Author Topic: Is it common to renegotiate the sales price after inspection of an as-is sale?  (Read 5647 times)

spartana

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« Last Edit: June 27, 2018, 02:05:47 AM by spartana »

ixtap

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My agent says no but still thinks I should consider accepting new much lower price so I can have fast all-cash sale. I said no. Waiting reply from buyer...will they walk or accept or raise offer. I don't need to sell house asap or even at all and have a pretty low limit I would accept if needed, but would rather keep to current price to see if I get more offers. So is this a common thing on an as-is sale or a ploy? I'm a newbie at selling so don't really know.

Background: live in hot market area where tear downs and rehabs are common so selling 60 year old 1000 sf ranch as-is rather than upgrading and fixing things - some big like needing new roof. I priced it accordingly and  fully disclosed everything I knew was wrong with the place beside obviously original 1950s stuff like cabinets, tile, etc... Got an offer fast and accepted contingent on inspections. Done with nothing showing up that was not disclosed but "potential unknowns" due to age (what will they find when redoing roof etc...). Buyer wants to renegotiate lower price or will walk. I said no.

In and of itself, it isn't that uncommon in many markets. However, if nothing new came up on the inspection, they are just being arses.

tralfamadorian

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Yeah that's kind of what I thought too. Maybe "ploy" isn't the right word but feels sort of planned - like giving a full offer to lock me in with the intent of knocking the price down a lot and hoping I'd just accept it since it would be a fast close.

I agree that it was probably planned.  I've talked to real estate investors, all flippers, that do this as a tactic and a house advertised "as-is" would attract those kinds of folks.

...They have until tomorrow to decide or my realtor will contact any other people who were interested...

Can you have your realtor reach out first thing and set up some showings?  A backup offer or at least backup interest might be the hardball needed to get your buyer under contract to get on board.

Lmoot

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 It's not uncommon. I purchased my house which was as is since it was bank owned, and after inspection got it for 10 K less than pre-inspection. Unless you do a thorough inspection prior to selling, you can't know what all is wrong with it. Also, many inspections include issues that may be impending, even if they not are not a problem now. My roof was in decent condition, no leaks, but it was older than any insurance company would be willing to cover (found out after buying) and after buying the house I ended up being forced to buy a new roof six months after closing...$8k, even though it still had some life left, thanks to a vinyl covering the previous homeownner installed.

Also, buyers usually assume that something is priced higher than the expected final sale price; tha's just built into the culture of house and car buying in particular. Sold "as is" doesn't always mean the same thing to different people. It can just simply mean the seller is not willing to fix anything, but would go down in price or provide a concession.fixing things to a prospective sellers specifications is a pain in the butt, which is why probably many sellers indicate "as is".  Everyone wants to feel like they got a deal, so unless you put out a price that initially didn't get much traffic, I would always price a house at higher than what I expect to get for it. It gives buyers the psychological win of getting the price down. Which is a big part of the emotional experience for them.

 Of course as the seller, you have every right to refuse offers. You'll just have to see how basic economics plays out on this one....supply and demand and all that. As the saying goes, a house is only as valuable as what someone is willing to pay for it.
« Last Edit: July 13, 2017, 07:15:59 PM by Lmoot »

ixtap

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Quote

Also, buyers usually assume that something is priced higher than the expected final sale price; tha's just built into the culture of house and car buying in particular.

Not for SoCal real estate. In most areas, things are selling over asking price.

Lmoot

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Quote

Also, buyers usually assume that something is priced higher than the expected final sale price; tha's just built into the culture of house and car buying in particular.

Not for SoCal real estate. In most areas, things are selling over asking price.

  That is true. That's the other side of the pendulum. I guess what I should say is buyers don't expect to pay asking price. Depending on the market, it's almost always expected some type of negotiation will take place, whether above or below the price, unless specifically stated that the price is firm.

waltworks

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It's a scrape, right? They are buying the land, so the house doesn't mean squat. They are just trying to get something for nothing, call their bluff.

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Another Reader

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The answer is no.  Price is comparable to other houses and as Walt said, they are buying the land.

I suspect you have an agent that is working for the buyer more than for you.  He is more interested in keeping the business of the buyer, who may be a repeat buyer and will refer friends and family if s/he gets a good deal, than in representing your interests.  This is a cultural issue, which I see in San Jose as well.

Bosco4789

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No, the poster said tear downs and rehabs were common.  He never said they intended to tear down.

Overflow

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My agent says no but still thinks I should consider accepting new much lower price so I can have fast all-cash sale. I said no. Waiting reply from buyer...will they walk or accept or raise offer. I don't need to sell house asap or even at all and have a pretty low limit I would accept if needed, but would rather keep to current price to see if I get more offers. So is this a common thing on an as-is sale or a ploy? I'm a newbie at selling so don't really know.

Background: live in hot market area where tear downs and rehabs are common so selling 60 year old 1000 sf ranch as-is rather than upgrading and fixing things - some big like needing new roof. I priced it accordingly and  fully disclosed everything I knew was wrong with the place beside obviously original 1950s stuff like cabinets, tile, etc... Got an offer fast and accepted contingent on inspections. Done with nothing showing up that was not disclosed but "potential unknowns" due to age (what will they find when redoing roof etc...). Buyer wants to renegotiate lower price or will walk. I said no.

I am in the middle of this as the buyer. Got scared when I started reading this thinking "oh no, our sellers are on the MMM forums!", but once you described the house I breathed a deep sigh.

We renegotiated after inspection of an "as-is" sale, but only because the issues that came up were substantially more than what was disclosed up front (water in basement, leaky roof, etc).


Mr. Green

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Agree that if all big issues where disclosed and house was priced appropriately that I wouldn't yield as a seller, especially in a hot market. Let them walk.

Cassie

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I would hold firm. In that market you will sell since it appears you have priced it fairly.  Maybe he wants to flip it and make $ off of you.  That's your $ not his:))

SnackDog

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Make sure you read the inspection carefully since it is Calif you will have to disclose it to others if you don't do the current deal. Make sure there is no bombshell lurking in there which will reduce the value of the house. You may need to redo your disclosure form. Otherwise, just ask them what part of "as-is" they don't understand. Also good to remind buyers this when they propose inspecting.

I love the inspection clause as a buyer and always use it to thrash the seller, especially if it is a brand new home. I'm simply amazed at the appalling quality gaps in new construction.

Bosco4789

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 Otherwise, just ask them what part of "as-is" they don't understand. Also good to remind buyers this when they propose inspecting.


I'm having trouble understanding your reasoning.  As-is doesn't necessarily mean a non-negotiable price.  The seller may say as-is, the buyer has the right to know what the "as-is" is, and base his offer on that value.

sequoia

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Background: live in hot market area where tear downs and rehabs are common so selling 60 year old 1000 sf ranch as-is rather than upgrading and fixing things - some big like needing new roof. I priced it accordingly and  fully disclosed everything I knew was wrong with the place beside obviously original 1950s stuff like cabinets, tile, etc... Got an offer fast and accepted contingent on inspections. Done with nothing showing up that was not disclosed but "potential unknowns" due to age (what will they find when redoing roof etc...). Buyer wants to renegotiate lower price or will walk. I said no.

You live in hot market area, so me thinks no worries if buyer backs out. You did the right thing.

SnackDog

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 Otherwise, just ask them what part of "as-is" they don't understand. Also good to remind buyers this when they propose inspecting.


I'm having trouble understanding your reasoning.  As-is doesn't necessarily mean a non-negotiable price.  The seller may say as-is, the buyer has the right to know what the "as-is" is, and base his offer on that value.

"As-is" in most markets means the house sale will be as the house currently "is", not how the buyer would like it to be after repairs paid for by the seller, either directly or via a discounted price, are completed.  Buyer is encouraged to conduct due diligence but seller has factored all known defects into the sales price and expects to receive all of it.  In can be useful to have a list of these defects from the seller before placing an offer if one is contemplating an inspection cross-check to turn up additional items and grind the price down.  Many California sales provide thorough seller-funded inspections at the time of listing to avoid any recycle on negotiations. 

The last house I bought was subject to half a dozen inspections with all significant items repaired including a brand new furnace.  I didn't even bother inspecting myself and waived inspection.  The kitchen range failed during the escrow period and the seller sent me a choice of fancy replacements from which to choose, then procured and installed it entirely at his cost. I was surprised.

Dicey

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In NorCal, there's a certain ethnic group that does this. They bid high enough to secure the deal, then they find tons of defects, and demand inflated retail prices for the defects that "must" be corrected. Then they move in, do the work themselves over a period of 2 or more years, then sell the highly appreciated house tax-free. Quite smart in many ways, but the seller should not be duped by their tactics. Glad you were savvy enough not to fall for something that sounds potentially similar.

Note: Sometimes there are defects found that are negotiated prior to closing. The difference is whether you're being asked to cure reasonable problems or handed an inflated laundry list of unreasonable garbage, considering the circumstances of the sale.

Bosco4789

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 Otherwise, just ask them what part of "as-is" they don't understand. Also good to remind buyers this when they propose inspecting.


I'm having trouble understanding your reasoning.  As-is doesn't necessarily mean a non-negotiable price.  The seller may say as-is, the buyer has the right to know what the "as-is" is, and base his offer on that value.

"As-is" in most markets means the house sale will be as the house currently "is", not how the buyer would like it to be after repairs paid for by the seller, either directly or via a discounted price, are completed.  Buyer is encouraged to conduct due diligence but seller has factored all known defects into the sales price and expects to receive all of it.  In can be useful to have a list of these defects from the seller before placing an offer if one is contemplating an inspection cross-check to turn up additional items and grind the price down.  Many California sales provide thorough seller-funded inspections at the time of listing to avoid any recycle on negotiations. 


You seem to be assuming a lot from the original post.  The buyer didn't ask the seller to repair anything, and we don't know if he knew of the defects and factored these defects into his selling price.  Certainly, if you offer a home for sale as-is for $X and say the roof is fine, and the buyer finds out the roof isn't, then he's going to lower his offer.

All I'm saying is that the "as-is" worth probably means different things to the two sides.

partgypsy

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There are other buyers out there. You are lucky in that you don't have a firm deadline to sell. It's worth to wait a few months to get the price you feel is fair. Agents want to close quickly because that's when they get paid. You know the location and what selling prices should be, more than anyone.

Another Reader

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In NorCal, there's a certain ethnic group that does this. They bid high enough to secure the deal, then they find tons of defects, and demand inflated retail prices for the defects that "must" be corrected. Then they move in, do the work themselves over a period of 2 or more years, then sell the highly appreciated house tax-free. Quite smart in many ways, but the seller should not be duped by their tactics. Glad you were savvy enough not to fall for something that sounds potentially similar.

Note: Sometimes there are defects found that are negotiated prior to closing. The difference is whether you're being asked to cure reasonable problems or handed an inflated laundry list of unreasonable garbage, considering the circumstances of the sale.

I don't think it's one ethnic group.  I think there are some cultures, now heavily represented in the Bay Area, that do business this way.  There is also a tendency to negotiate harder with people from other, more laid back cultures.  My neighbors bought the house as a short sale in 2011.  They let it sit for over a year, then started remodeling it themselves.  Everything was bought off the docks, probably in Oakland.    They finally moved in around three or maybe four years ago.  The overgrown yard was left untouched until recently.  I suspect Spartana is dealing with the same cultural forces down there.  She had the appropriate response, an extended middle finger, offered politely.

anonymouscow

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I don't see why it wouldn't be negotiable just because the property is as-is.

Maybe the buyer's think because it is as-is that you are trying to get rid of it cheap and fast and expected you to price in some negotiating room.

MayDay

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I would expect negotiation after inspection on an as-is house only is something new was discovered that was not previously disclosed.  Not "its and old house so SOMETHING might go wrong SOMEDAY!".