as is sale
What does an as-is home sale mean? It depends on whom you are talking to. Our California Residential Purchase Agreement says the home seller is not obligated to make any repairs to the home she is selling. Unfortunately, some buyers and agents think this is a time to renegotiate. A seller can say no, of course, but if she wants the sale to go through, she may reluctantly agree.
If a seller says no dice, take it or leave it, the buyer can then walk away. We then start over looking for a buyer. The process of inspections can be grueling on a rural property. For example, some cities will force you to hook up to city sewer lines. That can be so expensive. Sometimes costs could be $50,000. Always a good idea to check septics and wells, and local requirements.
The seller of this fixer home in East Sacramento had asked me what kind of things a buyer might ask him to fix and what could go wrong with a sale. This guy lives on the other side of the country and has been through a devastating situation. Imagine just about the worst thing that could happen to a person, and it happened to him, twice. On top of which, he later had to undergo emergency surgery in the middle of escrow, which will take a long time for recovery. He is still not out of the woods by a long shot, yet he exhibits incredible strength.
I feel a special affinity for this seller, in particular because he is older and in a vulnerable situation. Our first escrow involved a buyer that I did not want to go into escrow with. Not for any reason other than I did not think this was a fit for his method of operation, so I did not expect him to close. Sure enough, conditions existed that he claimed he did not see, although he has two eyes in his head, just like me. But at least he canceled within a few days.
It is always hard to tell a seller that a buyer has flaked. Especially when sellers seem excited the property is sold. But it’s never really sold until we close. The listing expressly stated this fixer home in East Sacramento was sold absolutely AS IS and there was a death in the home. But for some reason, often buyers think they can negotiate around that later. Maybe they can with other listing agents, I dunno.
We encountered that scenario with our second buyer. Her agent seemed aghast when I let the agent know that my advice to the seller would be to cancel the buyer because the buyer did not remove her inspection contingency. The agent kept pressuring me to put the squeeze on my seller, and I won’t do that. I don’t mess around, especially NOT when my seller is under such duress as this guy.
Finally, we received 6 offers in all, and our third escrow seemed to be moving along well. One of the things we discovered in the second escrow of this fixer home in East Sacramento was a crumbled orangeburg sewer line. This was one of the problems I had warned the seller could happen. His inherited property was built in 1950. Many homes of that era were constructed with tar paper sewer lines after the war. They don’t last more than 50 years or so. You would never know unless you ran a camera down the clean-out.
Yet our third buyer also neglected to remove her inspection contingency. The buyer, believe it or not, after all we had been through, demanded a price reduction. We told her no. Close or cancel. In fact, after we emailed a Notice to Perform, we also put the home back on the market, pending rescission. Agents must have been wondering: what in the world was going on with the fixer home in East Sacramento! We told the buyer we are not kidding. We will sell to a different buyer. There is always another buyer.
But in the end, the buyer came to her senses, deposited funds and signed her documents. I also cannot count the number of times I asked for an amendment to the purchase contract because the terms of the contract had changed. The contract presented to us was not a cash transaction since suddenly the buyer obtained a hard money loan. Despite our repeated attempts, we never received the amendment but at least the file released for recording yesterday. Whew.
The seller got the price he wanted. Although it might seem less, it was not because the buyer paid most of the seller’s closing costs.
Now, a strange twist in this tragic story of awfulness. At the moment, we simply presume it has closed. On par with the way this transaction had gone, the escrow officer left her office early on Friday. Her assistant then followed, promising another employee would send us confirmation. My worst fear at that point happened: crickets. Hopefully, we will receive that confirmation sometime today. Better than trying to call the recuperating seller in a time zone 3 hours later from us on a Friday night.
How does this miraculous thing happen? It happens because I have established relationships with roofing companies who know that when I list a home for sale, that house will sell. These roofing owners have confidence in me and my abilities to sell homes in Sacramento, not to mention, my track record speaks volumes. I don’t sell one house every 4 months like most agents — I close an escrow on average every 4 days.
The cost for your brand new roof will be paid from the proceeds of sale at closing. The roofing companies will wait to get paid. It doesn’t cost you anything extra, either. You’re not paying for the zero interest, and you’re not even signing an agreement. The bidding process is competitive. You are free to discuss costs and get other bids yourself as well.
It doesn’t get any better than this. It’s just one out of many services I offer my sellers that other real estate agents probably haven’t even thought about. If you have a bad roof, I’ll take care of it.
I just closed on a home in Carmichael a few days ago that had a bad roof. It was a trust sale, and the executor had never lived in the home. The roof was at its end of life, and there was quite a bit of dry-rot that I could view from the ground. The seller did not want to put any extra work into the home and preferred to sell AS IS. However, an AS IS sale would cost him a lot MORE than the cost to replace the roof. It actually saved him a lot of money to replace the roof during the sales process. Buyers don’t know how much a roof costs. Buyers might want to ding the seller’s price by $40,000 to $50,000 sometimes, when it costs less than $10,000 to replace an average roof.
Plus, now we could market the home in Carmichael as having a brand new roof! The roof over a buyer’s head is very important. A roof over your head is a reason to buy a home. If the roof is in excellent condition, it can protect everything else in the home. Not the very least of which, for a seller, a new roof protects the seller’s bottom-line profit. If your home was built prior to 1990, you probably need a new roof. Call Elizabeth Weintraub at 916 233 6759 for help in selling your house, bad roof or not.
I know there are buyers and sellers who want to be good friends with each other. After all, they have something in common — the house! I’m all for enjoying friendships with the people who are buying or selling your home, just don’t try to cultivate that relationship during the transaction. Bad, bad idea. Sellers belong on one side of the fence and buyers on the other. You can kick the fence over after escrow closes.
Let’s say your home was built, for example, during the geological time known as the Asbestos Era, which is sometime during the Cenozoic period, in the Quarternary. Perhaps the buyer suddenly became worried that your home might contain asbestos, but the buyer’s inspection period had expired. On top of that, say the buyers had removed all of their contingencies. As a seller, you might feel it is OK to let the buyer complete an asbestos test, even though you’ve already paid for such a test and the results were negative.
You might believe that since the home is sold AS IS, the buyer has no claims against you. You might also believe that if the buyer finds asbestos, the buyer will have to give you the earnest money deposit if they were to cancel because that’s what the contract says. But you haven’t met the buyer’s lawyer who might argue the contingency period is reopened after the discovery of new information. The lawyer might further argue that somehow the seller possessed knowledge of this defect but failed to disclose it. Little is black-and-white in the law.
The fact is once a buyer’s investigations are completed, the inspections are over. If you are a seller, don’t be a buddy and let the buyers continue investigating. The friendship a seller may have forged with the buyer (or vice versa) could come back to haunt. For maximum protection, expect your Sacramento real estate agent to handle such discussions and arrangements.