What further negotiations can take place after an offer is accepted?
- Once the purchase agreement between buyer and seller has been accepted, there are still items that can come up and require further negotiating. One of the most common is the home inspection - and unless a home is flawless-which few are-there will probably be some negotiations between the parties before the close of escrow.
The purpose of the home inspection is to find significant defects that would cause a buyer to not want to move forward with the transaction, or, at the very least, have the items repaired. Negotiating repairs after a home inspection should be kept to what is vital, and not previously known prior to writing an offer.
When negotiating home inspection items, we always recommend a credit at closing, or a price reduction, whenever possible. There is too much uncertainty and stress on seller to do repair work if it can be avoided. The buyer is likely to be particular about the quality of the work, and if not done to their satisfaction, could cause delays. For sellers, it is important to recognize problems that could be issues with anyone, and deal with them-which is why we always recommend pre-sale inspections, prior to listing a property.
- These days disclosure package are part of any offering. They have anywhere from 150 to more than 250 pages and include such items as inspections, permit records, leases, estoppels, seller questionnaires, warranties and bids for corrective work.
Buyers, and their agents, are asked to review the disclosures prior to submitting an offer so as to be able to make an informed, hopefully non-contingent offer.
However, once in escrow, changed circumstances may dictate renegotiation: further inspections called for in the pest report did not get done upfront and now reveal unexpected damage; a tenant finally tuns in his estoppel and claims protected status; the sewer lateral backs up; a tree comes down in a storm. This is not the time for the blame game but rather for reaching a prompt, equitable resolution. And this is where good agents shine.
- Contingencies can be included for inspections, finance, appraisal, or HOA documents, for example. This allows time to continue investigating for any deficiencies, the ability to continue the lender qualification, and protects them in the event that an appraisal is less than the purchase price.
Negotiations can occur if something new is discovered, or if a property does not appraise. Perhaps a credit or a revised price could be options.
In San Francisco, listing agents often have disclosure packages available during the marketing process, giving buyers the opportunity to review pre-inspections, invite their own inspector/architect, and for them and their agent to review pricing.
In cases where there are multiple offers, it is not uncommon for buyers to waive these contingencies when they feel confident with the pre-inspection process and confident with their ability to secure financing, even if it doesn’t appraise.