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Posted

We are selling a home and we got a contract on the place. The buyer had an inspection done and, as expected, found a bunch of shit. This is an old house. We made a shitload of disclosures of everything we knew about and we knew a lot because we do all of the work on the house ourselves.  Anyway, one of the things they found, that we did not know about, was active drywood termites. The buyer wants us to discount the price $60K and is telling us that basically the house is about to fall down from termite damage. It's all horseshit, of course. Some of the termite damage has been there for decades. There may be some active termites now, but they move slowly, from what I understand.  We're going back and forth now about what to do. They have said we have to basically replace the entire subfloor and all of the damaged frame members in the house. You might as well tear the motherfucker down if you are going to do that.

I hate this game. I've played it before.  You negotiate and then the buyer uses the inspection to fuck your ass. I've talked to some real estate people I know about how to avoid this and their advice was to state "as is" or "no inspection" or "no option period." What I want is to disclose ALL of the shit wrong - and I will list it all - and negotiate one time. I don't want to run off prospective buyers, but I also don't want to play this fucking game. Any advice?

Posted

Can your agent tell their agent that you’re fine if they drop out? I don’t know if you had a formal backup offer, but your agent can call people who made offers that you didn’t accept, and ask if they still want it?

Posted
18 hours ago, Ojo Rojo said:

We are selling a home and we got a contract on the place. The buyer had an inspection done and, as expected, found a bunch of shit. This is an old house. We made a shitload of disclosures of everything we knew about and we knew a lot because we do all of the work on the house ourselves.  Anyway, one of the things they found, that we did not know about, was active drywood termites. The buyer wants us to discount the price $60K and is telling us that basically the house is about to fall down from termite damage. It's all horseshit, of course. Some of the termite damage has been there for decades. There may be some active termites now, but they move slowly, from what I understand.  We're going back and forth now about what to do. They have said we have to basically replace the entire subfloor and all of the damaged frame members in the house. You might as well tear the motherfucker down if you are going to do that.

I hate this game. I've played it before.  You negotiate and then the buyer uses the inspection to fuck your ass. I've talked to some real estate people I know about how to avoid this and their advice was to state "as is" or "no inspection" or "no option period." What I want is to disclose ALL of the shit wrong - and I will list it all - and negotiate one time. I don't want to run off prospective buyers, but I also don't want to play this fucking game. Any advice?

If you used the standard TREC 1-4 family residential resale contract, the buyer probably already agreed to accept the property as is. Check Sec. 7.D. of the contract.

Posted
2 hours ago, wildcat09 said:

If you used the standard TREC 1-4 family residential resale contract, the buyer probably already agreed to accept the property as is. Check Sec. 7.D. of the contract.

That's not correct.  If you read the whole thing, that clause does not preclude inspections or renegotiating after the inspections.  It really only means that there are no named repairs in the beginning.

 

 

Posted

We didn't have any other backup offers at the time.  It is the standard TREC contract. The buyer had the ability to renegotiate after the inspection. We couldn't reach an agreement, today was the last day of the option period and contract was terminated. They just wanted too much and it's still pretty early. Property has been listed less than 30 days and there's very little inventory, especially in our price range. Who knows what's going to happen, but we just felt like we could do better. 

Still trying to decide whether to change anything about the listing now.  No option period? No inspection? Huge option fee? Do you say that in the listing or when they make an offer and incorporate it into the contract?

Posted
5 minutes ago, wildcat09 said:

It doesn't preclude attempts to renegotiate, but a seller isn't obligated to do so.

This is correct, but that's not what you said.  You said that the buyer agreed to buy as is.  The seller is never obligated to negotiate anything after the original contract.

Posted
1 hour ago, Ojo Rojo said:

We didn't have any other backup offers at the time.  It is the standard TREC contract. The buyer had the ability to renegotiate after the inspection. We couldn't reach an agreement, today was the last day of the option period and contract was terminated. They just wanted too much and it's still pretty early. Property has been listed less than 30 days and there's very little inventory, especially in our price range. Who knows what's going to happen, but we just felt like we could do better. 

Still trying to decide whether to change anything about the listing now.  No option period? No inspection? Huge option fee? Do you say that in the listing or when they make an offer and incorporate it into the contract?

As I understand it, you need to disclose it. So I personally would think that you should get a termite guy out and address the problem ASAP and then disclose as a minor fixed problem. There are lots of strategies though and it all depends on what you want to deal with and the resell numbers. For a house that is a tear down with value mainly in the land, selling "as is" may be the way to go. If remediation keeps you from moving on to your next home, maybe you should just disclose it. If it takes too long to remediate and you are worried about a housing market crash then maybe consider taking a hit now in resell value. Lots of variables for you to consider.

Posted
Just now, Bevo said:

As I understand it, you need to disclose it. So I personally would think that you should get a termite guy out and address the problem ASAP and then disclose as a minor fixed problem. There are lots of strategies though and it all depends on what you want to deal with and the resell numbers. For a house that is a tear down with value mainly in the land, selling "as is" may be the way to go. If remediation keeps you from moving on to your next home, maybe you should just disclose it. If it takes too long to remediate and you are worried about a housing market crash then maybe consider taking a hit now in resell value. Lots of variables for you to consider.

This is a second home. We are probably going to do a tenting treatment and we will have to disclose it no matter what.  I'm most curious about whether to do "no option period" or what.  This is an old house and we've priced it accordingly. I just fucking hate the game with getting the disclosure and then having it massively used against you. It would be one thing if everything on the inspection is a legitimate concern, but it's not.

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Posted
Just now, Dbeasy said:

You are getting horrifically bad real estate agent advice. You must disclose it on the sellers disclosure. 

We didn't know about the active termites before we did the disclosure statement.  We know we have to disclose it now that we know about it.  Our agent has told us too.

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Posted
3 minutes ago, Ojo Rojo said:

This is a second home. We are probably going to do a tenting treatment and we will have to disclose it no matter what.  I'm most curious about whether to do "no option period" or what.  This is an old house and we've priced it accordingly. I just fucking hate the game with getting the disclosure and then having it massively used against you. It would be one thing if everything on the inspection is a legitimate concern, but it's not.

I know that you know that you don't have to negotiate. If you addressed the termite problem, then it is pretty difficult for them to negotiate. Currently, it is still a sellers market in most places. Treat it as such. Get backups. Let your real estate agent know that you aren't desperate to sell and have priced the house fairly.

Posted
On 6/6/2022 at 5:26 PM, Ojo Rojo said:

We are selling a home and we got a contract on the place. The buyer had an inspection done and, as expected, found a bunch of shit. This is an old house. We made a shitload of disclosures of everything we knew about and we knew a lot because we do all of the work on the house ourselves.  Anyway, one of the things they found, that we did not know about, was active drywood termites. The buyer wants us to discount the price $60K and is telling us that basically the house is about to fall down from termite damage. It's all horseshit, of course. Some of the termite damage has been there for decades. There may be some active termites now, but they move slowly, from what I understand.  We're going back and forth now about what to do. They have said we have to basically replace the entire subfloor and all of the damaged frame members in the house. You might as well tear the motherfucker down if you are going to do that.

I hate this game. I've played it before.  You negotiate and then the buyer uses the inspection to fuck your ass. I've talked to some real estate people I know about how to avoid this and their advice was to state "as is" or "no inspection" or "no option period." What I want is to disclose ALL of the shit wrong - and I will list it all - and negotiate one time. I don't want to run off prospective buyers, but I also don't want to play this fucking game. Any advice?

See below

3 hours ago, Bevo said:

As I understand it, you need to disclose it. So I personally would think that you should get a termite guy out and address the problem ASAP and then disclose as a minor fixed problem. There are lots of strategies though and it all depends on what you want to deal with and the resell numbers. For a house that is a tear down with value mainly in the land, selling "as is" may be the way to go. If remediation keeps you from moving on to your next home, maybe you should just disclose it. If it takes too long to remediate and you are worried about a housing market crash then maybe consider taking a hit now in resell value. Lots of variables for you to consider.

 

3 hours ago, Dbeasy said:

You are getting horrifically bad real estate agent advice. You must disclose it on the sellers disclosure. 

Yep.

 

So, here's the important part:

"The buyer had an inspection done and, as expected, found a bunch of shit."

That's good for you.  Inspections are good for the seller.  Seller's hate inspections, but inspections are good for you, because now you can't be sued for failure to disclose anything that the inspection revealed.   I have no idea what the local custom is out there, but here, I'd show that "bad" inspection report to any other buyers.  DIsclose, disclose, disclose. 

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Posted
26 minutes ago, Gil Bang said:

See below

 

Yep.

 

So, here's the important part:

"The buyer had an inspection done and, as expected, found a bunch of shit."

That's good for you.  Inspections are good for the seller.  Seller's hate inspections, but inspections are good for you, because now you can't be sued for failure to disclose anything that the inspection revealed.   I have no idea what the local custom is out there, but here, I'd show that "bad" inspection report to any other buyers.  DIsclose, disclose, disclose. 

Yep, I should have been more clear. You have to disclose. But, you can either fix the problems or not fix the problems. And you then let potential buyers know whether the problems were fixed.

Posted
5 hours ago, Catpfish said:

That's not correct.  If you read the whole thing, that clause does not preclude inspections or renegotiating after the inspections.  It really only means that there are no named repairs in the beginning.

 

 

Well, if the buyer does not include an option period, or does not exercise the option, then the purchase is as is.

However, that does not fully preclude litigation over the property condition.

Posted
5 hours ago, Ojo Rojo said:

We didn't have any other backup offers at the time.  It is the standard TREC contract. The buyer had the ability to renegotiate after the inspection. We couldn't reach an agreement, today was the last day of the option period and contract was terminated. They just wanted too much and it's still pretty early. Property has been listed less than 30 days and there's very little inventory, especially in our price range. Who knows what's going to happen, but we just felt like we could do better. 

Still trying to decide whether to change anything about the listing now.  No option period? No inspection? Huge option fee? Do you say that in the listing or when they make an offer and incorporate it into the contract?

I wouldn't try to do any of that.

Now that you have updated the disclosure and once you have taken remedial action, it's out in the open for any offeror.  

You may wish to decline any future offers that include an option, though.

Posted

Just kill the termites and sell the fucking house it's not complicated. First buyers weren't serious about buying, doesn't mean other buyers won't be. 

Posted

An old house? Ain't nobody going to wave an inspection. You read the inspection, that now has to be disclosed, you were notified. The best thing to do, is not have the inspection report sent to you, but you are past that now. Fix the problem, take the loss, and put it back on the market. Lesson learned. Hopefully the land is valuable enough to absorb the cost of the loss of equity on the house. Sorry.

CHIEF

Posted
9 hours ago, CHIEF said:

An old house? Ain't nobody going to wave an inspection. You read the inspection, that now has to be disclosed, you were notified. The best thing to do, is not have the inspection report sent to you, but you are past that now. Fix the problem, take the loss, and put it back on the market. Lesson learned. Hopefully the land is valuable enough to absorb the cost of the loss of equity on the house. Sorry.

CHIEF

Our contract requires that all reports and investigations be shared with the seller.  

Posted
9 hours ago, CHIEF said:

An old house? Ain't nobody going to wave an inspection. You read the inspection, that now has to be disclosed, you were notified. The best thing to do, is not have the inspection report sent to you, but you are past that now. Fix the problem, take the loss, pussy, and put it back on the market. Lesson learned. Hopefully the land is valuable enough to absorb the cost of the loss of equity on the house. Sorry.

CHIEF

FIFY

Posted
11 minutes ago, Gil Bang said:

Our contract requires that all reports and investigations be shared with the seller.  

You are in California, correct?

CHIEF

Posted
26 minutes ago, Gil Bang said:

Our contract requires that all reports and investigations be shared with the seller.  

Texas common law requires that in addition to any contractual or statutory disclosure requirements.  Even if you get a report from an inspector citing some condition in the home that you think is bullshit (mold, termites, etc.), you have an obligation to disclose that to an ultimate buyer, and if you don't, you risk a lawsuit from that buyer somewhere down the road.

Posted
20 minutes ago, CHIEF said:

You are in California, correct?

CHIEF

Yeah, I'm in San Diego, but the contract is used statewide, and is from the CA Association of Realtors.

Posted (edited)

TREC doesn't require an inspection to be shared with the seller, since it was the buyer that purchased the inspection. They usually do if they plan on negotiating. However, if there are multiple expense items that need to be fixed, a buyer can just opt out of the contract during the option period, and not state a reason. Since the seller hasn't seen the report, he doesn't have to disclose things where he is unaware. It is up to the next inspector to find those items.

CHIEF

Edited by CHIEF
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Posted

I am a lawyer so I am very tuned in to the duty to disclose and all the bad shit that could happen if we don't.  We know that we now have to disclose everything that is on the inspection since we have seen it. We had already disclosed 90% of what was on the inspection anyway.  The only major thing we didn't disclose was active termites because we didn't know about them.

We're going to treat for termites because we really have no choice at this point. At least now, with the inspection done and everything out in the open on the front end, we won't have the two-step process where we negotiate a contract price and then negotiate again, where it can only go down, during the option period.  That is unless they get another inspection that turns up new shit.

Posted
4 minutes ago, Ojo Rojo said:

I am a lawyer so I am very tuned in to the duty to disclose and all the bad shit that could happen if we don't.  We know that we now have to disclose everything that is on the inspection since we have seen it. We had already disclosed 90% of what was on the inspection anyway.  The only major thing we didn't disclose was active termites because we didn't know about them.

We're going to treat for termites because we really have no choice at this point. At least now, with the inspection done and everything out in the open on the front end, we won't have the two-step process where we negotiate a contract price and then negotiate again, where it can only go down, during the option period.  That is unless they get another inspection that turns up new shit.

Are you negotiating a contract price?  Or just accepting an offer?

Posted
13 minutes ago, TwiceHorn said:

Are you negotiating a contract price?  Or just accepting an offer?

We listed at X. Potential buyer looks at it and makes us an offer of Y. We agree in the middle at Z. Then they get the inspection and go to Z minus $50K.

I could see it being just accepting an offer if they offered us our asking price.  Otherwise we will be negotiating a contract price.

Posted (edited)
3 minutes ago, Ojo Rojo said:

We listed at X. Potential buyer looks at it and makes us an offer of Y. We agree in the middle at Z. Then they get the inspection and go to Z minus $50K.

I could see it being just accepting an offer if they offered us our asking price.  Otherwise we will be negotiating a contract price.

Odd for this market.

Most sellers get at least a handful of offers and pick the best one, usually based on purchase price alone.  That's in Dallas, though.  Less urban markets may be different.

Edited by TwiceHorn
Posted

Yeah, this is in a small coastal town. It's supposed to be a hot market too. Very little inventory, can't get a builder for new construction and even if you could materials and labor is still super high. So you'd think it would be a hot seller's market.  So far that has not been our experience.  We've been listed about a month. We've had like 6 showings and one offer.

Posted
1 minute ago, Ojo Rojo said:

Yeah, this is in a small coastal town. It's supposed to be a hot market too. Very little inventory, can't get a builder for new construction and even if you could materials and labor is still super high. So you'd think it would be a hot seller's market.  So far that has not been our experience.  We've been listed about a month. We've had like 6 showings and one offer.

Man, here, at least until the last week or so, it's been list on Wednesday or Thursday, open house on Saturday or Sunday, offers by 5pm Sunday or Monday.  Pending.

Posted
2 minutes ago, Ojo Rojo said:

Yeah, this is in a small coastal town. It's supposed to be a hot market too. Very little inventory, can't get a builder for new construction and even if you could materials and labor is still super high. So you'd think it would be a hot seller's market.  So far that has not been our experience.  We've been listed about a month. We've had like 6 showings and one offer.

You aren't Bill are you?

Posted
1 hour ago, Ojo Rojo said:

I am a lawyer so I am very tuned in to the duty to disclose and all the bad shit that could happen if we don't.  We know that we now have to disclose everything that is on the inspection since we have seen it. We had already disclosed 90% of what was on the inspection anyway.  The only major thing we didn't disclose was active termites because we didn't know about them.

We're going to treat for termites because we really have no choice at this point. At least now, with the inspection done and everything out in the open on the front end, we won't have the two-step process where we negotiate a contract price and then negotiate again, where it can only go down, during the option period.  That is unless they get another inspection that turns up new shit.

Being in a small market might make a difference since there is an increased chance that the selling agent might know the inspector and their reputation and MIGHT not get a new inspection, but I would fully expect the process to be repeated with any subsequent offers.  The inspector will find something different from the previous inspection.    

Posted
7 hours ago, CHIEF said:

TREC doesn't require an inspection to be shared with the seller, since it was the buyer that purchased the inspection. They usually do if they plan on negotiating. However, if there are multiple expense items that need to be fixed, a buyer can just opt out of the contract during the option period, and not state a reason. Since the seller hasn't seen the report, he doesn't have to disclose things where he is unaware. It is up to the next inspector to find those items.

CHIEF

I had an agent really fuck me once on one of my listings.   The buyer's agent calls me and tells me that they will be sending over a cancellation because they checked the Sex Offender Registry and there are a lot of sex offenders in the neighborhood.   So, I consult with my broker and our lawyer, and yeah, I need to disclose to future buyers that a buyer cancelled because of the number of sex offenders nearby. 

Fortunately, I got an offer from  a buyer that loved the house, and, when I told the agent that they would receive the sex offender disclosure, she said "big fucking deal, pervs are everywhere".

 

Another time, I'm showing this couple...a couple of assholes with a half-dozen kids, and I showed them a ton of houses.  Even when they didn't like a house and had no interest in making an offer, they expected me to stand-on-my-head doing research on it.  So, I'm showing a house and the buyer, even though he didn't like the house, he goes over and asks a neighbor (who happened to be in his front yard) how the neighborhood is.  They guy response "well, I'm a sex offender, but everybody else is pretty good".  We all laugh.

We check.  Sure enough, the motherfucker is a perv. 

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Posted (edited)

I see this as a bit of tough luck for you, but the 2 huge issues for any homes are 1) mold, and 2) termites - in my book, when you're selling (or buying) any house, these two things must be looked for, period.  No one should neglect the Big 2, even if they've seen no evidence.  Those are deal killers the most.  But anyway,  now you have that identified and can fix and list it as such (if needed).  Usually when a buyer hires an inspector (perfectly legit) the idea is that you either trade $ value or pay for remedy as the seller (tacked on to the contract).

It wasn't bogus of these pseudo-buyers to hire an inspector after preliminary deal.  It was bogus of them to try to price the house beyond what the value of the repair might be (and indeed, the appropriate repair itself).  I don't know if ripping out half the beams is the solution, but if it's recommended, unfortunately you have to do it - or discount the house price to accommodate it.  But the good news is now you have that bit of info and the next buyers can't blindside you with that.

One other remedy you have is to hire your own inspector.  They'll work for you.  So if the buyer's guy recommends reconstructing half the house for something, but your guys says only a few nails are needed, you have negotiating power (i.e. you've got your own pro).  On old houses I would recommend this more.  If you think the termites are the biggest "ghost" now revealed, you might feel good it's all been found out.  If not, hire a guy and they'll help a lot when a buyer tries to lowball you.  In this market, even with your old house, I'd think you have some clout over this stuff and can demand a good/fair price.

Edited by phdhorn
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Posted

I went through this in 2016 on my rental.  Basically told the guy (first time buyer and his slap dick agent) that at that price it was as-is.  Of course they then came back with all kinds of repair asks.  I told them to pound sand for the most part and they ended up terminating before option period (and I ended up leasing it which worked out fantastic based on appreciation).  I just had it for sale or lease again, and signed a lease as I didn't get the sales price I wanted, but my plan was essentially to disclose issues I knew of in advance and then, if I couldn't get inspection waived, negotiate a much higher price for an option.   Essentially I was going to say if there is something I would absolutely need to fix for a tenant, I'll fix it, but otherwise it is what it is.  I wanted them pot committed where they would feel some pain if terminated.  None of this $300 or $400 for an option or whatever I did the first time.

Posted

I’m not sure if some this has already been mentioned, but you can also consider the following (kind of another flavor of what phdhorn already recommended):

—Purchase comprehensive inspection of home, as if you were a prospective buyer

—Include that report as up-front addendum to accompany your seller’s disclosure…for all the world to see

—Clearly state that any offer must be made with those inspection results already implied…and no additional price consideration or repairs will be made upon acceptance of offer…IOW, they can ask for whatever they want (or accept your anticipated repairs of X, Y, Z) up front, but never again from there onward without forfeiting earnest money.

—Buyer is free to purchase inspection of their own for additional due diligence, but alternative findings will not be taken into account for re-negotiation purposes…their only recourse exists within canceling outright via option period…otherwise deal must remain as-is from date of signing.

—Based on framework above, communicate up front that no offers will be accepted beyond “X # of day” option period or below “Y amount of $” option fee

—Set conditions above based on your urgency to sell and/or leverage to eventually void sales listing altogether and convert into a rental property

Posted
1 hour ago, Muny_Tex said:

I’m not sure if some this has already been mentioned, but you can also consider the following (kind of another flavor of what phdhorn already recommended):

—Purchase comprehensive inspection of home, as if you were a prospective buyer

—Include that report as up-front addendum to accompany your seller’s disclosure…for all the world to see

—Clearly state that any offer must be made with those inspection results already implied…and no additional price consideration or repairs will be made upon acceptance of offer…IOW, they can ask for whatever they want (or accept your anticipated repairs of X, Y, Z) up front, but never again from there onward without forfeiting earnest money.

—Buyer is free to purchase inspection of their own for additional due diligence, but alternative findings will not be taken into account for re-negotiation purposes…their only recourse exists within canceling outright via option period…otherwise deal must remain as-is from date of signing.

—Based on framework above, communicate up front that no offers will be accepted beyond “X # of day” option period or below “Y amount of $” option fee

—Set conditions above based on your urgency to sell and/or leverage to eventually void sales listing altogether and convert into a rental property

There's nothing wrong with this post.  Nothing. 

Posted
On 6/8/2022 at 2:47 PM, Ojo Rojo said:

We listed at X. Potential buyer looks at it and makes us an offer of Y. We agree in the middle at Z. Then they get the inspection and go to Z minus $50K.

I could see it being just accepting an offer if they offered us our asking price.  Otherwise we will be negotiating a contract price.

 

On 6/8/2022 at 2:53 PM, Ojo Rojo said:

Yeah, this is in a small coastal town. It's supposed to be a hot market too. Very little inventory, can't get a builder for new construction and even if you could materials and labor is still super high. So you'd think it would be a hot seller's market.  So far that has not been our experience.  We've been listed about a month. We've had like 6 showings and one offer.

yeah...we're waiting to close, and this is pretty much how it went for us. we were a bit surprised at how suddently things seemed to slow down ...but the right buyer did find us and i think this is the right home for them. the post-inspection concessions requested were reasonable and it was still above their initial offer by a good amount. they offered us some other concessions which made the offer worth it.

also, it's 110 degrees here and i'm ready to GTFO lol. 

On 6/8/2022 at 2:56 PM, TwiceHorn said:

Man, here, at least until the last week or so, it's been list on Wednesday or Thursday, open house on Saturday or Sunday, offers by 5pm Sunday or Monday.  Pending.

i'm in Allandale area and was surprised at the slow-down right when we listed (beginning of May), it felt pretty abrubt. prices are still high but it doesn't seem things are moving at break-neck speed anymore. 

 

now...i hope i didn't just jinx the shit out of our deal! haha

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