Those are the exact words we heard from a seller recently.
Why? Because after all of the back and forth negotiations were finished and a price and terms were agreed on, the buyer’s inspection report came back with several problems that the seller did not know existed. In order to keep the purchasers from cancelling the contract and walking away from the house, the seller spent over $2,000 having things fixed. Since he had already agreed to a darn good deal for the buyers, he felt a little short changed.
What do Louisiana purchase agreements say about inspections?
The first thing that our contracts say about inspections is that both parties are agreeing that the price was negotiated based on the apparent condition of the property. This is an important fact, because if there are needed repairs that were not readily apparent to a buyer, this often becomes an issue for them (or their lender or insurance company).
What if you are selling your home “AS IS”?
Most sellers in Louisiana list their homes as being sold “As Is With a Waiver of Redhibition”. However, this clause only becomes effective at the act of sale and does not preclude the buyer from doing any and all inspections, as shown in the purchase agreement below.
Did you catch that Option 1? If the buyer is not satisfied with the condition of the property, they can elect to terminate the agreement to purchase (and get their deposit back as well) without any questions. In our experience, however, unless there are an extreme number of hidden defects, most buyers will provide a list of items they are not satisfied with and request repairs be made by the seller.
What happens if the repairs are expensive?
Again, it becomes a renegotiation of your contract. With so many homes for sale, buyers are typically not willing to take on someone else’s deferred maintenance on big tickets items such as roofs, plumbing and air and heating systems. Buyers may request that expensive repairs be made at the seller’s expense or they may ask for a lower purchase price to offset the need to make repairs after they move in.
It’s important to know, though, that many FHA and VA lenders are looking closely at the condition of properties they are taking as collateral and they may not be willing to extend a loan on a home that is in need of major repairs. Since the majority of home sales this year have been to FHA or VA buyers, taking care of repairs may be the only way to avoid either reducing the sales price or waiting longer on the market for the more elusive conventional or cash buyers.
Inspections results must be disclosed
If you have your home inspected (whether it’s done before listing or by a potential buyer), you will need to update your disclosures to provide any new information to the next prospective buyer.
We have long been proponents of having a house inspected before it goes on the market, but find that most home owners don’t want to spend the $300-$400 up front. If our seller’s home had been inspected first, there would have been no expensive surprises that ended up reducing the money that he was going to leave the closing table with.
Need more information on home inspections? The Louisiana State Board of Home Inspectors has a great frequently asked questions page.