10 day inspection period (contingent, appraiser, foreclosures, negotiation)
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Yeah, states I'm familiar with no one is going to pay an appraiser and the appraiser doesn't have time to bother coming out unless the inspection and any other non-loan type contingency has been met.
In our state, the purchase and sale contract simply says that the buyer had a period of _X_ days to perform their due diligence.
If the buyer finds something that they want the seller to address, they complete an amendment called "Amendment to Address Concerns" where they detail those concerns, ask for repairs, etc., and submit it before the end of the due diligence period. These concerns have to be agreed upon between the buyer and seller by the end of the due diligence period (although sometimes we agree upon an extension so that one or both parties can obtain quotes for repairs under consideration). There's often some back and forth on changes (i.e., seller will fix this, won't fix that, or else just give them buyer some money and say "fix it yourself!"), and by the end of the due diligence period, the buyer can a) decide to accept the final form of the Amendment, or they can terminate the contract and walk away with their earnest money.
On the other hand, if the buyer does not go to the seller with their concerns by the end of due diligence, then the seller is not obligated to say, "Hey! Did you have any problems with the inspection?" It's up to the buyer. If the end of due diligence passes without any word from the buyer, then the buyer no longer has the right to terminate the contract and still receive their earnest money back. They can certainly back out -- but it's gonna cost them.
Ok now I have a question. We had been presented a contract which we accepted with no counter. It is the standard Realtor contract, as-is, with 10 day inspection period. We have the paper which states $ is in escrow. House inspection has been done and report received. There were a couple things on there but they aren't major, mostly calk and paint type things. However, if one doesn't understand construction things, a couple of those might look way more serious than they are. We fixed (without them asking) cracks of calking, bleached and repainted. DH has licenses and is legal to do these things.
Previously, neighbor had come out and acted like an idiot, and this problem was the only thing our buyer had a problem with. I happened to be there during the inspecton and buyer asked me about this fellow, and I told him what I knew about why he was upset (he didn't not get along with our previous tenant) and how it was when we lived there (quiet and not problematic). I believe I defused the situation, at least I hope.
Anyway, we are now on day 6. Inspection report arrived 3 days ago. I asked our agent if buyer is accepting the house and she said their agent forwarded the inspection report without any information if there is acceptance or asking for repairs, just no further info. Because of the neighbor issue, our agent said she didn't want to push the issue and was just waiting to hear.
Today our agent emailed that their law firm has sent them notice that buyer is now their client and they would be representing them at closing. Buyer is getting mortgage, and there is apparently no problem with the loan, except we had to extend closing date by 6 days for them so they could get it done. I realize appraisal has not been done yet, but we all feel it should pass easily.
I will read our contract line by line but I'm confused, doesn't the buyer have to actually notify us, isn't there some form or something they sign saying they accept? I think there's one asking for repairs (which we're already doing anyway), but I feel like we're in limbo just not knowing for sure. Our agent is really laid back, the "everything's going to be fine" type which is driving me crazy. She forgets to forward stuff to me...I still don't have that paper that says what the bottom line $ amount will be... so I'm not likely to get an answer from her.
Sorry so long, thanks for reading.
Ask your realtor. Every state is different. They had the 10 day inspection period and asked for another 5 because of appraisal. That's their counter as of right now. You either let them have the extra 6 extra business days or no deal. During that 6 days, they can still back out for basically any reason. Inspection, appraisal, they find a new house, etc. That actually happened to us. The buyer backed out the day before his last day of grace period. So we wasted essentially 3 weeks on this buyer. He had no reason to back out and doesn't need one. Our buyer got cold feet and decided to keep renting.
Unfortunately, this is all normal. They can still come back in the grace period and negotiate or back out. It's definitely hard to relax, but there's really nothing you can do but wait. The fact that they had a lawyer contact your agent is a good sign their moving forward.
I am licensed in MO so I can't speak for every state, but I am pretty confident in stating that it is not common for a contract to allow a buyer to back out of a contract for any reason, like if they find another house they like better. If they do, they lose their earnest money. That is one of the reasons why in a seller's market or a multi-bid situation I suggest to my buyers that they put down more earnest money to reassure the sellers that they won't be left holding the bag.
Depending on the contract, there are reasons why it is ok to back out of a contract and to get your earnest money back. If there is an inspection contingency, the buyer basically can get out of the contract if the inspector finds *anything.* Commonly buyer and seller try to compromise, but sometimes deals do fall through because they can't come to an agreement. You mentioned that you sold your house "as is." That means the buyer is free to have any inspections during the inspection period, but you are already saying up front that you aren't going to do any repairs regardless of what they find, and if the buyer decides not to go ahead with the purchase of an "as is" home even if based on inspection reports, they do not get their earnest money back. So I was a little confused on that point.
At any rate, whether the house is sold "as is" or with an inspection contingency (buyer will buy the house if any inspection issues are successfully negotiated), it is on the buyer to notify the seller within the inspection period of any issues that they want fixed or if they want out of the contract based on the results of inspections. If the buyer does not notify the seller, then they are bound by the terms of the contract and the inspection period is considered successfully passed.
Other common contingencies are "finance contingency" where buyer must be able to qualify for financing, "appraisal contingency" where the house must appraise for at least the selling price, and "insurance contingency" where buyer must be able to get insurance on the property (sometimes an issue based on condition or if it is in a flood plane, etc.), and acceptance of HOA or Condo restrictions/covenants.
Not having read your contract, I still would agree with others here that if you haven't heard back then you can consider the inspection period successfully passed.
If I read this right, the inspection period has not even run yet. It's only day six, they have 10 days to respond requesting repairs.
If they do that, you can agree, refuse, or negotiate an alternative. Refusing or negotiating alternatives may have consequences, like the buy can walk away. But there is usually some room to negotiate if the buyer is asking for things that are unreasonable or excessive.
Unless the buyer has an objection and wants some things taken care of, the normal practice around the country is, You will only be notified it the buyer wants to make some changes. The inspection period just ends with no notification. No requests for something to be done before closing, is considered good news.
Couple other notes.... it's unusual in our area, for the buyer's agent to have sent you the complete report. We don't do that here, and most sellers do not want to see it. Any defect presented in the report might now be a disclosure issue for you with any future buyers. In our area, the buyer would typically send to you only those excerpts from the report summary that they are asking you to fix.
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There is no reason for you to get a full report. You got what they felt needed taken care of which were very small. There is an advantage to you not getting the report if there is something wrong with the property. If you get the report, you have to reveal the problem. It might not be a real problem, but you have the obligation to reveal it anyway.
Appraisal is not typically ordered until after the inspection period, because there is a cost to appraisal, and buyers don't ordinarily want to pay that until the house passes inspection and they still wish to go forward. Some exceptions happen though, especially in the current climate where appraisals take many weeks due to appraiser shortages. If they're willing to risk the cost of the appraisal, smart buyers, and smart lenders, order them as soon as is possible to avoid delays.
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Relax. Things seem to be going your way, so why try to shake up something that does not need shaken up.
I'm no real estate expert, but imo not having an appraisal before all this in in the works seems bass akwards to me. Because if your appraisal comes back less than, all bets are off right?
And, it stands to reason the potential buyers have an out, they don't have to buy, or they won't get the loan with a low appraisal.
OP do you have an out, the appraisal comes back low....are you then somewhat forced to accept what the buyers offer??
It just seems the negotiations should happen before you get locked into a sale like this 10 day contract seems to do to the sellers.
I'm no real estate expert, but imo not having an appraisal before all this in in the works seems bass akwards to me. Because if your appraisal comes back less than, all bets are off right?
And, it stands to reason the potential buyers have an out, they don't have to buy, or they won't get the loan with a low appraisal.
OP do you have an out, the appraisal comes back low....are you then somewhat forced to accept what the buyers offer??
It just seems the negotiations should happen before you get locked into a sale like this 10 day contract seems to do to the sellers.
Maybe someone with expertise can speak to this.
The Sellers are already locked into the negotiated contract. Inspection, appraisal and financing contingencies are for the benefit of the Buyer.
As for the timing of the appraisal, put yourself in the Buyer's shoes. Would you want to pay for an appraisal prior to knowing the inspection results?
In our area the Buyer has to give written notice to the seller, during the 10 day Inspection period, if they are asking for any repairs otherwise the Inspection Contingency expires and the sale goes forward.
I'm no real estate expert, but imo not having an appraisal before all this in in the works seems bass akwards to me. Because if your appraisal comes back less than, all bets are off right?
And, it stands to reason the potential buyers have an out, they don't have to buy, or they won't get the loan with a low appraisal.
OP do you have an out, the appraisal comes back low....are you then somewhat forced to accept what the buyers offer??
It just seems the negotiations should happen before you get locked into a sale like this 10 day contract seems to do to the sellers.
Maybe someone with expertise can speak to this.
If the buyer's agent is competent they have run comparables and should know if the property will be appraised for the selling price.That said, you can sometimes get an off the wall appraiser that comes in with a low appraisal and that's when the fun starts.
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