Request for Repair Contracts

These come up on occasion and in the state of California the seller is responsible.
Have you ever had a seller wonder what this was all about? Chances are if you're a Rainmaker you've coached your clients well, both buyers and sellers alike. On occasion my sellers are blindsided with some creative requests. Here's how I coach both buyers and sellers to prevent this from happening. Note: Buyers and sellers reading this, you might impress your agent, pay attention...

Understand the part of the contract where "as is" is mentioned. In California the purchase contract specifically states "the property is sold in its present physical condition". What this means is it comes with the faux wooden beams, wood paneling, 1957 mirrored Elvis tile and the garden-hose-green shag carpeting. This doesn't stop buyers from asking for everything under the sun (and carpet), however. But buyers should be aware the seller loved their home at one time and is selling for an agreed upon price. If priced right, sellers have objectively taken into consideration the condition, fit and finish of their home and programmed that into their price.

If repairs are requested, negotiate based upon the end goal - sale of the property. Buyers often ask for items to see what they can "get away with" or how much they can beat a seller down while giving up their most prized possession. Conversely, sellers often feel their house is perfect and "how dare anyone ask me to fix or change anything?". There can be deal breakers coming from either side; ask, negotiate and respond fairly. An offer was written in good faith that the buyer wants to own this home, right? The seller should take a deep breath when reading a request and consider the buyer's perspective.

What is fair game to ask for? As mentioned before, the buyer can ask for everything and anything, including removal of the moon and star collection on the mirrored ceiling. Here in CA, the seller literally does not have to respond. This in and of itself can be a deal breaker, kind of like me asking my wife Barbara if I can go on a week long motorcycle ride over Christmas with the fellas; she'd just stare at me like a statue of Abe Lincoln. Can a buyer ask for cosmetic repairs? Absolutely! In all my years of asking and answering requests for repairs, I've said the same thing, "the buyer can ask for anything but the seller really should give priority to health and safety related issues".

What are health and safety related issues? First and foremost, both sides should not take this lightly or too serious. A seller might have been living in a house for years in certain conditions that might have warranted building code updates in recent years or standards that needed changing. Does this mean the house is instantly uninhabitable? Absolutely not! Common sense prevails.
Here are a few examples of (but not limited to) issues where remedies could be asked for: mold, fire hazards, leaks (water or gas), broken glass, roofs, foundations, lead based paint, asbestos and falling hazards (human or inanimate objects). Some of you 100k plus point clubbers could add to this I'm sure but you get the point. Again, there are many things a buyer could ask for, these just tend to be important and pertinent to a buyers definition of habitability.

How can a seller respond? Simple - no, yes or yes to some. "Not only no but heck no" can cause a buyer to take their ball and go home.
If a buyer was coached properly, these could be items they feel will tremendously impact their living experience in their new (old) home. Ask wisely and consider the seller's reason for saying no - "Read paragraph 7A silly" (the as-is paragraph), "this is cosmetic", "I don't have the money to do it (short sale or foreclosure)", "the item was only recommended by your home inspector, not mandated by anyone", "I'm part mule", etc. Yes answers - self explanatory. Yes to some, also self explanatory, refer back to "no" for the items not agreed upon. Make sense?

What happens next? Actual repair paid for by seller often happens in CA, refer to your contract defaults for repair standards. Here's what I recommend as listing agent, it's a little easier with a happy ending for all.
At the beginning of the transaction I prime the buyers agent to not only conduct a home inspection but to have licensed, reliable contractor(s) inspect and give the buyers an estimate for repairs they might want - all are part of buyer's due diligence. This will help the seller arrive at an easy response to a request for repairs. At this point the seller can do one of two things, agree to repairs during the transaction OR agree to NO repairs and give a credit to buyer at closing. Call it a discount on the house (or closing costs) that happens to be the price on the written estimate, and the buyer can fix these issues under their ownership.
Everyone should be happy at this point, buyer got a break, seller can move out without fixing the house they are leaving behind. Note: Seller CANNOT give buyer cash in hand from proceeds of sale if financing is involved, this is mortgage fraud. However, there is such a thing as a Rehab loan; ask your favorite lender or a fellow Rainmaker for details.

Randy Bailiff
Dean Graziosi Investment and Life Coach