The “Normal Way” to Sell a Home
You want to put your home on the market, which means you will have to keep it in “show” condition and staged for every viewing. You know from interviewing the Realtors that most FSBO sales (people who try to sell the home themselves) fall through or sell for much less than if they hire a Realtor and pay the 6% commission.
You also know that buyers will have at least two home inspections done (Safety and Functionality, and Wood Destroying Organism) You also know that, depending on the age of the house or the type of mortgage the buyer wants, there may be even more than two inspections (Radon, Lead Paint, Etc.) The buyer’s insurance company or mortgage lender may also require a Wind Mitigation Inspection to check that the house is structurally sound enough and will withstand strong winds
You and your real estate agent discuss the idea of selling the property in “As is” condition because you assume it means probably no inspections, but even if the buyer wants to pay for inspections, you do not have to do any repairs.
Unfortunately, that is not how “As is” contracts work. Let us dig into that to make sure you, the seller, know what will probably happen and the hassles it can cause.
The Problem with Regular “As Is” Contracts
There are several problems putting your home on the open market in “As is” condition. Some buyers:
- Assume that means the seller knows there is a serious problem and doesn’t want to fix it, so they do not want to view the home. This reduces the chances of getting an offer from otherwise ready, willing and able buyers.
- Know their lender will not lend on an “As is” house, so they do not want to view it either.
Other problems for the seller include the fact that there are several different regular “As is” contracts, so until you, the seller, receive an offer, you do not know what the actual conditions are. Remember, the buyer and their agent decide on which contract to use, not the seller.
Some regular “As is” contracts allow the buyer to walk away from the contract for any reason they choose. Let us say the buyer just gets buyer’s remorse. If they tell the seller they have changed their minds, they open themselves to an escrow dispute over the good faith deposit. If they use the “walkaway” clause in the contract, it may give them the legal right to break the contract for any reason. For example, they “do not like the color of the front door” or they “have just noticed the light switches are showing their age.” Regular “As is” contracts protect the buyer and, in some cases, for any reason at all.
Regular “As is” contracts do not protect the seller from doing repairs. To keep the contract in place, the seller may pay for repairs or renegotiate the sale price, even though they thought “as is” meant just that.
The Problem with Other Contracts
Most contracts require the seller to transfer the property in a safe and functional condition. It will also set a financial limit as to how much the seller will be liable to spend on repairs and replacements following the inspections. That amount is negotiable, of course, but the buyer’s and seller’s agents will say what “the normal amount” is.
Some buyers see that seller liability clause as “their money” that they haven’t got back yet. They, therefore, want the inspector to find problems. An astute buyer can then do one of two things, they can:
- Require the seller to do the work using suitably qualified and licensed contractors. Contracts do not usually permit the seller to do simple repairs themselves. Any and all fixing must be carried out by an approved contractor at however much they charge for parts and labor.
The buyer will then have a right, under the contract, to have the repairs inspected. Any fault found will mean the seller will have to pay for it to be done again. If the seller disagrees that the repair is faulty, then another inspector will be called in to be paid for by both the seller and the buyer.
- The buyer may simply agree that the repairs do not need to be done in exchange for the seller handing over the repair money at closing so the buyer can do the repairs themselves. This, of course, reduces the amount of money the seller gets at closing.
An off-shoot problem from this post-contract renegotiation is that either the seller or buyer gets angry and the whole deal falls through. This leaves the seller having to start marketing their home all over again.
An Added Problem
Most states demand that the seller completes a “Seller Disclosure” statement to help potential buyers understand enough about the home before they make an offer. If a previous contract fell through because of an argument over repairs following an inspection, the seller must now update the Seller Disclosure to state that the previous inspection uncovered safety or functional problems that have not been repaired. This would probably lead to the listing price for the home being lowered, or the seller paying for the repairs before the house goes back on the market.
All this takes time and can result in the seller having to rethink their plans for after they sold their home because the home is not now sold.
What About the Inspection?
Most sellers assume they must allow the buyer to have inspections done regardless of the type of contract, and that the buyer will show good faith throughout the process. Many do, but some use the inspections as a way to renegotiate the contract price, as was mentioned above.
Inspectors are there to check safety and functionality. Is everything safe? The plumbing, the electrics, hot water tank, the air conditioning/furnace, the garage door, structural issues, etc. Is everything functioning to industry standards? The roof, doors, windows, all appliances, electrics, hot water tank, air conditioning/furnace, etc.
A comprehensive inspection can take a couple of hours. Many buyers attend the inspections so they can talk with the inspector. The inspector works for the buyer, so may err on the side of pleasing the buyer if something is marginal, for example.
The wood destroying organism (WDO) inspection is also called the termite inspection. Not having termite infestation does not mean the money set aside is safe. There may be old termite damage, or dry rot or wet rot damage. This must be corrected per the contract.
If a property is older, someone may have used lead-based paint which, over the years, has been painted over. A buyer may choose to have a lead paint inspection. This can cause untold hassles.
Sellers should check to see if inspectors must be licensed to inspect in their state or county or if the buyer can bring in, let us say, a relative who is also a contractor, or a contractor-friend of someone the buyer knows to do the inspections. Friends and relatives of the buyer are never on the seller’s side.
A Better Way
Selling a home can be a hassle, can cause sleepless nights, and, of course, the sale is not over until it’s over. Contracts exist to protect both the seller and the buyer, but different contracts, or specific clauses within a contract, may appear to favor the buyer.
Most sellers want to sell their property quickly, easily, for the right amount of money, and without all the post-contract hassles that most people never think about until those hassles appear. And that is where we come in.
Sellers can avoid all of those hassles by contacting Seller’s Advantage online or calling us at 1-800-208-3243 to get a no-cost, no-obligation quote on your home. We buy homes for cash online in true AS-IS condition, without the hassles of a regular “As is” contract and can give you a cash offer in as little as 24 hours.