Negotiating Repairs in an Oklahoma Real Estate Sales Contract
What is complicated about negotiating the repair cap is that we agree on a limit that the Seller is obligated to spend on repairs BEFORE home inspections are conducted. Experienced agents will examine major elements such as heat and air systems, hot water heater, and look for signs of structural damage or wood rot.
If I see that the hot water heater in the garage has not been raised the required 18-inches, I’ll ask for that to be corrected in the “Additional Provisions,” portion of the contract so that expense is not included in the repair cap. If I know that the roof is twenty years old and two layers, I’ll include, “Seller to replace roof with shingle of Buyer’s choosing at a cost not to exceed $xxx.”
But as far as repair expenses, we take our best guess. You don’t want to ask for too much, because what is not spent is not refunded to the Buyer. If you ask for $1,000 in repairs and only $600 is required, the Seller keeps the unspent $400.
On the reverse, if you ask the Seller to be responsible for $1,000 in repairs and $2,000 is needed, we re-negotiate. Often the Seller and Buyer will split the excess amount. Sometimes the Buyer will choose only the items extremely important and make less important repairs after they close and take possession of the home. Regardless, this renegotiation is a pivotal point in the transaction and where many will fall flat if not negotiated with care and consideration.
Buyers don’t want to start new in a home with defects. Sellers have not been bothered at all by their home’s low water pressure, and they certainly had no clue that one corner of their home needed piering. Home inspectors are paid by the Buyer and do their best to call out what is considered dangerous, what should simply be observed over time and recommendations. It may not be a defect that a home has no guttering, but the potential for wood rot or termites will increase if guttering is not added in the near future – so that would be a recommendation by the home inspector.
Because these defects, observations and recommendations are not black and white, we all renegotiate. By now, the house has been off the market for ten days or so and everyone is scheduling movers and making plans to move forward. Make sure you have a good negotiator and licensed Realtor in your corner!
Contract photo compliments of Flickr Creative commons: http://www.flickr.com/photos/julishannon/2434691031/
Home inspection photo compliments of Flickr Creative commons: http://www.flickr.com/photos/48525508@N04/4459730027/