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All-Cash Buyer Wants Repairs
We have had our house on the market for about a month and finally attracted an offer, a good price from an all-cash buyer who does not want an appraisal. As part of the offer the buyer had a home inspection and came back to us with detailed bids requiring some $30,000 in repairs. What choices do we have in this situation?
Your choices are to accept the offer, make a counter-offer (which is really a new offer and ends the buyer’s obligation to purchase the home) or simply say no and maybe lose the deal.
None of these options is really what you want: a full-price, all-cash offer with no inspections or stipulations. However, in the real world, you didn’t get that ideal offer instead you got what you got. There are several problems here.
First, you may not have $30,000 to make the desired repairs.
Second, it may be that there are cheaper contractors who can do the work. However, if you use them then questions regarding the buyers’ satisfaction with the repairs might arise, and that could set off new rounds of arguments and discussions, depending on how the offer and counter-offer have been written.
Third, if you reject this offer you’re obligated to tell future buyers about the inspection and its results. This will undoubtedly encourage lesser offers.
The better option, relatively speaking, is this: You have an all-cash buyer. If you reject this buyer, the next one may be more demanding and it might take weeks or months to get a better bid – or any bid. It’s possible that the next bid could be lower. If the new buyer needs financing you will have to deal with an appraisal and if you get a low valuation then the next deal may be in peril.
The realistic alternative is to lower the price by the value of the repairs. This will allow the buyers to get the work done to their satisfaction. Since the property is being sold for cash, the purchasers can readily afford to have the repairs made from the cash represented by a lower price. The house will then be sold and you can move on.
Should you have made the repairs before placing the home on the market? It depends on what’s expected in your local market, how the home is being priced and sold and whether you had the cash. Also, a different buyer may have had a different set of repair demands – or maybe no demands.
In real estate, all transactions are unique so it’s difficult to say what “should” have been done. You tested the market, you have an offer on the table and a live buyer, so the next step is up to you.
Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to firstname.lastname@example.org.View Foreclosure Article Archives
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