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When the House Needs Serious Repairs

July 28, 2020

Here’s the scenario: you’ve been looking for the right house to buy. After months and months of searching, you found the right one, submitted an offer, and you’re officially under contract! However, the inspector found some things going on with the house that are not so good.

First off, the sewer needs to be completely replaced and you’ll need to tear up the floors. The A/C units are not functional. That perfect pool actually needs to be completely resurfaced. Lastly, the roof has a section which needs to be fixed. The grand total to fix all of this comes out to a whopping $50,000.

The house you’re under contract for actually…sucks! Here are three courses of action you can take:

One: Ask for the seller to repair the damages.

What this means is that when you submit the BINSR, or the request for repairs, you make certain that your realtor is asking for the seller to repair the items you disapprove of. That way, all of the work is done by the time you move into the house. Just make certain to ask that they use a licensed contractor for the work, send over the invoices when they’re done, and to add this to your checklist for the final walkthrough. The last thing you need is for someone to DIY a sewer line repair!

Two: Ask for a credit in lieu of repair.

Asking for a credit makes sense if you want to oversee the work with your own contractors or if the seller is not in a position to do the work. For example, the seller just might not have the $50,000 figure listed above to get the work done or they might still be living in the house. So what would happen instead is that the seller would discount this $50,000 from what you pay at the close of escrow. It is important to note that for large credits that are more than your closing costs, you are allocating the rest to a reduction in the purchase price.

Side note: You can ask for a mixture of a repair and a credit. Ex: Repair the sewer, credit for the pool. But NOT a repair/credit for the same item.

Three: Walk away.

Depending on how the negotiation is going with the seller or how you’re feeling about things, it just might not make sense to move forward with the deal anymore. For example, if the seller decides to not fix the problem or offer you a credit, you are essentially stuck with the $50,000 price tag. If this is unacceptable to you, it is time to walk away and get back to square one – finding the right house for you.

Side note: walking away due to a non-agreement on the BINSR will not jeopardize your earnest money.

It all comes down to a mixture of how flexible you are, how flexible the seller is, and what makes sense for both parties. In this way, the BINSR negotiation is more like a give/take.

Remember this, though: purchase contracts are “as-is” contracts. This means that the seller is not bound by law to fix or accredit anything. The BINSR process simply allows buyers to run inspections on the home to make certain there aren’t any other associated price tags. It is not an opportunity to get a better price. Rather, it is an opportunity to make certain you are paying a fair price!

As your real estate professional, I pride myself on being here to provide you with all of the tools and knowledge you need to succeed in the real estate market. Reach out any time.

Oh, by the way®… if you know of someone who would appreciate the level of service I provide, please call me with their name and contact information. I’ll be happy to follow up and take great care of them.

If you have any questions, please reach out to me. I’m always happy to help!

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