'm glad you put in the paragraph about contacting licensed contractors for estimates and so on. Too often the home inspector is pressured to give "estimates" for repairs and this more often than not leads to grief when, after the sale goes through and repairs are begun and the estimate falls far short, everyone is unhappy and fingers start pointing in all directions.

Remember that a home inspector is like a general practitioner, sometimes we have to defer to a second opinion from a specialist.

 

 

April 07, 2009 06:37 PM
Rainmaker
605,639
Sharon Simms
St. Pete FL - CRS CIPS CLHMS RSPS
Coastal Properties Group International

If we know a buyer would have paid more or a seller would have taken less, we often bring this up during the inspection scenario. Also - is the cost of the repair enough to put the house back on the market and wait for another seller with an unknown offer?

April 07, 2009 06:51 PM
Rainmaker
675,727
Mary Yonkers
Erie/PA Real Estate Instructor
Alan Kells 1-814-881-7548

Marvin--Congrats on earning a Gold Star for this very informative post.  Lots of good comments, too.  Mary

April 07, 2009 06:52 PM
Rainmaker
200,365
Sally Dunbar
Fair Oaks Realtor - Fair Oaks Homes for Sale
Lyon Real Estate, Fair Oaks CA (Sacramento Area)

I wonder how our business expectations will change as a result of buyers getting used to the AS IS method of buying REOs.  It's become a wysiwyg way of buying a home.

April 07, 2009 08:53 PM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

Chris - glad to hear common sense prevails in OH. Thanks for checking in.

Marie - I love the "get it right" once approach, or start over. Might cause agents to advise their clients wisely, early on. Thanks. Md

Paul - Home inspectors here are very careful with wording for obvious reasons (liability), which is why they recommend "licensed contractors" instead of Joe Handyman day laborer hangin' around Home Depot to fix stuff - that's just a lawsuit waiting to happen...

Sharon - that's why I stress the understanding of good faith in any contract negotiations. Is the buyer really asking for fair repairs or are they submitting a harassment package so the seller can tell the buyer where to go? It's better if both sides play fair and are aware of good faith negotiations from the get-go. I agree that if the buyer asks, the seller should understand it was for a good reason, reason enough to keep the buyer at the table...

Thanks Mary - this like the parking lot at a Harley show, some of the best bikes (comments) are in the parking lot! I'm learning a lot from everyone!

Sally - you know what sparked this was an actual normal transaction where the seller had equity in the house and could entertain taking care of repairs (much unlike all the short sales and REO's we've been working on). Luckily I had "the chat" with my seller about what to expect. It has paid off tremendously, this deal has been silky smooth thus far (knock on wood). Of course it ain't over till the fat lady sings (funding and recording). Note: my escrow officer is a dude, very sharp, best in the industry and I'm sure he wouldn't appreciate being called a fat lady...

April 07, 2009 09:23 PM
Rainmaker
357,856
Robin Dampier REALTOR®
Hendersonville & Western NC Real Estate Source
Coldwell Banker King

Hi Marvin -- a well thought out post and great comments from different parts of the country.  As many of the comments point out real estate is local as are rules and laws governing contracts and how repairs are negotiated.

Here in NC our Contracts regarding inspections/repairs contains a list of items that shallbe performing the function for which intended and not in need of immediate repair.  Basically these are the items considered "necessary repairs" under the Contract which the seller can agree to repair or not and the buyer can accept his response or not.  We also have a clause in the Contract that if the cost of repairs go over an amount stated the buyer has the option to back out.  If the sellers and buyers have not been well briefed/informed of the inspection clause on this part of the Contract before the inspections this can be and is quite often a mine field of disasters!  Our Home Inspectors are licensed and generally the buyers Inspection Report is in 2 parts.  The first section contains items for the buyers to be aware of for future possible expenditures and a Summary Section for items deemed safety issues and items deemed to not be performing their intended purpose.

As Lynn pointed out in MD if a roof is 100 yrs old and the buyer wants it replaced -- put it in the Offer to Purchase and get that issue out of the way and move on!  I learned that lesson the hard way some years back when my buyers Inspection deemed the roof to be beyond its life expectancy and they wanted it replaced.  The seller refused as it was performing its "intended function" and NOT leaking and if the buyers walked the seller would not release the Earnest Monies.  This was definitely a hard lesson learned!

Of course in the current unbelievably strong buyers market, short sales and foreclosures the sellers have lost a lot of negotiating on these matters and the banks control a lot of it as to what they will agree to.  Whew -- I didn't mean to write a book -- I'd have a terrible time trying to Twitter!

Sue of Robin and Sue

April 08, 2009 12:10 AM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

Sue - great thoughts nonetheless. This particular post has opened my eyes to how dedicated professionals think throughout the country. I honestly didn't bargain for the outpouring of experience and wisdom demonstrated here by my peers. Thanks for joining the group, you certainly have a good handle on how it's best handled in NC. 

April 08, 2009 12:34 AM
Rainmaker
199,034
Jim Mushinsky
Centsable Inspection

Marvin - I like that you keep the goal in mind - the sale of the property.   If you're not interested in the sale of the property then don't waste time with outrageous requests just to pretend that you are interested in the sale of the property.  Great posting.

April 08, 2009 12:51 AM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

Jim - I have the same attitude toward senseless lowball offers, what's the point? If the seller agreed on purchase price and opened the transaction with a buyer, then good faith should exist all the way through. It's a small sandbox, everyone should play fair and work toward the same goal - building (selling) a castle...

Thanks for chiming in! Md

April 08, 2009 08:46 AM
Rainer
332,937
Paul Gapski
619-504-8999,#1 Resource SD Relo
Berkshire Hathaway / Prudential Ca Realty

Thank you for sharing your blog; we need Real estate Professionals to share their comments and information regarding their markets and experiences. Thanks again from beautiful Sunny San Diego

August 05, 2012 08:06 AM
Rainmaker
54,049
Marvin de la Vega
Trident Realty Group

You're quite welcome Paul. I think our RPA-CA has changed a little since I've penned this post but in reading it again, not much has changed in my approach to all this, especially now with the (good) change in tempo in our market. Have fun out there, hope to see you in a transaction soon. M

August 05, 2012 10:02 AM
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