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Old 09-25-2014, 11:07 PM
 
Location: North
829 posts, read 1,524,491 times
Reputation: 1023

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We just got the addenda that the relocation company needs us to sign. The agent told me that it was basically the same, only more general since it's the same nationwide, that there was nothing to fear. But I was reading it and there are some parts I'm concerned about. The biggest issue is with the conduct after the inspection.

Their addendum states that it shall prevail over the P&S agreement. So even when we had 14 days after contract to do the inspections, they only give us 10 to perform the inspections and report any defects in writing with the complete report from our inspector. Then they inform us how they will proceed. They have 3 options:

1. Repair the defect and we have to proceed with the sale.
2. Credit us at closing. We have to proceed with the sale.
3. Terminate the P&S agreement and return deposit. We have the option to take the house "AS IS" and proceed with the sale.

The issue is we don't have any option. We would need to accept whatever option they choose according to this.

In the regular P&S and in the additional provisions, they insisted in including language that the inspection was for informational purposes only and that, while they may address any major defects, we may terminate the contract. But since their addendum language differs and it shall prevail, we really don't have any option to terminate, only to wait for their decision and then proceed with the purchase.

Is this common? Our agent insisted we still had the option to walk away, but when I read it, I don't see we can.

Thank you.
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Old 09-26-2014, 01:23 AM
 
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You have to realize that they either have to make the needed repairs, give you a credit for said repairs, or let you out of the contract. Why would you need the option to back out of a contract if they choose to satisfy those repair conditions? You shouldn't need that option, and an intelligent seller like a relo company isn't going to give it to you.

What would be wrong with any of those options? You either get a repaired property, get the money to fix the repairs, or not have to buy the house. What the heck else you want besides those options? They don't want you to be able to back out of a contract because of some silly repair issues. So they're willing to satisfy those repairs or let you out of the contract. All of this comes about as a result of far too many buyers using repair provision in a sales contract in order to continue to negotiate on the terms of a sales contract after it has already been agreed upon. You are now dealing with a professional seller (relo company) who won't play those games.

Relo companies also order their own inspections prior to putting the house on the market, and usually take care of any known problems at that time. So you are typically safer in a relo transaction as compared to just a homeowner who usually doesn't want to pay for inspections and repairs in advance.
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Old 09-26-2014, 06:10 AM
 
Location: Cary, NC
36,946 posts, read 64,295,450 times
Reputation: 36971
Quote:
Originally Posted by Merjolie8 View Post
We just got the addenda that the relocation company needs us to sign. The agent told me that it was basically the same, only more general since it's the same nationwide, that there was nothing to fear. But I was reading it and there are some parts I'm concerned about. The biggest issue is with the conduct after the inspection.

Their addendum states that it shall prevail over the P&S agreement. So even when we had 14 days after contract to do the inspections, they only give us 10 to perform the inspections and report any defects in writing with the complete report from our inspector. Then they inform us how they will proceed. They have 3 options:

1. Repair the defect and we have to proceed with the sale.
2. Credit us at closing. We have to proceed with the sale.
3. Terminate the P&S agreement and return deposit. We have the option to take the house "AS IS" and proceed with the sale.

The issue is we don't have any option. We would need to accept whatever option they choose according to this.

In the regular P&S and in the additional provisions, they insisted in including language that the inspection was for informational purposes only and that, while they may address any major defects, we may terminate the contract. But since their addendum language differs and it shall prevail, we really don't have any option to terminate, only to wait for their decision and then proceed with the purchase.

Is this common? Our agent insisted we still had the option to walk away, but when I read it, I don't see we can.

Thank you.
If it is in writing, it is what you have. If it ain't in writing, you ain't got it.
Do you have a contract now?
I would be tempted to tell the relo company they can sign any addenda they cared to, but perhaps I would decline to sign. And they could file it where the sun doesn't shine.
But that is ME. If you are getting confusing signals from your agent, press for clarification. It is not unreasonable to consider having an attorney review the documents prior to contract. I have seen some pretty nasty conditions presented by relo schmucks.

Quote:
Originally Posted by yousah View Post
You have to realize that they either have to make the needed repairs, give you a credit for said repairs, or let you out of the contract. Why would you need the option to back out of a contract if they choose to satisfy those repair conditions? You shouldn't need that option, and an intelligent seller like a relo company isn't going to give it to you.

What would be wrong with any of those options? You either get a repaired property, get the money to fix the repairs, or not have to buy the house. What the heck else you want besides those options? They don't want you to be able to back out of a contract because of some silly repair issues. So they're willing to satisfy those repairs or let you out of the contract. All of this comes about as a result of far too many buyers using repair provision in a sales contract in order to continue to negotiate on the terms of a sales contract after it has already been agreed upon. You are now dealing with a professional seller (relo company) who won't play those games.

Relo companies also order their own inspections prior to putting the house on the market, and usually take care of any known problems at that time. So you are typically safer in a relo transaction as compared to just a homeowner who usually doesn't want to pay for inspections and repairs in advance.
SOME "Relo companies also order their own inspections prior to putting the house on the market..."
I don't see that very often anymore, particularly when the relo company is flipping the house without ever recording their deed. Locally, IMO, relo purchases offer less protection and more risk to the buyer than most direct sales.
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Old 09-26-2014, 08:15 AM
 
5,048 posts, read 7,992,086 times
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Did the option to terminate refer to the P&S? And once you signed that, you were on to the addendum, which had its own restrictions.

Are you saying if the repair issue is bad enough you might not even want a repair or credit and would rather the option to terminate?
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Old 09-26-2014, 08:42 AM
 
Location: North
829 posts, read 1,524,491 times
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Quote:
Originally Posted by cully View Post
Did the option to terminate refer to the P&S? And once you signed that, you were on to the addendum, which had its own restrictions.

Are you saying if the repair issue is bad enough you might not even want a repair or credit and would rather the option to terminate?
Yes, the option to terminate was in the P&S, but it's not in the addendum.

We're not planning on walking just because one GFCI outlet is faulty, but if the septic has failed we'd prefer to move on rather than wait on them to fix it. Their addendum would require us to buy the house not matter what and we wouldn't even have a say in their election to repair or credit us or terminate.

To clarify: We negotiated with the owners and had the written P&S with them, they only asked for the inspection to be informational, but buyer may terminate. Yesterday we got another set of P&S listing the relo company as seller and adding the addendum. The P&S is the same as before, only changing owner name, but the addendum, which supersedes the P&S, changes the conditions.

We are not aware of any inspection done by the relo co., I suspect there's none. We got the disclosure from the owners and everything looks OK, but you never know.
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Old 09-26-2014, 08:44 AM
 
Location: North
829 posts, read 1,524,491 times
Reputation: 1023
Quote:
Originally Posted by MikeJaquish View Post
If it is in writing, it is what you have. If it ain't in writing, you ain't got it.
Do you have a contract now?
I would be tempted to tell the relo company they can sign any addenda they cared to, but perhaps I would decline to sign. And they could file it where the sun doesn't shine.
But that is ME. If you are getting confusing signals from your agent, press for clarification. It is not unreasonable to consider having an attorney review the documents prior to contract. I have seen some pretty nasty conditions presented by relo schmucks.



SOME "Relo companies also order their own inspections prior to putting the house on the market..."
I don't see that very often anymore, particularly when the relo company is flipping the house without ever recording their deed. Locally, IMO, relo purchases offer less protection and more risk to the buyer than most direct sales.
As explained, that's what happening, they are just flipping the house.
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Old 09-26-2014, 10:00 AM
 
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Are you certain that they didn't do their own inspections? I've done appraisals for virtually every major relocation company in the country and it's extremely unusual for the relo company to not have done any inspections unless the relo benefits extended to the transferee are very minimal such a home marketing assistance rather than a home purchase program.

There's usually one or two appraisals ordered on the subject property as well as a few broker's market analysis's and each of those forms ask the appropriate professional about any needed repairs. So you'd typically end up with 3-4 professionals who complete those forms and note any repair conditions, even if a home inspector wasn't hired. Relo companies also typically have a form that the transferee completes where it also asks about the condition of their house. If any of these professionals indicated any problems then it almost for certain that a home inspector will be called in, and it's pretty typical for most relo companies to order a generic house inspection in any event.

You mentioned that this is a 'flip'. You have to understand that are very restrictive IRS requirements that have to be met in order for relo companies not to be considered a dealer by the IRS. One of these conditions is that the relo company must put themselves 'at risk' under the at risk provisions of the tax code. So they must be involved with any real estate transaction at the beginning of the process and not allow the transferee to market the house for sale without already having signed the appropriate paperwork with the relo company.

So even if you are buying directly from a homeowner who appears to be selling by themselves, the relo company would already have done their due diligence prior to the homeowner having even listed their property for sale. The relo company must make a non-revocable offer to the transferee/homeowner at the beginning of the process. This means that the relo company needs to make sure, for their own benefit, that there aren't any repair conditions that would cause them to lose money. They don't have the option of changing their offer if some sort of property deficiency becomes know in the future because it would have huge tax implications for them. So these inspections are done to protect the relo company and are extremely standard in the industry. It would foolish for a relo company to make an offer on a property for which they didn't do any inexpensive home inspection.

It's not likely that they'll provide you with any of their inspection reports. However, you can be assured that any of the 'typical' national relocation companies would have gone through these processes and have a very good idea of the condition of the subject property. That's why they can get away with putting in more restrictive language in the sales contract, because knowledgeable real estate brokers would be aware of the industry standards and can let their buyers know that purchasing a relocation typically has much less risk than just purchasing outright from a normal seller. The idea of using a single deed, versus two deeds, is simply a strategy of saving money on recorder costs and not any sort of indication that the relo company has less influence in a transaction. The single deed option was lobbied for by the Employee Relocation Council on behalf of its members.

In our state, the state required property condition disclosure doesn't have to be completed for a relo transaction. That seems unusual that you got something some sort of disclosure from the homeowners because now it would appear that you have two separate parties making disclosures and most relo companies would want to be the primary source for information supplied on the subject property in order to limit their vicarious liability.
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Old 09-27-2014, 07:53 AM
 
Location: North
829 posts, read 1,524,491 times
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If they did their own inspections, we are not aware of them. The addendum has a place to fill the inspections done and it's blank.

We did get the standard state disclosure forms from the owners. All the process so far had been with them, it's only now that the relo co. requested we sign their addendum that changes some provisions of the standard state P&S. We don't like that it's one-sided, they have all the power and we have to go through with the sale without having any input if there's something wrong with the house. I asked the relo co, through my agent, to keep the standard P&S provisions. Let's see what they say.
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Old 09-27-2014, 11:29 AM
 
5,048 posts, read 7,992,086 times
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So I understand....you have an agent that you mention. And you have asked him/her to contact the relo company. So was there no local agent who listed the property and who would be the contact on the seller side? Your agent isn't representing both sides, is he/she?
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Old 09-27-2014, 08:31 PM
 
Location: North
829 posts, read 1,524,491 times
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No, our agent is only representing us. There is a "local" agent for the sellers (she's from a neighboring area). Our agent is going thru the local agent. We don't know where the relo co. Is operating from.
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