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Buyers asking for Price Reduction before Closing

Posted by seller2325 (My Page) on
Sat, Aug 17, 13 at 8:35

Hi,

I am currently in the process of selling my home and purchasing another which is contingent on my current home selling. We had an investor place a contract on our home. They have put their money into escrow and we are still within the inspection period. This buyer had the inspections done and found nothing structurally or otherwise wrong with the home. They waited until Friday night at 5:00 pm to contact our realtor to say they want an 8K reduction in price to make the house to their liking (ie: putting in granite countertops etc). The house we are selling is only worth 160K so to give 8K is a lot of money. We are in a tough situation because we cannot purchase our new home unless we sell this one. If they are still one day within their inspection period are they allowed to bully us knowing we're in a tight spot into taking 8K off the price? What does everyone think or know about this? We are in Florida BTW


Follow-Up Postings:

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RE: Buyers asking for Price Reduction before Closing

Yes, they have every right to ask for the price reduction, and you have every right to deny them.


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RE: Buyers asking for Price Reduction before Closing

I would say no. If you loose the other house so be it. They are counting on you being tied to it and that you'll agree because of it.

It is a business transaction and they are within their right to ask just as you can decline.


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RE: Buyers asking for Price Reduction before Closing

It's a bit disgusting. We were to close on the new house on Aug 29th and our current home we're selling on August 28th. I can't believe how spineless people are especially when we priced our home 5K below the comps to sell it fast and be fair. Investors are the worst....I have never heard of anyone asking for a price reduction because something isn't to their liking only when something is wrong in an inspection. Ruthless people.


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RE: Buyers asking for Price Reduction before Closing

My main problem with this is that they should've put that price reduction in their initial offer. They didn't realize that there weren't granite countertops (etc) when they previewed the house? (or even looked at pictures of the kitchen?) Had the inspection revealed something that was not obvious during a basic walk-thru, then they might have something to stand on - such as electrical panel not big enough to meet demand, or doesn't have wind mitigation straps (or clips, or whatever they are) on the roof, or something like that.
This is more bold than my in-laws' buyers who demanded a new $6K leach field for the septic system, although it passed inspection. The inspector had made an off-the-record comment that they usually lasted (something like) 25 years and this one was 20 years old. My inlaws insisted that the copy of the inspection stating that it needed a new leach field to be sent to their lawyer (they didn't actually have a lawyer), and the demand was removed and they closed on time.
I hope the agent representing you lets them know that this is an outrageous request and you're not letting them out of the contract.


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RE: Buyers asking for Price Reduction before Closing

I would say no and be prepared to walk away.

But this raises a question. The offer agreement talks about the breach of contract and penalties being limited to the amount of deposit. When, if ever, is a buyer ever found in breach of contract? I would think if the contingency includes reduction in selling priced based upon inspection and nothing is found on inspection that the seller would be coming close to breach of contract if they decide they want to pay X amount less or just walk away. Or is this one of those things that is in contracts that doesn't really mean anything because it's never invoked or enforced?

I know someone who was sitting at the lawyer's office waiting to close and the seller just never showed up and would not answer their phone. Are the buyers out their deposit then? Or do they still get to walk away without penalty?


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RE: Buyers asking for Price Reduction before Closing

The time to haggle is BEFORE you sign the contract and put money in escrow!

I'd tell them that they bought the house, and that you expect closing to go off as scheduled.

Tell your RE agent that, too, that when they signed the contract you thought you had a sale at that price.


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RE: Buyers asking for Price Reduction before Closing

ditto lazygardents

Hopefully your state or local jurisdiction allows you to keep the money put in escrow seller2325. If they walk away, I hope that escrow money will be a costly lesson. Depending on the law in your state. Technically, nobody "gets" the earnest money until the sale is completed or canceled: The keyword here in your favor is the sale being "canceled"

Some info on the earnest deposit:

If the sale is successful: the earnest money is applied to your down payment on the home purchase.

If the buyer backs out of the sale for reasons not covered by a contingency: then the seller keeps the buyer's earnest money.

If the sale falls through because of a failed Contingency Condition included with an offer on a home that must be fulfilled before the deal can close. If a buyer or seller is unable to satisfy a contingency, then the offer on a home may become void.

This post was edited by sasafras on Sat, Aug 17, 13 at 17:17


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RE: Buyers asking for Price Reduction before Closing

You are within your rights to say "no" and if they decide to pull out of the deal, then most likely you are due their earnest money. Because they would be breaking the contract.

I would offer $1000 to them just to make them happy and keep the deal from falling apart. Even if you get to keep the earnest money, it would put you in a terrible position because it would delay the purchase of your new home. Maybe you lose the new home.

The FL marke is booming again so it is highly likely if you place your home back on the market, you get another buyer quickly. Especially if you are priced $5k under market.


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RE: Buyers asking for Price Reduction before Closing

but, see, we don't know that the sale is falling apart;
this sounds like typical investor tactics.

Investors don't put granite countertops (or anything else) in a house because they 'like' granite;
they spend only what they have to in order to turn a profit or to increase their profit.

& you can't make a profit off the installation, at full retail, of *anything*.

If they can make $8000 off the seller before they even sign their names, their purchase is that much more profitable.

Investors are famous for "negotiating" all the way through closing;
if this gambit works, it doesn't guarantee a solid closing, it might just get them excited enough to perhaps show up at closing & say, 'sorry, we're about $5,000 short of funds, can't close unless you help us'.

You must, of course, do whatever you have to do, & the first thing I would recommend is to consult with your Realtor, but I myself would be inclined to call their bluff & decline their request.

I wish you the best.

edited to add:

Waiting until the last minute is another tactic;
it tends to blindside the seller, who has been thinking that everything is going swimmingly & who therefore has been making plans & commitments.

This post was edited by sylviatexas on Sat, Aug 17, 13 at 18:56


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RE: Buyers asking for Price Reduction before Closing

To some degree, this depends on your contract and what it says, but if you are in the inspection period, they can back out based on something wrong found during the inspection. Not some random thing that they suddenly decide they don't like.

So if the inspection found that the current counters were crumbling or covered in lead paint or something, they might be able to back out of the contract.

But for something they don't like? Something as obvious as kitchen counters that they had to have seen when looking at the house? Nope. They can't back out of the contract for that.

They can ask for a price reduction. You don't have to give it to them.

Then they can decide to stick with the contract or back out and lose their earnest money. But they will be breaking the contract at that point, not utilizing an inspection contingency.


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RE: Buyers asking for Price Reduction before Closing

Not so sweeping Camlan. it all depends on the local RE law. here in NC, the buyers gtr a Due Diligence period where they can terminate the contract for any and /or no reason. The buyer get their deposit back but lose the small due diligence fee.


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RE: Buyers asking for Price Reduction before Closing

don't know what state you're in, camlan, but here, the buyer pays a fee for the right to terminate within a certain number of days (the option period).

During the option period, the buyer can terminate the contract for any reason or for no reason.


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RE: Buyers asking for Price Reduction before Closing

I agree with you sylviatexas. I think they are pulling a tactic because they know we are in a bind and think we'll budge. Unfortunately I found out about this after my husband al ready went back and offered to split the difference. I am totally against splitting anything with these people. Of course they tell our realtor they don't work on the weekends so we wouldn't be able to get an answer until Monday. We lost an entire weekend of nothing having the house back on the market. This house we are selling actually was inspected just 3 months ago because we wanted to avoid anything like this happening and the home is in perfect condition. They know it's a good deal they are getting but are greedy and want more. Thank you all for your responses. I don't know where we go from here. This is the worst experience. I'll let you all know how it turns out.


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RE: Buyers asking for Price Reduction before Closing

good luck, seller2325. I hope your husband is learning how to live in the dog house about now LOL!!


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RE: Buyers asking for Price Reduction before Closing

If they don't do business on the weekend, neither do you. Don't offer to give the 1/2... That was for Friday. By Monday, it is off the table.


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RE: Buyers asking for Price Reduction before Closing

Ah, here in New Hampshire, things are bit more rigid. You pretty much have to write every contingency into the contract. Once both parties have signed it, it's a legal and binding contract. If you have an inspection contingency, you can get out of contract if something wrong is found on inspection, for example.

But asking for a price reduction because you suddenly decide you don't like the counters? Well, you can ask, but you can't back out of the contract without penalty when the seller says no.


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RE: Buyers asking for Price Reduction before Closing

Ignore that your husband offered to split the difference. You haven't signed anything, right? If the written contract price has no meaning to these people, how could a verbal offer from your husband mean anything? I would mentally prepare to walk away. Buyers like this don't get any better as the process goes along.


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RE: Buyers asking for Price Reduction before Closing

If you and your husband haven't both signed something agreeing to drop the price, then it's not a contract. I'd call the realtor ASAP and have them communicate that your DH's verbal offer is off the table. (That'll teach them to "take the weekend off.") Play hardball. Call their bluff. I don't think they'll walk.

Your buyer's actions are dreadful.


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RE: Buyers asking for Price Reduction before Closing

There is a Federal law in place where the buyer has three days to reconsider for any reason. it's called the "right of rescission." It's basically a cooling off period.

After that, the contract is binding on both parties. Any earnest money is described in the contract and what would happen to it if the contract is broken.

As far as I'm concerned, unless it's in the original contract, the seller is not responsible for financing the buyers upgrades.

Put "time is of the essence" into the contract and go to closing.


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RE: Buyers asking for Price Reduction before Closing

I was thinking more about this. It's easy for us to tell you to walk away, but I know how hard it is to actually do that. Of course you don't want to lose the other house. Your agent should be in contact with the owners of the house you want to buy to see if they will work with you if these buyers fall through. They probably will.

Also, if you call their bluff this time it should prevent future shenanigans from them.

Good luck, and keep us posted.


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RE: Buyers asking for Price Reduction before Closing

I agree with mpagmom.

Yes, it sucks that they asked for a price reduction. And I would be frustrated and angry in your position, too. BUT I strongly suggest that you keep your personal feelings out of it and keep your eye on the prize. If selling your place and buying the new place is worth $8k to you (or $4k, or whatever), then I think you should consider it. Of course, this totally depends on your market, and whether you think you'd have trouble getting another buyer, and/or whether you think you'd lose the house you want to buy. (And how disappointed you'd be if you walked away and your house sat on the market and/or the house you have a contract on sold to someone else.)

If you end up giving them a partial credit, for whatever, I would be very clear with them (in a professional way) that you're doing it to get the deal done but won't tolerate any more antics. If they're investors, do they have a financing contingency or are they paying cash?


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RE: Buyers asking for Price Reduction before Closing

"Investors" don't give a rat's you-know-what about whether you like or will tolerate their antics, but will try to wring every dollar possible out of a transaction by exactly this sort of maneuver.

Just say no, otherwise it probably won't be the last demand. Put yourself into the mind frame that you are negotiating with terrorists, and act accordingly.


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RE: Buyers asking for Price Reduction before Closing

You can check with your Realtor or, better, with an attorney about that offer your husband unilaterally made.

Here in Texas, one spouse cannot commit the other to any agreement unless they both sign their names, & no contract is binding unless it's in writing.

Tell buyers & Realtors it was a misunderstanding & nobody intended to give these buyers a nickel.

My own thoughts of the day are:

1. Put husband in a cage with a bowl of water & toss in groceries. Let him out for closing.

Maybe not really.....

but I myself would blow my top & make sure he saw the steam/fire/hot lava, just so he'd know I'm serious & so he'd remember the experience for next time.

2. Know that you're paying a predatory buyer to treat you badly. You're rewarding him/her/them for making money off you, & you're training or encouraging them to do it again. maybe with the next seller, but maybe with you again before or during closing.

3. Talk to your Realtor.

It's a pickle, & whatever you do, I wish you the best

edited to add:

Be sure that you take whatever action you want to take while you still have the legal option. If you say nothing, does that mean that you accept the buyer's terms, or does it mean that the contract lapses?

You might get your Realtor to call other people who have looked at the house & ask them for their highest & best offer for a quick closing.

Good luck.

This post was edited by sylviatexas on Mon, Aug 19, 13 at 15:37


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RE: Buyers asking for Price Reduction before Closing

1. It depends on what your contract says, regarding inspection and any related and unrelated contingencies.
2. It depends on how desperately you want to go through with this sale.
3. What's the potential liability with your buying contract if you don't go through with that sale and your buying falls through?


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RE: Buyers asking for Price Reduction before Closing

I want rwiegand, ** Put yourself into the mind frame that you are negotiating with terrorists, and act accordingly.** and sylviatexas, **Put husband in a cage with a bowl of water & toss in groceries. Let him out for closing.** on MY side of the table at closing!! You two are a hoot!

seller2325 I hope we hear from you soon - and with good news. Real estate transactions are not for sissies. I'm learning from everyone here and trying to grow a pair before I need them ;-)


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RE: Buyers asking for Price Reduction before Closing

:There is a Federal law in place where the buyer has three days to reconsider for any reason. it's called the "right of rescission." It's basically a cooling off period. "

I believe this is for loans, not the purchase of a house.


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RE: Buyers asking for Price Reduction before Closing

There is no liability on their contract to buy the other house. They have a contingency to sell on that offer, and contingencies like this mean the offer is void if their house does not sell within a certain time period.

In our local market this contingency is usually only accepted if the buyer retains the right to show and entertain other offers.


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RE: Buyers asking for Price Reduction before Closing

Are the buyers in their due diligence period when they made this demand, or has it passed? This makes a big difference.


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RE: Buyers asking for Price Reduction before Closing

Camlan,

I was a real estate agent in a previous life and the right of rescission definitely applies to real estate transactions. At least it did back then.


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RE: Buyers asking for Price Reduction before Closing

The right to rescind has nothing to do with "cooling off" on the offer or contract, it applies to the loan.

Exercising it requires a written intention and since that did not (according to the OP) happen it is not going to help here.


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RE: Buyers asking for Price Reduction before Closing

I've been following along. Any news?


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RE: Buyers asking for Price Reduction before Closing

Not to side-track the thread too much, but here's what I've found about the right of rescission.

"A right under federal law set forth by the Truth in Lending Act that gives a borrower the right to cancel a home equity loan or line of credit with a new lender, or to cancel a refinance transaction done with another lender other than the current mortgagee within three days of closing.

"The right of rescission exists only on home-equity loans, home-equity lines of credit and refinances of existing mortgages in which the refinancing is done with a lender other than the current mortgagee. The right of rescission does not exist on a mortgage for the purchase of a home, a refinance transaction with the existing lender, a state agency mortgage, and a mortgage on a second home or investment property. "

So, yes, it applies to real estate transactions, but not all real estate transactions. It does not apply to a mortgage for the purchase of a home, which is what I think the OP's post entails.


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RE: Buyers asking for Price Reduction before Closing

However, that is the federal level. There are more laws than only federal laws.

In Washington, for any contract/sale made in your home (ie, a window guy, or a contractor, or a roofer, or a cosmetic sale) you have 3 days to rescind (as I understand it. I am not a lawyer).

So, there are federal protections, and then there are state. Generally the federal level laws are limited in their scope, but that isn't true of states.


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RE: Buyers asking for Price Reduction before Closing

In our area, so many contracts do not make the period of refusal after the inspection that we do not even put the earnest money into the escrow account after the contract has gone past the inspection and acceptance by both parties.

If you want them to buy the house more than you are willing to walk away from these buyers, then you give in.

If they want to buy the house more than you are willing to lower the price, then they give in.

This is just a business transaction and you are coming to a new agreement about the price within the bounds of the contract law. You need to know what the contract says in your particular situation and in your local area or trust that your real estate agent will advise you correctly/appropriately.

In general, the investor does not have to buy this house. Another house will come up for them. So they maybe willing to walk. You HAVE to sell this house. You are not in the driver's seat. They have the money, and you want their money.

Unfortunately, if you call their 'bluff' you may hurt yourself more than the potential buyer precisely because they DO NOT have to buy this house and buy another house just as easily. It is just a commodity to them. Your real estate agent should have advised you this fact about the investor buyers.

If your local area allows it, it does not matter what the reasons are, they have the right to terminate (within the deadline) the contract based on the inspection; as least that is the law in my state. I can simply say that there are thing about the house that I don't like 1,2,3 etc, and I have the right to terminate. The contract says that the condition of the sale is based on inspection. (there is always something one can use to get out if one really does not want to buy the house...)

It seems harsh but in the buyers market, the buyers have that option. You need to know your market to know how much you can leverage the market conditions.

If the market is so hot where there will be another buyer quickly, then you hold your position. If the market is soft and you are not sure if you will have another buyer quickly, then you renegotiate to get the best price that you can.

If they are investors, they maybe more savvy than you about buying and selling houses and have a better real estate agent to negotiate for them.

Don't take any of this personally.

Evaluate each position methodically and take the one that meets the most of your needs.

Take the emotion out of this and ask yourself what is an acceptable price to you to close the deal and negotiate toward that.

In business transactions, unless the deal closes, no one gets paid; the seller, the real estate agents (yours and theirs), the loan officer etc. This is why all agents really work for the 'sell' and not the 'price'. Most of all, you don't get paid until the deal closes.


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