The Easy Way . . . and the Hard Way
The Buyer’s inspection revealed a material defect in the home that the Seller doesn’t dispute.
Both parties want to stay in the deal.
What are their options?
Option #1: the Seller fixes the problem, prior to closing.
Here are the related steps:
- Buyer and Seller negotiate an Amendment to the Purchase Agreement describing the work to be done — typically, by a licensed contractor — and further providing that, post-completion, the Buyer is to receive copies of the related invoice showing that it was paid in full. If the issue requires a re-test — for example, radon remediation — Seller is to provide Buyer with documentation that the re-test results are satisfactory.
- [Optional]: The Buyer checks out the reputation (or tries to) of the contractor hired by the Seller;
- The Buyer reviews the work performed, often as part of the walk-thru inspection just before closing. If there are any issues regarding workmanship, Buyer and Seller must negotiate a resolution prior to closing;
- The Buyer makes sure that any warranties covering the work can be assigned by the Seller to them;
- Prior to closing, the Buyer (or the title company representing them) obtains a lien waiver from the contractor who did the work.
Unless the issue represents a safety issue — or the Buyer’s lender requires the repair prior to closing — the Buyer and Seller can instead agree to reduce the purchase price.
Then, the Buyer hires their own contractor, post-closing.
Here are the required steps:
- Buyer and Seller each get quotes estimating the repair cost.
- Buyer and Seller sign an Amendment to the Purchase Agreement reducing the sales price, usually by an average of the two quotes.
- Post-closing, the Buyer hires, oversees, and pays a contractor of their choosing to correct the issue. Any warranties associated with the work automatically cover them.
Now, which option seems simpler to you?
Me, too . . .