Removing Contingency... question regarding repairs

NEW -> Contingent Buyer Assistance Program
Do you know how hard it is for the seller to get their hands on a buyer's deposit?? Both parties have to sign to release the deposit to the seller. If they don't agree who it goes to then it sits in escrow for a long time. You can look up the <a href="http://homebuying.about.com/od/buyingahome/qt/EarnestMoney.htm">info </a>online. Not that having your funds tied up in escrow would be ideal either, but just sayin'. Hope this helps.
 
[quote author="Meatball" date=1222304817]Yes I have a realtor who helps me but I don?t have 100% of trust in her as she will be tempted to talk me into accepting the deal. Actually she is already doing so by saying that we need to close escrow in 30 days.</blockquote>


That's not good that you don't trust her. Sounds like she's trying to make sure you don't walk away by telling you that you "need to close escrow in 30 days." Maybe she's afraid she won't score a commission from you. Desperate times lead to desperate realtards.
 
Dear Meatball, just check your docs such as Real Estate Purchase Agreement and Joint Escrow Instructions, including any amendments to them. You are looking for thing called "Contingency," such as you getting financing, your time for inspection of the property and so on. It is different for everyone, but my contract contained contingency that I have 2 weeks to investigate the property and after that, I can't walk away without losing my earnest money deposit.

So, my interpretation of your situation: if there is still time for your investigating contingency, and you set the deadline for seller's repairs within that deadline, you should be ok, AS LONG AS you insist on a provision in your request for repairs that they are done to your satisfaction and subject to your approval.

Just 2 cents of common sense: no seller will repair it using high quality people and materials, they will use the cheapest contractor who will do a lousy job. So, if you are set on that property, demand credit instead of repairs based on the quotes you get from good contractors on that kind of work.

Overall, you haven't even bought this house and it has already causing you such a headache-just look for something better, walk away until it is too late. And if the termite inspection determined that there is some damage, there is no telling whether they discovered all of the damage. BTW, your realtor has his/her best interest in mind, getting their commission, which means they will try to downplay the extent of the problems with that property, so I would not trust his/her opinion on this whole situation.
 
Meatballs,



I was just re-reading this thread and got to wondering... why the talk of backing out due to unsatisfactory work when the work hasn't even been done (or started) yet? I'm getting the sense that you may have cold feet for other reasons. Is it possible you are having a smidge of regret for buying now as values are declining? It almost sounds like you are looking for reasons to walk. One thing that I think is important is for the buyer to be realistic about what it means to be a homeowner. When you own a home you are (especially in today's market) married to that house for better or for worse. As a homeowner you will often find surprises and maintenance that is costly... it comes with the territory especially on an older home. This period in escrow may be a good test for you to see if you are dedicated to this home. If you are not dedicated to it then there is no sense in going through with it. It is much like dating (house-shopping), engagement (escrow), and finally... marriage (here are your keys!) In my experience when it's the right one, you know it.
 
Thank you for all your comments and feedbacks and I really need them. Just to provide some backgrounds and clarify. We don?t actually intend to walk away although I am not feeling too comfortable about the financial meltdown happening now in our economy. I know that the price is probably going to drop further and now it?s not the best time to buy. But for us houses are becoming affordable and we have kids that need their space. We are planning to stay in this house for at least 10 years therefore we are not overly concerned about the short-term trend, although someone can always argue there?s also a chance that the housing market will enter a multi-year recession.



All I care is the quality and safety of this house that I originally love very much. Finding out the problems from the inspection report are surprises that I didn?t expect therefore I am nervous that the seller is not going to fix them and we are stuck with the house. As long as the seller is willing to fix all the problems that I concerned, I will not regret to make the purchase. It?s just my things to find out all the options and scenarios that we have so that we can make good judgments. Your inputs have made me very informed and I am not as anxious now. Thank you, blackacre-seeker, for your idea about asking for credit instead of waiting for them to hire contractor that only does cheap and lousy jobs. I hope they can agree to this.





I will report the updates of the negotiation between us and the Seller so that anyone have the similar situation can benefit somehow from my experience, just like I have benefited great deal from your kindly feedbacks.
 
Meatballs



"The reason the termite report is required is to protect the lender?s interests, as they are the primary purchaser of the home in most cases. The lender will not lend on a home that does not have termite clearance. ?Clearance? is given by the pest control/remediation company, and indicates that the pest control company, in their professional opinion, believes the home to be structurally sound in regards to the wood-destroying pests.



Until repairs are made, clearance is not given. If something goes awry after the fact, the company that made the repairs could/would be held liable for damages. "



I think IR did a great job of explaining this point and maybe you missed it. The lender usually will not fund a loan without a "Termite Clearence" from a licensed firm.



I don't think a credit will work in this instance. You may want to do your own inspection in addition to the seller's inspection during the contingency period and compare the two reports. Then negotiate the repairs be made using your chosen termite company. The seller may or may not agree. Be sure to accomplish all of this and have it in writing prior to expiration of contingency period. boilerplate on contract for that is 17 days from acceptance unless altered prior to acceptance.



Good luck!
 
Thanks xsocal land merchant for reminding me of IR2?s point and I do understand. We will actually let the seller take care of the termite clearance and are trying to negotiate some credit back for repairs. I prefer taking credit not only because it would make the transaction processed quicker but also by having the ownership of the repair we can make sure that the contractor is doing a good job. We?ve sent out the repair request and are waiting for the seller?s response.

My impression is that this is a reasonable seller and he is willing to work with us (because he wants to sell the house!).

Therefore I am having my finger crossed in the hope that we can get the repair done appropriately.



With what is happening last night and today in the Capital Hills and Wall Street, I admit that it?s getting even more stressful to make a purchase at this time. If I don?t like this house that much, I?ll definitely run. Therefore I am also prepared to walk away if the negotiation doesn?t go to the direction that we like. We?ll see!
 
Dear All,



I?d like to thank you again for your generous suggestions on my question about removing contingency. We actually went ahead and removed all contingencies and let the seller do the repairs. But it turns out that they didn?t do a proper job and that was actually my fear comes true. My inspector said now the structure of the building is in danger. At this point I am really not enthusiastic at all about buying this property and seriously thinking about backing out from the deal. Now I regret I didn?t back it out before removing contingencies. I?d like to ask again the wisdom and knowledge of this board to give me some insights and strategies on how I can back out without losing my earnest money? Should I make it clear now that I am not interested at all as there is serious structural problem that they could not fix? Or should I keep bugging them and delay the payment and let them give up the transaction first? What is the better strategy?
 
[quote author="Meatball" date=1224048725]Dear All,



I?d like to thank you again for your generous suggestions on my question about removing contingency. We actually went ahead and removed all contingencies and let the seller do the repairs. But it turns out that they didn?t do a proper job and that was actually my fear comes true. My inspector said now the structure of the building is in danger. At this point I am really not enthusiastic at all about buying this property and seriously thinking about backing out from the deal. Now I regret I didn?t back it out before removing contingencies. I?d like to ask again the wisdom and knowledge of this board to give me some insights and strategies on how I can back out without losing my earnest money? Should I make it clear now that I am not interested at all as there is serious structural problem that they could not fix? Or should I keep bugging them and delay the payment and let them give up the transaction first? What is the better strategy?</blockquote>


Meatball,



Thank you for the update. I had been wondering how it was going. Are you willing to consider letting them make additional repairs or corrections so that the job is done to your liking? If it was me, I'd be asking my realtor these questions and going over all my options with him/her because that is what you are paying them for - to represent you. I think if you all agreed that they were responsible for the repairs that they would have to follow through so that it does indeed pass inspection. (My experience on the selling end was such that the inspector stopped by to make sure the repairs were made... if they had not been it was my job to make sure they were completed correctly or else come up with an alternate arrangement.) I would say put the ball in their court. Have them fix it correctly. Let it be up to them whether they want to proceed or not, and accept responsibility on their end for not following through. Just my 2 cents. I am sure there will be some better answers coming shortly.
 
Meatball



Can you explain how the repairs allowed the home to have structual problems and if so what the licensed bonded termite company says about the repairs since they have to give a clearence that they stand behind.



Try to explain the problems more clearly and maybe put the wording from the inspector here for us to review.



When in the building bussiness one of our sayings was: "sometimes the best deal is the one you don't do".



The suggesstion of having your realtor get to the bottom of this is good. He/she is somewhat on the hook and should be deeply involved.
 
Sorry my work has been crazy these two days thus I didn?t have time to write. Anyway the repairs were aiming to fix the structural problem of the house but they failed to do it properly. I guess the contractor that they hired is not qualified to do this kind of job. We are now waiting them to provide the engineering drawing so that we have some kind of documentation to start another run of inspection. So far they were not able to provide any paperwork. We thus didn?t close the escrow on time and I?ve made it very clear that unless they can rectify the mistake, we will not complete the transaction and I?ll fight for each penny of my deposit.



Thank you for your feedbacks and concerns and I?ll try to find some more time to provide details if I have break this afternoon.

BTW, my agent is again not helping us and even tries to persuade us not to take another run of inspection. I really hope I can fire her at this point. Anybody knows how to fire a buyer?s agent when you are not satisfied with their service?
 
probably really hard to fire her at this point, but maybe IR2 can comment.



I would guess that you would have to file a complaint with her broker and CAR, and even then will still have to pay her if you buy the house.



Of course, if it falls through, then all bets are off, as i understand it, unless you signed a weird contract, and you can go find yourself a better real estate salesman (like IR2)
 
[quote author="Meatball" date=1224211304]Sorry my work has been crazy these two days thus I didn?t have time to write. Anyway the repairs were aiming to fix the structural problem of the house but they failed to do it properly. I guess the contractor that they hired is not qualified to do this kind of job. We are now waiting them to provide the engineering drawing so that we have some kind of documentation to start another run of inspection. So far they were not able to provide any paperwork. We thus didn?t close the escrow on time and I?ve made it very clear that unless they can rectify the mistake, we will not complete the transaction and I?ll fight for each penny of my deposit.



Thank you for your feedbacks and concerns and I?ll try to find some more time to provide details if I have break this afternoon.

BTW, my agent is again not helping us and even tries to persuade us not to take another run of inspection. I really hope I can fire her at this point. Anybody knows how to fire a buyer?s agent when you are not satisfied with their service?</blockquote>


Sorry to hear your news Meatball.

Socal (actually both Socals) were right to make sure your broker is taking care of it. Whether or not you choose to close the transaction, the broker is now due payment as they technically have a non-contingent agreement that was agreed upon by both buyer and seller. (You did actively sign to remove ALL contingencies, and VP aka "final walk-through" is not a contingency of the transaction.)



I have to make it clear that I can't really give you any advice on your situation, as it could be construed as interfering with another broker's transaction and put <strong>my </strong>license at risk.

.

.

But hypothetically, if I were in say, a similar situation, I'd take a close look at my RPA agreement, page 1 of my BIA, my BA, and my SBSA, all of which <strong>in bold print</strong> advise me to have inspections until I am satisfied. I'd know that if my agent was not acting in my best interests and telling me <u>not</u> to get inspections, that I'd have pretty solid grounds for legal action against the agent and broker, depending upon what was defined on page 5 of the RPA.



I am just speculating on my own and thank you for understanding that I couldn't possibly tell you what you should do. Wish I could be of more help.
 
Meatball



IR is very correct in not being able to interfere with the transaction and also cannot provide legal advice. The hypothehectical does sound like solid information.



IR also has a good point that you may possibly owe a commission.



At this point I would probably involve a good real estate attorney to work on protecting your deposit and having the broker (he is the owner of the commission) release you from any commission due.



The added burden of this bad transaction along with a heavy work schedule would not be pleasant.



Good luck and let us know the outcome.
 
Thank you IR2 for your kindly advice and the reminder to go back and read those contracts for my better protection. I appreciated that you step in my shoes and think about what actions that I can take. Actually it never occurred to me that we probably still owe my agent commissions even if the transaction didn?t go through. I did contact my lawyer and we talked about how to act if the seller doesn?t agree to fully refund my deposit. He thinks I have very good chance to have the money back as the house basically has material structural defect and the seller?s repairs is not to the safety standards. Allow me not being able to provide many details at this point as things are still evolving now, but I?ll definitely keep you posted after we have some kind of conclusion. Also appreciate Socal 78, xsocal land merchant and FreedomCM?s concerns about my case. I truly feel the warmth and helps this blog has to provide.



If I had the choice to undo the decision, I would very likely back out from the deal knowing that there's structual problem or ask the seller to significantly reduce the price so that I can hire quality contractor to fix the problem correctly. Now my only choice unfortunately is just to lay the ground work for getting the refund of my deposit. But I am glad that at least we didn?t close the escrow and regret after most of my savings as the down payments are gone and we are obliged to pay the considerable mortgage payment every month. Probably the silver lining is that we still have the chance to buy a better house after the further decline of housing price. That would save us more money even factoring in the possible loss of the deposit in the worst case scenario. Until then I may also have the privilege to have IR2 as my agent if he is not opposed to it. :)
 
Just like to bring a closure to my little story here and thank the friends on this board again for the attention and advices.

We actually closed the escrow before the deadline on the lock-in mortgage rate expired because the seller was very cooperative and went back to fix the structural problem according to structure engineer?s drawing and city codes. My lawyer told me that if the seller complies there?s no chance that we can walk away without losing the deposit. But I am happy that at the end everything worked out and we have a bigger house for our kids. Although I foresee that the price will probably keep falling further but this is the choice that we need to make for my growing family. Renting a house and wait for a better time is not an option for my husband because he is a guy that buys the house that he absolutely loves and stays there until he is too old to maintain it. He just doesn?t like to move. The price that we bought is already close to rental parity now so we don?t feel like waiting a few years more and waste the tax advantage of paying mortgage instead of rent. Also there?s almost no inventory at this point in that special area and neighborhood that we love. So we end up buying the house still and didn?t walk away although we almost had the opportunity of second chance.
 
Good luck in your new home... people have various reasons to buy and you sound like you have enough of them regardless of what the future may or may not hold.



Just some questions:



Did you find it hard to get financing? Can we ask what type of terms you did? Like 20% down, fixed, etc?
 
Hiya, Meatball.



Thanks for the update... and congratulations on your home-purchase. I think I speak for all of us when I say that you are quite welcome for the attention to your situation... and that, should you feel like repaying us, we would be interested in knowing more details about the house. You don't have to give any identifying information... but I am curious to know what the <em>price per square foot</em> is that you closed at... if there were any concessions given towards closing costs... and the approximate square footage or price-point of the home (or a range thereof).



I hope you have enjoyed talking with everyone here and hope to see you again soon.



Cheers,

SoCal78
 
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