Do Home Sellers Have to Give Up Inspection and Appraisal Concessions in a Hot Market
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Barb Schlinker Radio Show
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After the seller’s home goes under contract, the next steps are the buyer does and inspection and sometimes asks for things to be repaired, or an appraiser comes along and may not agree the home is worth what the buyer agreed to pay for the home. Does the seller have to do all the buyers ask?
1. Well in this hot market, where there is low inventory and high demand for homes, the seller does not have to concede anything. However, the risk is that the buyer walks away.
a. Probably the most common concession we receive this time of year are requests to check out the roof for hail damage. If the seller has to make a claim they must pay a deductible.
●One of the most popular insurance companies in the area, USAA, has recently imposed a deductible as high as 1% of the homes value. That could mean 3-10K the seller has to come out of pocket if the roof is damaged by hail.
●So I just sold a home where the seller had already given a price concession because they were tired of showing it. Then the roof was determined to need to be replaced.
○The deductible was $3000
○We actually got the buyer to increase the sales price to get a new roof and cover the deductible.
■But we let the buyer pick the color and upgraded the roof to a Class IV shingle so he gets a discount on his Homeowners Insurance by as much as 25% .
■Every one ended up happy in that deal.
2. Inspection repairs, if the home needs them should be handled in most cases. But it is not the time for the buyer to ask for updates.
3. On the appraisal. I just had one that the appraisers opinion of value was $3000 low. Looking at the appraisal the opinion did not make sense. However, it was conventional financing and its hard to challenge the appraisals.
a. So the choices were:
●Seller lower the price
●Buyer come up with the difference in cash
●Seller and buyer negotiate in between
○The 3rd option is what happened in this case.
●However I have had buyers either give an appraisal guarantee with their offers in bidding wars and have to come up with some extra cash when the appraisal came in low.
●It’s frustrating for all. But less costly than starting all over.
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