June 20th, 2017 7:23 AM by Jackie A. Graves, President
No matter which side of the transaction you're on, you don't
want to give up more than you have to.
months of searching for the perfect home, making some offers, and maybe even
competing with other buyers, you finally have a deal on your dream home. It
took some negotiations, but you and the seller have come to terms.
often, getting a signed contract and putting your money into escrow is the
beginning of what can become yet another round of negotiations. Here are five
things every home buyer and seller should know about last-minute negotiations
Buyers may ask for credits
based on property inspections.
a real estate contract either provides for a property inspection, or buyers inspect before
signing. Depending on the property and the issues, a buyer might also have a
particular type of inspection for the sewer line, septic, pool or roof.
inspections can bring to light issues that the buyer couldn’t possibly have
known about before making an offer. Once inspected, the buyer may still be
interested in pursuing the sale. But given the needed repairs they will
probably want to re-negotiate the price by asking for credits or a reduction
in the purchase price.
Sellers should consider having
a property inspection before listing.
goal is to avoid negotiations once you’re under contract, because they’re not
going to be in your favor. If you know the roof is near the end of its life or
the furnace breaks from time to time, let it be known upfront, because rarely
can you “sneak” something past the buyer.
might even go as far as having your property inspected before listing the home. This way,
you can address any issues, and make the inspection report available to buyers.
They can come up with their best offer upfront, knowing what they’re getting.
you have an inspection report or are otherwise assured your property is in
great shape, you could even ask for an “as-is” clause in the contract. Although
it’s not necessarily enforceable, it will send a strong message to the buyers
that you aren’t open to more negotiation.
Sellers may try to avoid giving
credits by having work done before escrow closes.
inspections, the seller might agree to have work done before the closing. Or
the seller may require that a payment is given directly to a contractor for the
purpose of performing the specific, required work and nothing else.
agreements help protect the seller, because buyers sometimes ask for credits
just to help offset the closing costs — and never intends to do the repair
also protects the seller if initial estimates for needed work turn out to have
Buyers who ask for credits just
to get the price down may be taking a chance.
the buyer concedes on the purchase price thinking they can come back after the
property inspection and ask for an additional concession.
buyer may even feel empowered now that they’ve completed a series of
inspections and are just weeks away from closing. The seller isn’t going to go
back to the drawing board with a new buyer over a few more dollars, right?
they might. If it’s a strong buyer’s market, there’s a good chance the buyer
can pull it off, but if it’s more of a neutral or a seller’s market, the seller
may call your bluff. They’re assuming that you’re the one who, having invested
all this time and money on inspections and an appraisal, isn’t going to walk
away over a few dollars.
Buyers nearly always ask for
credits, so sellers should give themselves some cushion.
should also leave some additional room for negotiation when you’re in escrow.
Always assume the buyer will ask for minor repair work — they nearly
always do, even if there are no major issues. If you leave some cushion for
yourself, you’ll feel better about the deal, and you’ll have protected yourself
against the inevitable.
the last thing you want is to be blindsided by a buyer asking for a few
thousand dollars credit — just when you think the deal is finally done.
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