request for repair negotiations upfront
Fixing Bay Area offers without offending the parties involved often means stepping back and putting your client’s needs first and foremost. There is no easy way to tell a Bay Area agent that so much stuff in the agent’s buyer’s offer is wrong. At first blush, I was tempted to quickly judge the parties as not being serious. They made demands that nobody asks for in our Sacramento seller’s market. The buyer asked the seller to pay for things no other seller pays for. In fact, it was about as one-sided as a buyer’s purchase offer that I would have written myself in 1978, but certainly not in today’s market.
To make matters worse, it wasn’t just a matter of fixing Bay Area offers, there were also 2 or 3 other offers on the table. After talking to the sellers, it was clear to me they would like to find a way to make the Bay Area offer work. After all, it was cash, so no appraisal. Getting an appraisal on this home would be difficult because there were really no comparable sales. The home was a white elephant. Overbuilt for the neighborhood.
After every open house, buyers would ooh and ahh over the upgrades and improvements. But after driving the area, they said no thank you. It was one of the nicest homes in the area. Plus, with cars parked up and down the street, basketball hoops blocking driveways, well, it didn’t present the neighborhood in its finest light. However, we knew that walking into the situation. The sellers were patient because they didn’t have to move until the end of October. They felt now would be a good time to sell over October, and they were right.
I decided to try to find a way to make the purchase offer work because that’s what my sellers desired. The buyer was doing a 1031 exchange, although the home would not be a rental. It would be occupied by family. Not even about to argue how it is not a 1031. Not our problem. So, I asked the buyer’s agent if the buyer would consider renting back to the sellers until the end of October. The buyer said yes and named an agreeable rental amount. This was a hugely important benefit to the sellers. Not moving twice.
OK, the dilemma was how to handle the fact the buyer refused to purchase the home in its AS IS condition. The way I saw it, we could argue over the black-and-white verbiage in the purchase contract which clearly states the home is sold AS IS. Or, we could find a way to make it work. The agent said the buyer expects all repairs from inspections to be completed. What? And we didn’t even have a home inspection yet. How could we agree to do all repairs when we don’t know what they are? That sounded like a recipe for disaster.
Well, what we could do is have the seller pay for a home inspection from a reputable home inspector. Not some fly-by-night idiot. There are idiots doing home inspections in Sacramento because they don’t need to be licensed. Anybody can pretend to be a home inspector. An teenage mouth-breather can be an inspector. So I drew a counter offer that included the seller paying for a home inspection, subject to successful negotiation of a Request for Repair. We agreed not to open escrow until the Request for Repair is executed, and if it can’t be, then the offer is void and canceled.
Seemed like a perfect solution. We signed all the counter offers and the purchase offer. A few days later, the buyer’s agent noticed we were holding an open house because our status was changed to Active With Release Clause. The agent accused us being dishonest and underhanded. What? The agent threatened if we did not cancel the open house, the buyer would cancel the offer. Then, the agent tried to cancel the offer.
However, the offer could not be canceled until the terms and conditions were met. We had a binding agreement.
But they do things differently in the Bay Area, and not every Bay Area agent sells a lot of real estate. Many sell only a few homes a year. So you really can’t hold it against the agents. Some agents just don’t know what they don’t know. All I really wanted to do was spare my sellers the anxiety and drama. Very difficult under the circumstances. I was fully prepared for the buyer to make more unreasonable demands, especially after receiving all of the inspections.
However, suddenly we received the Request for Repair from the buyer and it was not completely unreasonable. Very surprised and excited over this. In keeping with fixing Bay Area offers, I also rewrote the response to the Request for Repair to make it very specific. The Bay Area agent copied the numbers from the home inspection report but it was not easily understood and could be misinterpreted. The report did not identify how to make repairs, and it alluded to further inspections. After laying out each specific repair, we went into contract. We signed the Request for Repair, which also stipulated the buyer would immediately release all contingencies.
By being very clear from the beginning, we can often avoid misunderstandings later.
This is also the first escrow I’ve ever closed in which we entered escrow ready to close. I’ve closed thousands of sales over my 40-some years in real estate, not one like this. Twenty-day closing. No monkey business, no weirdness. Oh, and it sold over list price.