After weeks of looking, making offers, and maybe competing with other buyers, you and the home’s seller have finally reached an agreement on the deal. You’re ready to sign the paperwork, but once the offer letters have been signed and the money for the home placed in escrow, another round of negotiations may begin. Here are five things that you should know about last-minute credits.
Buyers may ask for “credits” upon the results of the home inspection
Many offers are made “contingent upon inspection” of the home by a professional home inspector. Often, the inspector may find issues with the house that the sellers didn’t know were there. Depending on the severity of the issues, and the necessary costs to fix them, buyers may wish to re-negotiate the purchase price to include these repairs, or to reduce the price based on the amount that the buyer will have to pay for fixing the issues.
Sellers may be better served by having a property inspection before listing the house
Entering negotiations while you’re under contract should be avoided because they rarely favor the seller. If you know that your furnace is on its last legs, or your roof needs replacing, it’s better to disclose up front. If you have lived in the property for many years, consider having it inspected yourself and fixing any issues before listing the home. You can make the inspection report, and any necessary repairs you undertook, available up front to serious buyers. They, in turn, can make a better offer with these things in mind. If you’ve done this, you may ask for an “as is” clause in the contract – which will let buyers know that you aren’t open to negotiate on price.
Some sellers may avoid giving credits be having work done during the escrow process
In this case, after the inspection has revealed needed repairs, then sellers may agree to complete the work at their cost before closing escrow. The seller may require that the payment is given directly to the contractor to complete the work and nothing else. These types of agreements help protect the seller, in case the buyer is asking for credits to offset closing costs. It also protects the seller from over-estimated repair costs.
Asking for credits doesn’t always help the buyer
Sometimes, the buyer may be taking a chance asking for a lower price after the offer has been accepted. They may feel like they are negotiating from a position of power this close to closing on the house. These types of buyers assume that the seller isn’t going to approach other buyers just for a few thousand more dollars. However, if it’s a strong seller’s market, or if the seller received multiple offers for the house, they may. However, if the local market is strong for the buyer, then they may get away with it. This is when having an experienced Real Estate Agent working with you comes in handy – they can give advice on whether to accept the credits or deny them.
Anticipate the buyer will ask for credits
Sellers should give themselves some wiggle room, as buyers nearly always ask for credits. As you move into escrow, leave room for additional negotiations. You can always Assume that a buyer will ask for more repairs to be fixed (they often do, even if it’s just something minor). So leave a little room for yourself. Not only will you feel better about the deal, you will also have protected yourself.
In the sales process, the last thing you want is to be blindsided by a buyer asking for a few thousand dollars credit when you think the deal is finally done.
Both buying and selling a home can be tricky, but we’re here to help! Call or text us anytime if you have questions: 909-921-2544