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As a seller I plan to pay for a pre-inspection, um, inspection to figure out what needs to be fixed beyond what I know needs to be fixed.
For a couple hundred bucks I know what would hold up a sale, and can address it on my own time vs being under a gun to do so come sale time. I figure I'd get the money back doing the work myself, or at least being able to take bids.
The only concern I have is things that the inspector thinks are issues that really aren't, or for example have existed for a decade when we bought the house, that are still the same (we have a small 1'x4' section of vinyl siding that has been partially melted a bit by the sun reflection, but it hasn't changed since we bought it). I wouldn't want to fix that, as it's cosmetic, and will just go back to being melted.
I guess what I'm asking is, would stuff like that end up scaring off buyers, or would they appreciate the honesty? We have nothing to hide and except for not updating the home, it's extremely well maintained and I've gone above and beyond in materials when doing so. New roof and paid another $1,500 for "pro" shingles, HVAC two years old done by local contractor not lowest bidder, new water heater professionally installed, etc. Heck I replaced all the electrical plugs in the home as the ones that came with the home (original) were the $0.50 ones and were all dingy. We used quality paint so re-painting will be easy...list goes on.
Home is in the $250k-$260k range. 3/2.5 w/ garage, NE Raleigh outside 540.
Inspectors note all things that affect the home. For example...caulking around the tub. Sellers think it is cosmetic but inspector notes it because if there is no caulk around the tub, water could intrude and cause issues.
Since you are going to get an inspection prior to listing your house, I suggest you ask your Realtor which items are most important for you to take care of. In this market, caulking isn't a necessary repair.
If you are the original owner of the home, many times, windows have a lifetime warranty for the original owner. So, if you have windows with broken seals, and you are the original owner, there may be a warranty so the window company will send the glass but you'll pay to have it installed.
There are repairs that you SHOULD do and repairs that you COULD do so again, ask your Realtor.
Correct. And the flippers know it. (Why do I keep saying flippers? Of the ten houses my son has viewed, at least half of them are by flippers.)
My daughter paid $300 DD 3 or 4 years ago. When we found there were foundation problems, we got her $300 back. I would have sued over it just like the seller would have sued if everything didn't go right in the transaction.
That's not the question. If the buyer discovers, say, a foundation crack that the seller supposedly didn't know about, the buyer walks, and the seller keeps the DD. Who deserves to lose in this situation? The buyer or the seller? I say the seller.
Did they have an inspection done? If so, they should have to notify the buyer of every problem on the report that has not been corrected. A little honesty goes a long way. I had a home inspection done before I sold me last home (in 2016), and I had an inspection done before I even listed it. My buyers knew EXACTLY what they were getting. We had a couple of conversations with them since then, and they have never mentioned that we were anything less than honest and forthcoming.
Agreed
The buyer's agent puts her client at greater risk by having her put down a larger DD even with the inherent risk in doing so all such that their client will get the house. "Oh, but the buyer wants the house." But would the buyer want the house if he knows everything the seller and the buyer's agent know, at least from experience? I don't think so.
My attitude is puzzling to some here based on their triggered responses, but as I said before, I get really pissed when people take advantage of a little guy. I was a little guy once, and I had people try to stick it to me. About 15 years ago, I sold my wife's car for $1,000 to a guy I knew in a local retail store. He was a good kid trying to make a living. The car had 250,000 miles on it, but it was in good shape for its age and mileage. A month later, I was in the store to buy something. I asked him how the car was doing. He said the transmission went out two weeks after he bought it, and he sent it to the junk yard. I took out my checkbook and wrote him a check for $1,000. I didn't legally have to do it, but I wouldn't have been able to look myself in the mirror if I had sold him a lemon and walked on him.
Apparently there are people here who are satisfied that "a deal is a deal", and let the poor, inexperienced buyer beware. If that's true, that's really sad.
You sound angry and you seem to want to blame Realtors for things out of their control. I'm guessing you've never worked with a Realtor that has YOUR best interest at heart. Maybe your son's Realtor isn't a good fit for him (or you).
As for suing the seller over something like a foundation issue...you first have to prove that the seller KNEW about the foundation issue so good luck with that.
I know most of the Realtors that post in this forum. Not so sure about those that are "behind the scenes"!
I feel comfortable saying that they would rather HELP their buyers than see them make a huge mistake.
Think of it this way...most of us rely on our past clients to send us referrals and to come back to us when time to sell. I've been a Realtor for over 20 years. During that time, I've had a few clients that buy and sell about every 5 years. That means 1 happy client equals 5 more sales plus a few referrals so why wouldn't I have their best interest at heart? Plus...it makes me happy to be around happy people!
Actually, if you pull an old Standard Form 2-T, the buyer could walk away from the deal right up to closing just by claiming they could not get funding.
They didn't have to prove anything. "...in the buyers sole judgment..." I think it said.
DD Fee worked fine while the market was balanced or tilted to buyers. Less so with the current mania.
If the market is flooded with inventory as the doomsayers contend, sellers will take a Happy Meal for due diligence fee and be tickled to have it.
And, sellers will whimper that the gubmint should fix it.
I'm not certain about that, but don't have any old 2-T's at my disposal. I did see some 2013's (w/due diligence) where we were giving $200-500 on a $500K house.
What I DO recall about loan "commitments" was:
a. the loan paragraph was a contingency. So if you said you had to get a 3.0% mortgage, and the Lender would say "cannot obtain 3% interest rate" right at closing, then you could bail and the Seller had contractually agreed to release E$.
b. in '07-08, the lenders were usually waiting until late for the appraisal, and anytime it came up as low by a couple $K, it was pretty much on the Sellers to eat it.
Correct. And the flippers know it. (Why do I keep saying flippers? Of the ten houses my son has viewed, at least half of them are by flippers.)
My daughter paid $300 DD 3 or 4 years ago. When we found there were foundation problems, we got her $300 back. I would have sued over it just like the seller would have sued if everything didn't go right in the transaction.
yes, even 2 years ago, depending on the property and the interest in it, you could easily have <$500 for due diligence.
I do wonder how a "foundation" problem entitled her to a refund. If the Seller knew or should have reasonably known - sure. And what did the contract say about any Seller suing? Basically nothing. Generally, Buyer and Seller agree that actual monies in play are the only remedy. Buyer gets their DD fee, E$ and "inspection" costs if Seller is in the wrong. Seller gets the E$ if the Buyer is in the wrong.
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That's not the question. If the buyer discovers, say, a foundation crack that the seller supposedly didn't know about, the buyer walks, and the seller keeps the DD. Who deserves to lose in this situation? The buyer or the seller? I say the seller.
My suggestion to your son would be this:
He knows by now "where" he wants to live, and the type of home he wants to buy. He can tell by the info and the photos and some google map views if he is interested in the home. So, even if he only get 15 minutes or 30 minutes for his appointment, he can spend all but 5 minutes (confirming the pictures didn't make a rotten apple into apple pie) and the rest of that time looking for "inspection" issues. His qualified agent will also be able to tell a lot of obvious issues.
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A little honesty goes a long way. I had a home inspection done before I sold me last home (in 2016), and I had an inspection done before I even listed it. My buyers knew EXACTLY what they were getting. We had a couple of conversations with them since then, and they have never mentioned that we were anything less than honest and forthcoming.
And everyone here, and most in the business locally would rather have a situation where the house is pre-inspected. But a Seller has to agree to it. Sad to say, even if the agent paid for the inspection, many Sellers are in the "I don't want to know" category.
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The buyer's agent puts her client at greater risk by having her put down a larger DD even with the inherent risk in doing so all such that their client will get the house. "Oh, but the buyer wants the house." But would the buyer want the house if he knows everything the seller and the buyer's agent know, at least from experience? I don't think so.
Every agent I know wants their Buyer to be able to put down the least DD possible. I don't know any that practices a "I get all my Buyers to put down high DD so I know they'll go through with the deal."
If your son or anyone you know has an agent that either a)withholds information or b) refused to do basic things to serve and protect their client ("Oh, I don't do that/that's not my job") then they need a new agent.
Now, having said that, I am not doing like MikeJ - I do not have coveralls and I'm not planning on crawling around getting filthy in a crawl space. Look in there, go where I can duck around? Sure. I'm also not climbing out windows onto roofs.
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My attitude is puzzling to some here based on their triggered responses, but as I said before, I get really pissed when people take advantage of a little guy. ...
Apparently there are people here who are satisfied that "a deal is a deal", and let the poor, inexperienced buyer beware. If that's true, that's really sad.
I think when it seems you're laying the "blame" at the feet of the Buyer Agent, it does puzzle me.
There aren't agents here who are satisfied for their Buyer that a "deal is a deal". I don't get the impression any of us deal with Buyers without some education and explanation of the process - especially for 1st-time buyers. Where did your son find his agent?
A "deal is a deal" would be "You signed saying it was as-is" (since every sale is contractually as-is) or "you don't have any loan contingency" (which you don't) or "you agreed to pay $X and appraisal isn't a contingency" (which it isn't).
I can see letting the potential buyer “rent†the property during the due diligence period. Conventional rule of thumb might be 1/240th of the purchase price per month. That should be the legal limit of the DDF.
Other than that it is simply a bribe to have the seller take that offer.
First time buyer or experienced buyer the whole system is ripe for abuse. And abuse is what is happening.
it's not a "bad idea" to limit a DD fee. Maybe you could make anything "in excess of 0.5% [1/240 = 0.42%] of purchase price is refundable". However ...
anytime the pendulum swings towards a far end, it favors one and seems unreasonable to the other. And when you try to create a set of laws that govern "today's" problem, what happens 3 years later when it's the complete opposite problem?
it is a "bribe" when you are a Buyer mindset, and you assume an offer lesser on other important terms will be accepted. It is a gamble, when the amount of info upfront is substandard (ee Mike's list above). As a listing agent, it is "what's the likelihood a Buyer would walk away for this amount"?
By the way - if a Buyer wants to avoid DD fees (nevermind the inspection uncertainty), they should be buying RELO homes, Opendoor homes, or use Zillow's purchase agreement on a Zillow home.
Last edited by BoBromhal; 02-20-2021 at 10:46 AM..
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Now, having said that, I am not doing like MikeJ - I do not have coveralls and I'm not planning on crawling around getting filthy in a crawl space. ...
Run with me for a day with promise of buying me a frosty cold beverage after class, and I will teach you how to dress like a bum so no one has expectations of anything but dirty.
I haven't had coveralls in the car for years.
And, most crawlspaces have a good plastic ground vapor barrier. I like the encapsulated ones. Sometimes they are cleaner than the dadgum kitchen!
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Originally Posted by BoBromhal
By the way - if a Buyer wants to avoid DD fees (nevermind the inspection uncertainty), they should be buying RELO homes, Opendoor homes, or use Zillow's purchase agreement on a Zillow home.
I never exaggerate on important topics like this. Your posts indicate you are a fan of extreme intrusive
government over-reach. You may reasonably infer that I am not.
I might be a bit sarcastic, but your playing of the silly "scam" card to support your current desire to have your government order the details of transactions merely to serve your family hankerings is clear.
I can only work with what you've offered, and at that, I'm spot on.
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I see a lot of < 4 ft and dirt
