Buyer wants to know "what is normal?"
Tuesday, I wrote about conflicts of interest, based on Ethan’s email. Today, I answer another question that came up for Ethan:
I wish we had more advice as to what are common allowances to sweeten the deal (outside of negotiating the price) and what always needs to be strictly adhered to in legalese.
I can speak from an agent’s experience on this. I’m not qualified to discuss legal practice and contracts.
What should be in writing? As much as humanly possible! In my practice, we keep notes on what is agreed to, and we give all the conditions to the attorney for the Purchase and Sales Agreement.
Purchases are based on price and terms. Those terms are everything that is not price. That includes when the loan closes, what is included in the sale, what condition the house will be in when it closes, how many times you can go to the place to bring contractors before closing, what happens if the appraisal comes in too low, what happens if the seller can’t get a clear title…
Here are the common things that happen:
1. Inclusions and exclusions get muddled. Anything attached to the house with a nail or bolt or wire is real estate; anything hanging from a hook or plugged-in is personal property (sometimes called “personalty” or “chattel.”) Buyers frequently ask for chattel, such as refrigerators and large mirrors over the mantle. Sellers frequently want to keep custom lighting fixtures and stained glass. There is a place on the Offer form where this information goes.
2. Seller’s private “yard sale.” Sometimes the seller agrees to leave furniture, lawn mowers, snow blowers and such, at a minimal price, to sweeten the deal. I think getting the leftover stuff does not benefit the buyer as much as a cash refund, so I separate the discussion about these items until the Purchase and Sales Agreement is signed. If you do get additional chattel, make a list!
3. Price and terms change after home inspection. After home inspection, there is a laundry list of repairs the house is calling for. Negotiation frequently follows. It is at this point where the seller and buyer should agree, in writing, as to what work will be done or what defect will be compensated for by way of a price reduction or credit.
4. Who does the repairs is also a negotiating point. There are some things a seller should do (or pay someone to do) before closing. Examples are tasks that are finite and will cause damage if left as is (like a faucet that is leaking and making a puddle under the sink) or something finite and seasonal, that needs to be done before closing (like removing leaves from the gutter before everything freezes.) Anything that could be a huge can of worms should be investigated, and may need to be repaired by the seller (like termite damage within a wall.) However, most of the time, it is better for the buyers to get a credit or a price reduction and do things their way after closing. Task lists should be detailed.
5. Access. There is a term “reasonable access.” When it is important for my client to get into the house before closing, I ask the buyer’s attorney to define “reasonable.”
6. The appraisal and title items are more in the legal sphere and need to be handled, in writing by attorneys.
Those are the kinds of things that frequently happen in my practice. What kinds of things did I miss? What was your experience? What do you want to tell Ethan?
