In a balanced or buyer’s market, buyers typically want the sellers to correct significant deficiencies or reduce the purchase price based on a cost to remedy, otherwise they walk away.
Yet in today’s hot seller’s market, with buyers competing to buy a property, some are accepting deficiencies or making concessions normally considered uncharacteristic of buyers. Buyers may have lost out on more than one bid and in frustration, don’t want to lose out again. Still others have opted out of buying in a competing situation.
The following are some examples of this trend:
- Vermiculite has UFFI; No Problem. One home had vermiculite insulation in the attic that tested positive for UFFI. For fear of losing the purchase, the buyers agreed to remedy the problem at their expense after closing.
- The Power of Attorney for Afar. The owner of this home was moved to an extended care facility and a close relative had power of attorney to sell her home. Competing against multiple offers, the buyers offered $20,000 more than list. Yet their accepted cash, condition-free offer was not the highest yet got accepted.
What clinched the deal? The buyers conceded that the seller could take whatever chattels and personal belongings they wanted and leave the rest in the home. On closing the buyers would empty the home of anything left behind and take care of cleaning it. Living six hours away, the Power of Attorney welcomed the buyer’s proposal. He was relieved that he did not have to come back to the Niagara region to empty and clean out the house.
- The Sagging Floor. This home had a noticeable and spring-like sag to the floor in the livingroom. The buyer, very aware of the problem, purchased the home in spite of it and agreed to take responsibility for the remedy.
- Problems in the Inspection Report. The buyer wanted to renegotiate the offer due to some deficiencies and maintenance items noted in the report. Given the home’s demand and real possibility of a back-up offer, the buyer removed his home inspection condition and assumed the issues without question, deciding to correct them himself once the deal closed.
- Compliance with the Fire Code. This couple made an offer on a three-unit apartment. Their offer was conditional on the property complying with the Fire Code. This is a common condition when a property has more than one rental unit. On learning that they were competing against other offers, they decided to remove the condition from the offer and accept the property as is. In so doing they assumed the risks they might encounter should a fire inspection be triggered that might require corrective and potentially costly measures.
In a noticeable number of deals, lenders are ordering appraisals after mortgage conditions are removed from an offer; a risky move.