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Excessive repairs?

Posted by joannaca (My Page) on
Sun, Aug 30, 09 at 17:19

Our buyers just did the inspection and are now asking for $17,000 cash for repairs! They want to do the repairs themselves (dad's a contractor, natch). This seems excessive to us, considering the house is only 4 years old. We've had the house inspected twice since we built it and repairs were nowhere near this extensive. I just can't believe any repairs needed would come close to that amount.

We are in a dead real estate market, so we priced the house very competitively. We got this offer within 3 weeks of listing, and have gone back and forth ever since, negotiating the details.

Can anyone give their opinion as to what a reasonable repair request would be? My husband is ready to throw in the towel over any more than $2000 because we've already 1) accepted $25k below our asking price, 2) agreed to a $3000 carpet allowance and, 3)are offering a 1-year home warranty.

We realize that if this falls thru our chances of selling this year are slim. But we can't afford to give away the house, either. I feel like this couple is really trying to take unfair advantage. I know that everyone is looking for a deal right now, but come on!


Follow-Up Postings:

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RE: Excessive repairs?

What kind of "repairs" are they claiming are necessary? Have they given you an itemized list?


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RE: Excessive repairs?

On the surface that does seem excessive for a relatively new home -- however, if there is foundation work, roof needing replacing, hvac system needing to be replaced etc -- it could add up fast. Exactly what are they asking for? Is it anything that would prevent you from selling the home to someone else if you don't fix it? Look at the itemized list of items that need to be repaired, definitely have anything repaired that is a safety issue or would stop you from selling the home. But beware the fact that they're probably padding the costs and allow reasonable costs, not the excessive costs it appears they're trying to pass onto you.


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RE: Excessive repairs?

I'm still waiting for the list. My realtor called this morning to give me a heads up. I know one thing they want is for us to pay to encapsulate the crawl space. This costs about $5000. We currently have a vapor barrier. (The house is in humid coastal NC)


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RE: Excessive repairs?

Tell them to take a hike. They are playing you.

Some buyers think they can use home inspections to renegotiate the price. Real estate agents abet this. You can be sure the effective lowered price won't be the one that is the basis for their commission.

Best bet, make it clear up front that the negotiated price is it. They can use the home inspection to determine if they want the house or not, but it won't be the basis for renegotiation. Stick to that unless they come up with something serious and verifiable that you were totally unaware of.


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RE: Excessive repairs?

Got the report. They want $11,000 for the encapsulation and $6,000 for everything else that is listed on the inspection report. Apparently they want a brand new house. We're willing to offer $3000 toward repairs. They know they're still getting a great deal. A similar house in our neighborhood recently sold for $100k more than our asking price.


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RE: Excessive repairs?

Well, then, now you know. Re: encapsulation, is that normal in your area? How likely is the next buyer to expect that? Also, is this just the communication of a wish list, or are they really expecting they can get what they are asking?


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RE: Excessive repairs?

I'd be ready to tell them to take a hike. When we sold in 2004 the buyers decided to tell us at the last minute that they wanted $5K to repair the driveway. It did need to be repaved but was very obvious and something they couldn't miss the 3 times they saw the house before they made the offer. Did not need an inspection to point it out either!

I was ready to tell them the deal was off, but DH talked me out of that! The best part is that we drove by last summer, 4 years later and the driveway had not been touched!

As a buyer I try to avoid this type of behavior by figuring out obvious things like this before I make an offer.


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RE: Excessive repairs?

Encapsulation is gaining popularity here because of the extreme humidity but it's definitely an upgrade and not something most homes have. it's kind of the solution of last resort when other, less costly methods of moisture control fail. There is one house on our street that had it done.


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RE: Excessive repairs?

So you would be selling at $45K below asking price if you accepted their offer. Do you really need to sell that badly?

I think the games would bother me more than the discount, and I would definitely tell them to go away and come back when, and if, they are serious.


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RE: Excessive repairs?

Encapsulation may be gaining popularity in your area but unless it's for mitigating radon, I'm not so sure it's necessary. As an upgrade I'd tell the buyers "no" on this one.

If this deal goes south because they won't accept the 3K you're willing to give them in concessions, then you've learned something for the next deal. We always made sure the home was maintained and any and all safety issues addressed before we listed the home. When we'd get a contract, we'd set a dollar amount that we were willing to pay in repairs. If repairs went over that amount the buyer could walk, or fix the problems themselves if they still wanted to close. No chance to use the inspection as a way to renegotiate price. Another thing I've seen done lately is because of rock bottom pricing many sellers are selling "as is", again another way to stop the renegotiating of some buyers. Good luck, but I'd only fix safety issues and stuff that HAS to be fixed, not fulfil the buyers christmas wish list.


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RE: Excessive repairs?

It's really hard to advise -- it all depends on the local market. How badly you want to sell. How will you feel if you say no, and the local prices drop more.

I've sold and bought in the past five years. I wsn't happy with some issues in the selling (but in retrospect, it would have been really bad if I had not caved on some disaggreeable aspects of the sale.
When I bought, I also caved on the disagreeable issues. Now I'm happy I did do the deals. The problem is that you have to make a decision very quickly.
The realtors try to keep an urgency atmosphere.

So, it depends on how much you want to sell. If selling is optional for you, you may sleep better if you say "no" to this deal. If you need to sell and move on, then hold your nose and do it. If you think that it's likely to have another buyer soon, then say no.
Good luck
Susan


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RE: Excessive repairs?

Cordovamom: About this statement: "When we'd get a contract, we'd set a dollar amount that we were willing to pay in repairs. If repairs went over that amount the buyer could walk, or fix the problems themselves if they still wanted to close."

When we got the offer, the buyers had already filled in the 'cost of repair contingency' for $1000 or they could walk. How did you add your own contingency? We'd certainly like to go this route next time, if this deal falls through. We are just waiting to hear from them now.

We have had this house on and off the market since Fall 2006, so it's been a long and unpleasant ride. We have rented it in the past and can do so again. While rented, we can make any needed repairs for far less than $17,000 and it's tax deductible, but we can't buy another house until we sell this one. Unfortunately, we live on the other side of the country now, which makes upkeep/repairs that much more complicated. We're not in any danger of foreclosure but we are crammed into a tiny rental house while we wait to sell.

So we're very motivated, but not desperate.


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RE: Excessive repairs?

joannaca -- when we would receive an offer, and they've always been contingent upon an inspection, we would craft our counter offer as to include a phrase that stipulated a specific dollar amount we would be willing to fix. In your offer the buyers agreed to $1000 or they could have walked, we would have stood firm on that $1000 or let them walk. But we've never sold a home in a market like this, so you have to do what is right for your particular situation. Either you're going to have to be firm and let them walk, or give in as much as you're comfortably able to give in to get the home sold. Buyers are in the drivers seat right now and they know it.


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RE: Excessive repairs?

I'd take a hard look at that list and repair or pay for only what is broken, defective and/or a hazard. Inspection does not mean "home improvement wish list".


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RE: Excessive repairs?

You mentioned that the Dad was a contractor. Is he licensed or certified for your area? Because the house is only 4 years old that amount is ridiculous. If you are below market, counter offer. Is your house up to code? then tell them that. Like gardenspice, have fixed only what is a hazard, or broken etc. Since I am not familiar with the humidity in NC ( I assume it is North Carolina) but I am familiar with humidity in Northern Calif. I would counter offer with a lower carpet allowance, and raise the offer of 5000.00 below not 25,000. They are trying to scare you. If you and your husband are really stressing out, put the money into a escrow account with the stipulation that the money will only be paid upon receipts from work done by licensed and bonded contractors and all permits needed will be bought and paid for by the buyers.


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RE: Excessive repairs?

I think agents must be advising this. We had a prospective buyer do this too. They came back with 34k in "repairs." Most of it was just a wish list. It had items like "peeling paint" and their remedy was "replace all siding and repaint." We rejected everything that wasn't an actual repair and then said we would fix those items or knock a bit off the price. The buyers took the money and we closed.


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RE: Excessive repairs?

The dad being a contractor thing would really turn me off to these people. Not only do you already have the feeling that the bids are high if you did them yourself, can you imagine how cheaply they will get them done with dad doing everything for them? I like the idea that mariend gave specifying that you would be willing to pay for some things or some $ amount with escrow money only if receipts from certified contractors (not dad) were submitted within a specified period of time - say a month after close. If they are just reaching to see what they can get, they might not even bother.


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RE: Excessive repairs?

I think that you should forget about the details of the repairs and just consider this financially.
Are you better off getting the house sold and moving on at this price, or can you afford to maintain the house (and long distance landlording is problematic) and wait for a better offer (knowing that prices have been dropping in many areas)

They may be open to negotiation on the repair bill.
There are no easy answers here -- real estate is such a cycle thing -- I've sold in both cycles (lost $5,000 and by that I mean paying the bank cash in a short sale) in the 1980's) and being very lucky in 2005. In any case, I would advise moving on.
Good luck
Susan


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RE: Excessive repairs?

Still waiting to hear back from them.

Our decision is made more difficult by the fact that we now live in the Pacific NW where median home prices are much higher than coastal NC. So, if we sell too low just to get out of this house, we won't have enough for a down payment on a home here and will have to continue renting AND lose all our home owner tax deductions on top of it.

Question: one of our friends suggested we ask our realtor to forfeit part of her commission in order to close the deal, assuming they come back with another counter. She said this is done "all the time." My husband doesn't think it's fair to our realtor. I'm not sure what to think. Opinions?


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RE: Excessive repairs?

You can ask her. Sometimes they do forfeit in order to seal a deal. However, the buyers come across as vultures, and whatever slice of commission the agent is willing to give up may not satisfy them.


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RE: Excessive repairs?

I personally do not cut my comission to make deals happen. The Offer To Purchase is financially between the seller and the Buyer.
Susana pretty much summed it up:

"I think that you should forget about the details of the repairs and just consider this financially.
Are you better off getting the house sold and moving on at this price, or can you afford to maintain the house (and long distance landlording is problematic) and wait for a better offer (knowing that prices have been dropping in many areas)"


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RE: Another thing...

On another note... you DO have some leverage here... the Buyers have already spent money on a credit check, an application fee, an inspection fee, a survey fee, and probably an appraisal fee by now. And the fact that they are emotionally tied to the place.


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RE: Excessive repairs?

Don't expect the agents to give up one penny of their commission. It's stunning how quickly their advice changes (I've now bought and sold the *same* house with the *same* realtor and this will be the *last* transaction I ever do with her). And seriously, what have they got in the game? The cost of a few brochures and a tank of gas? Please. I filled the brochure box myself.

We're in the same situation where our buyers got a ridiculously high quote for their "dream roof" even though the inspection revealed that there is nothing wrong with the current roof. Now they want us to "go half" with them on The Dream Roof. Well, my licensed guy can do it for about a 1/5 of the price with a new version of what's up there now and I told my agent I'd have the roof replaced. But oddly, they don't actually want a new roof, they want an improved roof. The current roof is not out of scale for the neighborhood and it really can't be seen from the ground because of the style of the house, so architectural shingles are overkill.

Since it's a cash sale, the buyer keeps their half, the brokerages get their money, and my husband and I pony up another $10K in real money bringing our effective loss on this property to $80K.

Too bad when I bought this place my agent didn't mention that it's "common" in this price range to split the cost of a new roof. When I bought she told me that while this roof might be 11 years old, her 15 year roof had lasted 8 years beyond its life expectancy and not to give it a second thought. Now the roof is 12.5 years old.

I suspect this move by our buyers has more to do with the fact that we were $50K apart in the initial offer/counter offer stage and they are hoping for one last chance at a price adjustment rather than getting the actual Dream Roof installed.


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RE: Excessive repairs?

Our buyers just did the inspection and are now asking for $17,000 cash for repairs! They want to do the repairs themselves (dad's a contractor, natch). This seems excessive to us, considering the house is only 4 years old. We've had the house inspected twice since we built it and repairs were nowhere near this extensive.

What was on your original inspection/repair list?
Did you have it taken care of?

Got the report. They want $11,000 for the encapsulation.. but it's definitely an upgrade and not something most homes have.
My realtor called this morning... I know one thing they want is for us to pay to encapsulate the crawl space. This costs about $5000. We currently have a vapor barrier. (The house is in humid coastal NC)

If it normally costs $5,000 - I wouldn't consider anything more then that, and since you already have something in place, I wouldn't give any credit for it.

and $6,000 for everything else that is listed on the inspection report... We're willing to offer $3000 toward repairs.

I don't understand how a newish house needs that much in repairs. Did your tenants trash the house?

Can you get someone in to give you estimates for the work they want? Once you have a real estimate, if they don;'t like it, they can get another.. or you can get 3.

They know they're still getting a great deal. A similar house in our neighborhood recently sold for $100k more than our asking price.

How long ago did the other house close?

You're already giving $3,000 for carpet which sounds high to me; about the most I would give is a total of $5,000 to $6,000 and no more.

I highly doubt either agents will consider giving anything from commission. Most won't; which I don't understand. You get this far and if both sides give and still can't reach an agreement; would it kill both agents to kick a little in to help it close? The stupid thing is if the deal doesn't close they get 1/2 of nothing and in this market; I would rather have 1/2 of something.

Our agent wouldn't kick in a few hundred dollars.


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RE: Excessive repairs?

STILL WAITING, 4 days later. As expected, the buyers are dragging their feet, so we won't be able to relist the house for the last weekend of the summer. Not that it would likely make any difference, but still. It's aggravating and I'm starting to hate them.

We would never have agreed to the carpet allowance if we'd known they'd come back with this much on repairs. Lesson learned. I have a contractor coming out to take a look at the house this weekend so I can get his estimate.

Oh, the other house that sold for $100k more closed just a couple of months ago. I certainly hope it shows up as a comp on an appraisal at this point.


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RE: Excessive repairs?

You should have given them only a day or two to make up their minds on your counter. Absolutely no more than three days. Why were they given more time? Didn't your agent discuss this with you?

If the listing expires and you relist. Do it with another agent.


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RE: Excessive repairs?

When they came back asking for repairs they tried to change the contract. Until both parties agree on repairs you have no contract with them. You could send them a letter letting them know that since they don't accept the house in the current condition you consider the contract void, and get on with selling it to someone else.


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RE: Excessive repairs?

Roselvr wrote:

"I highly doubt either agents will consider giving anything from commission. Most won't; which I don't understand. You get this far and if both sides give and still can't reach an agreement; would it kill both agents to kick a little in to help it close? The stupid thing is if the deal doesn't close they get 1/2 of nothing and in this market; I would rather have 1/2 of something.

Our agent wouldn't kick in a few hundred dollars."

So you criticize an agent that is willing to give up a few thousand dollars until possibly another buyer comes along, but you say nothing about how silly it is that a seller is willing to lose even more money than that over a few hundred dollars. And the agent is not contractually part of the Offer To Purchase. Their contract is with the Seller.
Doesn't make sence to me.


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RE: Excessive repairs?

STILL WAITING, 4 days later. As expected, the buyers are dragging their feet, so we won't be able to relist the house for the last weekend of the summer. Not that it would likely make any difference, but still. It's aggravating and I'm starting to hate them.

Why do you need to relist it? I'm confused. The house was on for 3 weeks when the offer came in. How long was your contract for?

You didn't take the house off of the market (as pending) while you are working a deal? If so, tell your agent to let them know it's going back to active while they make up their mind.

IMO, there is no reason to take a house off of active until a contract is signed.

So you criticize an agent that is willing to give up a few thousand dollars until possibly another buyer comes along, but you say nothing about how silly it is that a seller is willing to lose even more money than that over a few hundred dollars. And the agent is not contractually part of the Offer To Purchase. Their contract is with the Seller.
Doesn't make sence to me.

You're best offer is usually your 1st.
In this market, people are lucky to even sell.
Things that go in other years, may not happen now.
Why I said everyone should budge is because this couple is going to buy a house, why not this house so everyone can move on?
Sorry, there are only so many buyers out there.

In our case we were the ones who had to keep bending and bending until it felt like they just kept screwing us.


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RE: Excessive repairs?

I sympathize with you--living away from where this house is located and in a more expensive home area is something we have dealt with twice before when we were transferred for work---

frankly these buyers probably know your history--that you are absentee owners and probably want to sell this house very much so they are putting the screws to you

I think YOUR agent is not earning her money...she has done nothing with the contract language to prevent this from being a long, drawn-out battle of attrition--to your detriment
I don't know if she is not very experienced or maybe desiring to get a sale that she is considering her desires more than yours...agents can do that...my daughter had one in FL...

the fact that the buyers have a contractor in their midst means that I would not take at face value anything they claim are "repairs"
maybe the inspector has a relationship with the contractor/dad...

for something to be a repair--there must be damage
what damage beyond a "possible" one is your house suffering...legally that is no damage at all...
using that line of reasoning, they could ask for all the insulation to be removed and foam added
or for a much higher SEER HVAC to be installed

In TX all sellers who are not selling "as-is" must fill out disclosure list that covers things like physical condition of the property and are supposed to reveal any significant repairs done or remodeling done

after inspection report comes in--you have the option of walking away or trying to re-negotiate for repairs but
unless the inspection comes back with something that is materially less than represented--really flawed --(like a home needing a new roof because you can't get insurance until it is replaced) then you are dealing with chump change--and should not expect to get anything changed

unless it is really a buyer's market--
of courst it is a buyer's market now...

--the buyers have committed only a small portion of what you will give up if you do give in to their demands so they have much less to lose than you do if the sale washes out...

the fact is IF they had offered this low a price initially you would not have accepted it--you would have countered and probably gotten them to come up even if you went down

but even if you agree to this do you have any guarantee that they won't pull something else before closing and try to get the price even lower
what guarantee do you have they will fulfill the contract IF you do agree to their demands--
they are just bullies---and bullies always want more...
I wonder if they are fronting for the father--have they tried to buy other homes in the area with this strong arm approach


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RE: Excessive repairs?

They accepted our $3000 repair offer. Whew! I think they must realize what a phenomenal deal they are getting. Our realtor said their lender has already approved them, so we are just waiting for a closing date. Are you saying that even though all parties have signed the contract, they can still come back with more demands? I thought the hard part was done. We have only sold one other house before this, and it was smooth as silk: Under contact and closed within 3 weeks of listing. Ah, the good ol' days.


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RE: Excessive repairs?

Good for you for working out the repairs.


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