What’s the Best Way to Resolve a Request for Repairs in Residential Real Estate? Advice for Buyers and Sellers
It seems simple, right? Here’s what’s wrong with the house…fix it. Everyone’s happy. Right? Right?!? If only it were actually that simple. Read on for more info about why the proper resolution to a Request for Repairs isn’t as simple as just fixing the requested items and for a discussion about the options that are available to both parties. This article is for Buyers and/or Sellers.
Please note that the information in this article pertains ONLY to California residential real estate transactions and is up-to-date only as of the date of this article’s publication. You should always consult a licensed professional before making any decisions that pertain to any particular real estate transaction.
What is the Request for Repairs?
The Request for Repairs is a document submitted by the Buyer sometime after the Home Inspection and sometime before the end of the Buyer’s Inspection Contingency. It is by no means required and is sometimes non-existent in real estate transactions. It is a list of items that the Buyer wants repaired, wants more information about (usually documentation), or wants some other dispensation for (usually money). It is up to the parties involved and their agents to determine what becomes of the request.
The Seller Has No Inherent Obligation to Complete the Request for Repairs
Before we jump into this let’s get one key detail cleared up. The Seller is NEVER required to do any repairs to their home, regardless of the Buyer’s requests, unless and until the Seller agrees (or has already agreed) to make those specific repairs in writing or when those repairs are required by law (not many are).
There is nothing legally binding about the Request for Repairs when it is submitted. It is simply a request. In some rare cases a Seller may choose to make no response at all. Whether the Request for Repairs becomes a larger matter or whether it is resolved quickly and becomes a binding document is entirely up to the parties involved. But when it comes to contracts and negotiations, everything is up for grabs.
Why Isn’t It a Good Idea to Let the Seller Be Responsible for the Repairs?
In most cases, the Buyer will either ask the Seller to make certain repairs before closing, or they will ask the Seller to give them some dollar amount back during the closing process, as a credit to their closing costs. At first glance, it may seem like one option is easier or better but in ALL situations, the ease and/or difficulty in completing the Request for Repairs has more to do with the parties involved than it does with the volume or scope of the repairs. Put another way, personalities and our personal lives are often more relevant than logistics and dollars when trying to successfully navigate a real estate purchase and/or sale.
Here’s an example. The Seller has decided to complete the repairs before the closing but they required that the Buyer sign-off on (complete) their Inspection Contingency (learn more about Contingencies in real estate) as a stipulation of their offer to do the repairs. Simple, right? Well, if the Buyer signs off on their Inspection Contingency they have given up their right to cancel the contract due to the property’s condition. The Seller completes the repairs but the Buyer isn’t happy with the job the Seller’s contractors did.
This won’t happen every time but it WILL happen sometimes, and if you aren’t prepared for it, it can become a problem, FAST.
The Buyer can insulate themself from this by requiring a sign-off or approval from the Buyer (or better yet, a third party) in an addendum that will determine when the repairs have actually been “satisfactorily completed”. This would allow the Buyer more recourse were the Seller to complete the repairs negligently, but only to a certain extent. Having a third party as the designator of approval is the best move because it helps BOTH parties feel confident about how the results will turn out.
If you’re the Buyer, here’s an important reminder. This isn’t an opportunity for you to nit-pick every aspect of the repairs. If the Buyer agrees to let the Seller fix the repairs the Buyer is agreeing to let the Seller fix the repairs. Get it?
Hopefully, the Seller will do a great job fixing the repairs. It’s more likely the Seller will do an adequate job fixing the repairs. It is sometimes the case where the Seller does a horrible job fixing the repairs.
That’s the big problem and that’s how it is. Welcome to reality. If they do a horrible job, protest. If it’s a deal breaker (Is it really a deal breaker?) then maybe it’s time to walk. Hopefully not. (Really? Deal Breaker?)
Is There A Simpler Solution?
When it comes to the Request for Repairs we almost always recommend the Buyer ask for a credit to offset the cost of completing the repairs, though this is still only part of a solution and depends largely on the scope of the requested items. If the list of repairs is long but most of the items are light, handyman-style repairs, the Seller may want to do the repairs themself. If the repairs involve larger changes and, specifically, subjective design aspects, the Seller may be better suited offering a credit. Don’t spend money repairing your home only to have the Buyer gum up the transaction if they aren’t satisfied with the work.
What’s the Best Way to Handle the Request for Repairs?
Well, whenever I’m representing a client, be it, Buyer or Seller, my recommendation is always to try and put yourself in the other party’s shoes. If you were the one selling the home would you consider these requests unreasonable? Or if you were the one buying the home, would you want to purchase a home with these issues? And what would make you feel better if you were purchasing a home with these issues?
When it comes to the Request for Repairs, the best move is to offer/request credits for larger repairs and to offer/request to have the smaller repairs completed before closing. That is, of course, assuming the “larger” repairs don’t involve issues that would drastically harm the value of the property.
Having Professional Guidance is ALWAYS the Right Move
Every real estate purchase is different. What’s at stake, who the parties are, and what their time requirements are; those are the questions that shape the playing field when it comes to determining how best to approach the Request for Repairs. There is no “right” answer, there are options and there are personalities. When you’ve got an experienced real estate professional on your side, you’ll get guidance and assistance with BOTH.
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