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Not sure where you live, but have never heard of a "custom" that dictates that the seller pay 2x the quote for a repair.
The question is who takes how much risk. If you have a punch list of a dozen items I will virtuallly guarantee the list will cost at least 50% more than the initial quote.
If the seller wishes to take the risk they can simply fix the problems. Otherwise they pay a premium to the buyer to take the risk.
My favorite is an inoperative gas fireplace. I figure $50 for a handyman...what is there to go wrong? $300 later it worked like a charm. ( In truth I could have fixed it myself in a couple of weeks for less than $50. But do you delay a closing for that)
My buyer asked for a laundry list of repairs. I fixed the legit items and told him the rest "had passed city inspection when renovated." They were satisfied with that. Of course, we had pulled permits and had the stamped approvalws of every stage.
Nothing personal, but the above bold would scare the hell out of me as a seller. I would never agree to "your inspection and approval".
I would either "buy" you off with discount sale price, closing costs, whatever but never would I agree with based on "your inspection and approval". It is to subjective, could cost me money, and you still could back out no matter what I do.
Again, nothing personal.
Well, then you'd probably give me a healthy price reduction, which would usually be my preference anyway. Actually, I can only think of one time when I required a Seller to make a repair prior to closing. It was a simple plumbing repair which only cost about $300, but I didn't want the hassle of taking care of it. All the other properties I've purchased have been "as-is" and the price reflected the conditions of the properties.
By the way, I would never write into a contract "subject to my inspection and approval"--it sounds too onerous. However, I would stipulate that I could inspect the property prior to closing (I'd be foolish not to view any repairs), and if the repairs weren't up to code or were out-and-out shoddy, I'd request that they be fixed. I wouldn't close otherwise. Nothing personal, of course--it's business. But, being reasonable people, I'm sure that we could fulfill the roles of Buyer & Seller just fine.
I talked to some people who recently sold their home I know, and others on a real estate message board, and a few were burned by trying to negotiate during the inspection contingency period. When they refused to fix or pay for some things that the inspector suggested the buyer bailed out and the house went back on the market now stale because they wasted three weeks of valuable time on the market. They later found out that many homes that are not sold in three weeks in their specific city are considered stale and have to lower their price. The resulting price drop and the hassle of continued showings caused them for more loss than the original cost of the suggested repairs they turned down. A lesson learned.
I talked to some people who recently sold their home I know, and others on a real estate message board, and a few were burned by trying to negotiate during the inspection contingency period. When they refused to fix or pay for some things that the inspector suggested the buyer bailed out and the house went back on the market now stale because they wasted three weeks of valuable time on the market. They later found out that many homes that are not sold in three weeks in their specific city are considered stale and have to lower their price. The resulting price drop and the hassle of continued showings caused them for more loss than the original cost of the suggested repairs they turned down. A lesson learned.
Interesting points. Yes. When a property falls out of contract, buyers want to know what is wrong with it and buzzards and vultures begin to circle.
It is difficult to apply personal experience from others to your situation.
Every deal is different, and every region has its own common practices.
One value of forums is to help recognize wide variations in typical real estate transaction executions around the country.
Bear in mind that much input you receive is limited by region and personal attitudes.
No one here knows enough about your situation to offer specific advice to you as to how to proceed. But, we see stories here routinely where people willingly trash a deal over small differences in repair costs.
Or as I like to tell clients, The first $500,000 is the easy part. Then we have to keep the deal together as we push around a few bucks and attitudes and posturing intrude.
The last $100 or $1000 is the most difficult when the money becomes immaterial and real estate testosterone clouds judgement.
It is amazing how much financial harm some sellers will gladly absorb to prove their point and "win" a pyrrhic victory.
My wife and I are selling our home and just got the home inspection report. As expected, *the report had a number of relatively serious problems that would take quite a bit of time and money to fix. I don't want to hold up the sale and I don't want to sit at home waiting for a contractor to come by the house for days on end and coordinate the repairs and hope these meet the expectations of the new buyer and his structural engineer.
What do you think of just paying him a credit at closing that would be about 125% of the expected repair costs so the new owner can fix these things after he moves in the house?
How have you coordinated the repairs of the house you have sold demanded as a result of a home inspection?
If the number of *relatively serious problems are an accurate estimate of the buyer's repairs' request, which per your later post would be $3,500 max., negotiating toward that figure is not a major problem if you are motivated to sell rather than wait for another buyer. At which point the same repairs will be noted, or fixed by you beforehand.
Serious problems add up to a lot more than $3,500 in my opinion. You could also offer a home warranty for about $500 to cover incidentals on non-structural repairs. As BBronston said, in many states there is a "cost of repairs" $$ figure maximum clause in the purchase and sale contract which will answer your question. If the buyer is taking a mortgage, serious repairs will come up in an appraisal most likely and lower the value of the property in any event.
Your Realtor should advise you on how to proceed. Why not just lower the price, attend the closing, and move forward.
If I was the buyer I'd rather have the cost of repairs toward closing costs verses the actual repairs. I then could control who does and the quality of the repairs.
There is a big difference if the seller or the buyer is paying to have the repair done. Sellers want cheap and buyers (should) want quality.
I've always taken the credit... instead of repairing something I plan to upgrade anyway...
The only problem might be if the repairs prevent lender approval for the buyer.
One time, I bought a property and I had to place 150% of the estimated cost of repairs in escrow so the property could close.
I did the repairs with permits and the lender's inspector signed off... my out of pocket was 1/3 of the estimate including permits.
Someone else above mentioned what I'm going to mention- did your contract have any sort of agreed upon limit to the repair expenses? Our does.
I don't understand why any seller would agree to an open ended repair clause where it's going to be pretty obvious that the buyer is going to want to take advantage of getting anything repaired that he can. Even then, the discussion should be limited to those items in the inspection report that were hidden deficiencies. I wouldn't be too happy if a buyer wanted various things repaired that were obviously in need of repair when they viewed the house.
Location: Mokelumne Hill, CA & El Pescadero, BCS MX.
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The CA request for repairs form has a check box, that says "In lieu of repairs seller will credit buyer $______ as compensation." It's a bit more wordy than that, but I've always felt it was the simplest (and therefore the best) way to handle the repairs issue.
When I bought my house, the seller had an estimate for a roof repair of $6K. We took the credit as I was going to replace the comp roof with a metal one anyway.
A lot of lenders will also require that those repairs be completed prior to closing.
I always thought it was best for the buyers to place an offer based upon the house's condition and leave it at that, unless the house is in poor shape whereby they can get an inspection prior to placing an offer. There's been too much of a trend to continue the negotiating phase beyond the contract signing and into the weeks afterwards once the inspection(s) are done.
Even when deficiencies are found, the buyer is in no position to know how the subject property compares to other houses they looked at because they likely didn't have inspection reports on those houses.
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