This brought the offer down below the asking price. In the meantime, the house was off the market and the original bidders were long gone. It is now approaching winter, the best selling market period is past, my house is off the market and I am faced with accepting an offer that is below the asking price.
I can’t get the deposit, and the contract states that if the two parties can’t agree on the disposition of the deposit, the conflict goes into mediation. This means the house will be off the market until next year.
I feel like the buyers are taking advantage of me. How do sellers protect themselves?
A: There are two sides to every house deal. It’s possible that the buyer is using the home inspection to renegotiate the purchase price. It’s also possible that your home has real problems that were only uncovered in the inspection.
We haven’t seen your home, and you didn’t furnish any information that we could check, so for the purposes of this column, we’ll assume your home was in pretty good shape and the buyer’s inspection requests are being used to get a lower price on the property.
A seller is protected by the terms of the purchase and sale agreement he or she signs. That document usually allows a buyer to inspect a home within a given time period and either kill the deal or move forward. In many parts of the country, the buyer is given five days or so to get the inspection done. By the end of the five days, the buyer has to tell the seller what he wants. At that point, the seller can tell the buyer to take a hike if the buyer's requests are unreasonable.
In some cases, buyers might get 10 days or two weeks to get their inspections done, but at the end of that time, you should be able to either make a deal or cut the buyer loose. You’re right, however, that you might have a bidding war up front, get a winning offer and then lose that one and lose any others that wanted to buy your place. Unfortunately, that’s the way many deals end up.
In a bidding war, buyers strategize how to put forth the winning bid. Sellers have their own decisions to make as well.
Let’s start with the market conditions. In situations where there are more buyers than sellers — a hot seller’s market — you can plan the process to benefit from the market. When the bids come in for the home, you can sort those bids by strength of the bid. Some buyers will waive the right to an inspection but may offer less. Others may offer more but plan to use the inspection to renegotiate the price. You will have a choice on how to proceed on those offers. You may accept the lower offer and move forward, or you may take the second offer but give the buyer a very short period of time to get the inspection done and completed.
In any case, you must understand what the worst situation could be when evaluating your offers. We think you wound up where you are because your agent didn't adequately prepare you for the possibility that someone would bid high, hoping to knock down the price with the inspection report.
In an older home, you’re going to have problems. But if you had a problem requiring a $40,000 fix, you probably would have known about it sooner. In a hot market, sellers typically have a lot of leverage. In your case, it sounds like your area cools off on a seasonal basis, and now you find yourself in a situation where the other buyers have disappeared and all you have left is this one offer.
When you're a seller you have to understand what you are selling, the market you're selling in, your options and what price you'd like to receive for the home, and you must have a general strategy for when multiple offers come in. At least if you think of these issues ahead of time, you can make decisions quicker and get to a buyer that actually wants to buy your home.
At this point, it seems that your current buyer may have given you notice of the inspection issues within the timeline given under the contract, and if you are unable to come to terms, the buyer gets their money back. If you refuse to give it back, you go into arbitration. We think you and your agent should determine whether these buyers really want the property and whether you can generate interest from other buyers who are in the market. If you can, and you're willing to wait, then you should let this buyer go and move on. If not, then try to negotiate as best as you can and move on.
One way or another, try to find a resolution that will allow you to move forward. Good luck.
Ilyce Glink is the author of “100 Questions Every First-Time Home Buyer Should Ask” (4th Edition). She is also the CEO of Best Money Moves, an app that employers provide to employees to measure and dial down financial stress. Samuel J. Tamkin is a Chicago-based real estate attorney. Contact them through her website, ThinkGlink.com.