Tomorrow will be another busy day. I’m going over at 8am to finish fixing some small issues, paint a couple of things, install some weather strip on a door, etc. I also have to go through the whole place and make sure everything is spotless because we have showings.
Then at 11:30am the original inspector comes through to check the fixes although I’m not sure what document he is going to be working off. The Buyers submitted their formal Request for Repairs this morning but they included an open ended statement on the foundation crack epoxy repair item. “Pending receipt of report from Structural Engineer for further items”. I informally returned my agreement to most items, my exception to some of the items and specifically stated that I cannot formally reply or sign the doc when there is still an open ended item on the request. So, at this point we don’t have a final list of repairs that this guy is supposed to look at. I suppose he can look at all the minor stuff.
At 12:30 we have first set of buyers and 1pm we have second set of buyers.
I’ll report back as all these events unfold
And, the XYZ foundation repair company has confirmed that they cannot schedule repair work for at least 2 weeks. So, this repair has to be done outside of escrow somehow because I am not delaying the close of escrow for the repair to be completed.
Yes, having backup offers is always a position of strength and will have the Chicago folks move faster so they don’t make the deal collapse. Good luck! You deserve for things to go in the right direction and to have a speedy, uneventful close ON TIME!
I’m letting my agent handle the XYZ foundation repair since she is paying for it. She feels that the repair should be handled outside of the official escrow. If we issue a ‘credit’ of monies inside of escrow, that will require an amendment and will show up on the Buyer’s lender HUD (closing estimate sheet) and it can sometimes throw a wrinkle into the loan process because the bank will review this and then want to know what the credit is for, etc.
When purchasing or selling a house the whole Request for Repairs process is just part of the purchase agreement between buyer and seller. These issues are handled between the agents, not the escrow office. When a Seller issues a credit or changes the purchase price, that has to go through escrow with amendments and updates to the bank. Most of the time it isn’t a big deal, but whenever anyone sees the word ‘foundation’ everyone gets all freaked out.
Inspection of Repairs
The original inspector showed up an hour early and I actually had not finished putting the weather stripping in the door. So, I quickly got that done and went down to his car to invite him in. He chose to wait for my agent to show up. I left because it wasn’t appropriate for me to be present.
Everything went fine, he didn’t even go under the house again because the foundation crack issue is being handled by the other companies (inspectors). After a long explanation from my agent (I had written several paragraphs about how the insulation was installed properly) and review of the vertical insulation issue he realized “Oh, this is just here for sound proofing. OK, no need to repair” Geez, what an ordeal. So, we’ve passed that hurdle.
I still do not know if the Buyers have received the Structural Engineer Report and are going to add anything to their open ended line item. They haven’t been available by phone today.
First set of buyers came through while I was still on my hands and knees trying to get the place cleaned up. I had to stay during their showing because I had several things I needed to finish (like clean the kitchen sink!). They stayed for an entire hour looking at every detail. Retired gay couple from Long Island NY who are going to retire in San Diego. They are renting a place and doing their home search. I could tell that one guy loved the place and the other one was not very interested - don’t think he likes the stairs, he was not very physically fit looking. Lots of questions about the property boundaries because it is confusing in the back of the house.
Second buyer showed up without her agent right on time.
I don’t think my agent is going to ask for written offers just yet. She is telling the buyer’s agents that the Buyers have missed their appraisal contingency removal deadline and we are also worried about full loan approval because they are self employed. We will get back to them on Monday with an update on how the current escrow is going. If our appraisal comes in low and the Buyers back out, or balk at paying more down payment, or start asking for concessions then we will be able to say we have several buyers who are waiting in the wings.
We actually have two more showings this afternoon that I was not aware of. These buyers contacted my agent from her real estate office website which still shows the property, but has not been updated with ‘pending’ yet because the agency database isn’t connected to the MLS and does not get updated automatically. So, it still shows property available.
The last showing was through my agent’s website and they are not represented by a buying agent yet. They were a young family from Arizona that are looking for a summer vacation home (we have a huge influx of ‘Zonies’ that swarm San Diego in the summer). The wife absolutely loved every single detail in the house.
They are going to be making an offer tomorrow morning. They want the house, even if it is already tied up in escrow!
Hope I don’t kick myself that I didn’t hold out for better offers, but the contract right now is very close to where I want to be.
The only way a Seller can cancel the contract (well, normally) is if the Buyers do not meet their deadlines stated in the contract. As we stand now, the Buyers have to release their Appraisal Contingency and their Physical Contingency by Monday midnight. They have to formally release their Loan Approval contingency by Wednesday. We officially signed an Extension of Time Addendum giving them until Monday (which will expire Monday night). I don’t believe they will meet their Loan Approval by Wednesday because the bank doesn’t even have an appraisal yet to push the loan package through underwriting.
Buyers can cancel a contract very easily. They can cancel due to ‘physical inspection’, they can cancel due to ‘appraisal’ and they can cancel if they don’t get their loan or they don’t ‘like’ their loan. They have certain amount of days in contract to ‘release’ these contingencies. Honestly, they can make up any reason they want during those contingency periods and get their deposit back. Even after these dates elapse, Buyers usually will not sign a ‘cancellation’ of escrow that allows the Seller to keep the deposit. Due to fine print in Escrow instructions, Escrow companies cover their butts very carefully that they will not release deposits without both parties signing a document because they have been in the middle of some real doozy transactions.
As a Seller, I always cover myself and issue a ‘Notice to Perform’ on the day contingency release is due (if I feel it is not coming in a timely manner). That gives them 24 hours notice to release contingency. I personally have never been put in a situation where I have to follow through with cancelling after the Notice to Perform.
I have been in situations where Buyers are taking way too much time to release their Physical Inspection contingency. They hem and haw a lot. But the Notice to Perform usually gets their butts in gear.
If the Buyers come back with additional ‘requests for repair’ or a credit, the Seller can refuse. The Seller has every right to refuse any requests made by the Buyer. I am now in a position where I can ‘refuse’ knowing that there is heavy interest in the property. And, they do not really have any time on their clock to make an argument at this point.
If the appraisal comes in low, the Buyers may come back and ask for a price reduction or a ‘credit’ to cover the additional down payment they have to make. I do not have to agree to it, they are just ‘requesting’.
Changes made to the current contract in escrow are considered ‘addendums’ to the original contract and do not change the underlying terms of the contract, such as closing date or something.
We had to issue 5 Notices to Perform when selling MIL’s house. Very annoying, though it turned out that a good deal of the problem was having Orthodox Jewish buyers working with their Orthodox Jewish real estate agent on a transaction that went through escrow in September, the month with a lot of Jewish holy days. (It also didn’t help that the buyer’s agent had very weak written English skills, and not much attention to detail. I think our name was misspelled three or four different ways on different docs.)
Coralbrook: do you have to sign the “freeways are noisy,” disclosure? I thought that was one of the most ridiculous documents ever.
H and I have often looked at properties that needed significant work, and have several times walked away from houses where budget-busting repairs were discovered during inspection and the seller was not willing to negotiate.