Inspection Advice - Kicking Myself

louislinusMay 10, 2014

I am selling my house FSBO. We have a signed purchase agreement with a buyer and are scheduled to close in 2.5 weeks. We are also buying a new house and close on that house the day after we close on the sale of our existing home. Our Buyer does not have a REA. (I wish she had one.) She had an attorney write up the purchase agreement. She also has never bought a house and is doing this without any counsel. ugh.

Buyer had her inspections a week ago. The inspector said that the house needs an entire new roof and that there are structural issues with the foundation.

The house is a 150 years old and in very good condition. The basement is rubble stone (also called fieldstone). It is extremely solid. We have no cracking anywhere in the house. The basement is certainly unusual and only inspectors familiar with homes of this age will understand it. When we bought the house 5 years ago we were also concerned about the basement and had a separate basement inspection. Our inspector, who has 50+ years experience, was very positive about the basement and in fact said that he felt bad taking our money because this house wasn't going anywhere. With regards to the roof, the back part of the house, which is an addition, does need a new roof and I disclosed that when the buyer looked at the house. The rest of the roof looks good. In fact, just 2 months ago I hired someone to get up on the roof and remove some moss and check it out. There were no issues at that time.

Last Tuesday, two days after the general inspection, my buyer came back with a structural engineer and a roofer to look at the roof. I was here but not privvy to their conversation. Buyer did not communicate with me at all after Tuesday's inspections. I finally emailed her Friday to find out how it went. Buyer said that the structural engineer said "The house is so far from being to code that he wouldn't write a report and walked away from the job." I told my buyer that any house over 30 years old would not be to code and that the majority of homes in our town would fall into the same category. I also said that I would very much like to get the basement inspector I used when I bought the house to come look at it and when could she be available to come back and meet with him (at my cost). She did not respond. I finally just called my old inspector (who is now retired but he agreed to come back) and scheduled an inspection for tomorrow. I emailed her again late Friday and said that I had scheduled an inspection for Sunday and would love for her to be there. I also said that I needed to put my mind at ease about this basement issue. (I KNOW there are no issues with the basement.) I asked her to let me know if she was going to be able to make it. Now it's 24 hours later and she has still not answered me.

The stupidest mistake I made was not reading the contingency section of the contract carefully. Her attorney did not specify any timeframe for her to release us from the inspection contingency and I didn't catch it. Basically she can hold us hostage up to closing and can back out any time. In the meantime the seller's of my new house are understandably super annoyed because this is also holding them hostage.

My buyer is a cautious person and does not like to be pressured. I also just like her a lot but I don't know how to tell her that it's not okay to go dark on me when everything is hinging on her. I know that she is not comfortable negotiating. Every concession we've given her has been because I've offered. She hasn't asked for anything. The concessions I've offered I've only done because I could sense she was unhappy. It's like reading tea leaves with her.

Any advice? My REA (we are using one as a buyer's agent) has been very helpful and gracious with advice but she understandably doesn't want to get too involved in my sale.

HELP! What should I do?

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Mmmbeeer

I feel for you! What an awful position to be in. Why don't you just be frank with the buyer and tell her she's holding up the process and you don't want her to be uncomfortable and do anything she would regret in the future and get her to walk away from the sale. Every time I've had a hinkey about a buyer it was well justified. THEN, get your own home inspection and remarket your home to let buyers know it's already been pre-inspected.

Once a seller has accepted an offer, a savvy (or manipulative or even nervous) buyer knows they are in a position of power to jerk you around. I'm not saying your buyer is like this but there are a number who understand that they can use the period designated for inspection to renegotiate the whole contract. At this point in time, I'd rather cut my potential losses and find a buyer that better understands the issues that older homes may have.

    Bookmark   May 10, 2014 at 8:56PM
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detroit_burb

"I also just like her a lot but I don't know how to tell her that it's not okay to go dark on me when everything is hinging on her."

put it in writing and send it to her, it doesn't matter if you "like" her or not, this is not the start of a friendship, it is a business transaction that she hired a lawyer for - where is your lawyer?

"I know that she is not comfortable negotiating. Every concession we've given her has been because I've offered. She hasn't asked for anything. The concessions I've offered I've only done because I could sense she was unhappy. It's like reading tea leaves with her."

once again, as a seller, you need to be approachable, but firm, her lawyer knows this about your - giving concessions without her even asking, but once again, I ask -- where is YOUR lawyer? You need someone who is representing you because this can cause you a costly mistake.

Making a huge purchase is an emotional thing, but it is a business deal. If you put your basement inspection in the disclosure upfront, it will help. At this point, you are paying for your own expert to argue with a report from her expert - her lawyer probably got the 'best' basement inspections possible for his client.

If you want, you can call her bluff and offer her an out at this point, but give her a time limit on accepting the 'out' and make it clear that you will not be making concessions on the basement foundation or the roof.

and for goodness sake - if you have no agent, at least pay a lawyer.

This post was edited by detroit_burb on Sun, May 11, 14 at 9:50

    Bookmark   May 11, 2014 at 9:47AM
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Trebruchet

louislinus:

You need to make this woman feel comfortable or this deal's headed for the toilet, or worse yet to the lawyers.

    Bookmark   May 11, 2014 at 10:06AM
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gyr_falcon

"... I don't know how to tell her that it's not okay to go dark on me when everything is hinging on her."

Well, actually it sounds as if you did tell her it was okay. You signed off that she can wait until the closing date to back out of the purchase due to the inspection report. If someone wants to FSBO to pocket the money that would have gone towards commissions, you also assume the responsibility and risks that go with the assignment. Mistakes can be costly. That is why many home buyers and sellers use agents and lawyers.

Hopefully, you can get the woman to sign an amendment, or voluntarily notify you of her intentions sooner, even if she may not have to legally. You need to be prepared with your next steps in response to all of the ways this could go. Not much help, I know, but there aren't a lot of options. You really need this sale to go through, so I hope it does. Maybe she will have checked out a few other houses, and be more confident that yours is the one she wants. Good luck, louislinus!

    Bookmark   May 11, 2014 at 1:51PM
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rina_

quoting detroit_burb above:

and for goodness sake - if you have no agent, at least pay a lawyer

FSBO - not such a great savings at the end, is it?

Sorry, don't want to be mean but one should be really informed before attempting what could be a biggest money transaction in their life.
It does pay to employ an agent....more often than not. Or a lawyer. You mentioned that you have REA for a purchase - may I ask why? You (possibly-I don't know the situation) could bought privately too - why not? (unless it was listed)
Or at least should have made some arrangement with the same REA to pay smaller commission on sale of your present house since you are buying too & REA has 2 deals from you at the same time.

I feel for you, it's stressful enough selling & buying & trying to co-ordinate everything without complications.

I think it is good idea for a seller to do proper inspection (at their cost) just before selling. That way you know (& have it in writing) what possible objections may arise.
The buyer has option to accept your inspection report or have new done by inspector of their choice, but you'll be spared of "surprises". The difference between 2 reports should be very minimal - as long as you employ qualified inspector.

I am sorry for repeating what was already said by other posters & am not trying to "rub it in". I hope that something will happen & person in question will follow thru. But I would definitely prepare myself for worst.

*How much time do you have until closing?
*Is there enough time to market your house again? If so, pls. give the listing to REA to spare you of similar problem...
*How is the selling/buying activity in your area? How long was your house offered for sale before you received this offer?
*Do you "have to" close on another (your new) home? You probably have to & want to, but what if your sale doesn't go thru & there isn't enough time to find new buyer?

This post was edited by rina_ on Sun, May 11, 14 at 14:25

    Bookmark   May 11, 2014 at 2:03PM
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mpinto

You need an attorney. You should have had one when the contract was drawn up, but what's done is done. You need an amendment to your contract with an end date for the inspection contingency. A good REAL ESTATE attorney can advise you.

    Bookmark   May 11, 2014 at 4:40PM
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weedyacres

If she won't respond to you, you might try calling her attorney and getting the message to her that way. He/she might be able to get the buyer to act sensibly. Or at least respond.

BTW, everyone that's piling on saying "you're dumb for going FSBO" is really not helpful. OP needs some help with her current situation, and we're a community that offers that help. Monday-morning quarterbacking accomplishes nothing. And unfortunately having an agent doesn't guarantee no mistakes either.

    Bookmark   May 11, 2014 at 8:55PM
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detroit_burb

I think it is NOT dumb to do FSBO in a hot market. I think I may do the same.

weedyacres, you have a good point suggesting contacting the attorney. That will make the seller's bill go up. Perhaps light a tiny fire under her delicate ...

I'll bet OP, that you have a great house, and the buyer has invested a bit so far, likely she wants the deal to go through.

I know for a fact that agents often light little tiny fires under the buyers ... when buyers start hemming and hawing, you can do the same.

I think this will work out in your favor, just stop being 'nice' because this is a business transaction. You can be polite, and refined while still holding your own.

    Bookmark   May 11, 2014 at 10:27PM
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louislinus

A couple of things:

1) We have to do FSBO or we can't buy our new house. We need every penny of equity for the down payment or we can't do a conventional loan.

2) We ended up with 3 kids instead of the two we planned (twins) so staying here in the current house that we love and had planned to be our forever home is also not an option. :)

3) There ARE basement issues much to our surprise. Not foundation issues but cracked floor joists and support columns needed. We are getting this work done ASAP and are covering it 100%.

4) I told seller I would provide her with a contingency release based upon getting the work done. I hope she signs it.

5) There were legitimate personal reasons (unrelated to the sale) why she wasn't communicating with me so I'm feeling much better.

6) As I said previously I WISH we could have used a REA. Ours is top notch. But the commission would have made the new house impossible.

To answer a few questions - we close in 2 weeks. Our house was on the market 2 weeks when we received this offer. Another screw up is that I stopped showing the house once we received this offer. (In my defense the buyer had a conventional mortgage and no house to sell so the offer was solid.) Lesson learned.

Everyone keep their fingers crossed k?

    Bookmark   May 11, 2014 at 11:57PM
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rina_

louislinus

Hope everything works out for you.
You did get offer very fast, I am sorry to hear that you found about any issues that you need to spend $ on. Good luck with having all done on time.

BTW, I wasn't piling on saying "you're dumb for going FSBO" at all, but there is a lesson in these kind of situations. There is really nothing this forum can do to help situation but to keep fingers crossed...if there is a will on buyers side, transaction will happen. Or lawyer may help.

The truth is, most of us really stretch $$$ to buy "dream house", and sometimes maybe we shouldn't - if there is absolutely nothing left (We need every penny of equity for the down payment or we can't do a conventional loan.), it could create other problems/stress for the family.

I am not preaching - been there, done that too. Thankfully, survived.
And I see that there are many reasons for you to move to bigger home. I am definitely rooting for you.

    Bookmark   May 12, 2014 at 2:04AM
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ncrealestateguy

If you had to peel away moss from the roof in order to inspect it, then chances are it does need to be replaced.

    Bookmark   May 12, 2014 at 7:04AM
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louislinus

So I spent all day working out the inspection issues with the buyer and we came to an agreement. Then this afternoon the appraisal came in $25k under the selling price. OMG. I don't even know how or if we should continue. Our town had very little inventory and none of the recent sales have a lot our size - ie no good comps. I mean the appraisal came in 15k under what it appraised for 5 years ago and we have done significant improvements since then. Buyer is providing me a copy of the appraisal and I guess I need to write a letter to her bank fighting the appraisal and discounting their comps. Any other ideas? What a mess.

    Bookmark   May 12, 2014 at 8:58PM
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dekeoboe

What comps did you use to set your selling price? Why do you think your comps are better than the comps the bank used?

    Bookmark   May 12, 2014 at 9:42PM
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louislinus

My REA did an CMA and gave me the listing price.

    Bookmark   May 12, 2014 at 11:12PM
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detroit_burb

crossed.

    Bookmark   May 12, 2014 at 11:18PM
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pixie_lou

Louislinus - first of all, I understand you are upset with the buyer about not releasing the inspection contingency. However, you did sign a contract that did not specify a deadline. So my understanding is that your buyer has not done anything wrong. You just don't like the contract you signed.

As for the appraisal - has the buyer agreed to pay $25k over appraisal? She may have been pre- aproved for a mortgage. But unless she is willing to put up that $25k in addition to her 20%, she won't be getting a mortgage. I'm not sure why the bank will listen to you - you are the seller and the bank only has a relationship with the buyer.

Appraisals do take into consideration differences in lot sizes. No 2 houses are identical. So a appraisers make adjustments for things like lot size, square footage, number of bedrooms and bathrooms, how busy a street is. When we've had our house appraised, even though we are the largest lot in our subdivision, lot size barely matters. Unless you have a big enough lot with enough frontage for 2 homes, you are just valued at 1 build able lot. And the fact that your house appraised for $15k less than 5 years ago also is irrelevant. It is based on what current homes are selling for NOW. What you paid 5 years ago and how many improvements you made have no bearing on what your house appraises for today.

I hope things work out for you in the end. But between the roof issues, basement issues, and appraisal issues, I have a feeling this sale may not be going through.

    Bookmark   May 13, 2014 at 7:26AM
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