My husband and I put an offer on a house this week that we absolutely loved. The sellers came back with a multiple counter offer with some terms that didn't sit well with us. What do you guys think of these terms? My realtor expressed he felt he could get around some of the terms and they weren't red flags to him, but as first time homebuyers it seemed like they took it a little too far. Here are the details.
House 599k. We offered 608k. 5bd 3 bath house with attached apartment above the garage, pool and spa. House has paid off leased Solar. Seller Agent had told us in the open house that Attached apartment was unpermitted. They also had another addition that was permitted for the master. Also, that they already got an appraisal on the house but didn't disclose that info. I hid the names of people and companies in this offer.
Counter offer is as follows:
Buyer to submit Highest and Best Offer, Buyer to waive appraisal contingency (this concerned us, since they did an appraisal already. Our perspective is that they know our offer is more than what the appraisal came out to be.)
- Property is sold "AS IS" with no guarantee of repairs
- Escrow to be with **** Escrow –
- Title to be *****
- Buyer to remove all inspection contingencies within 10 days of acceptance
- Buyer must cross qualify with certain person at certain mortgage company within 3 days. (We didn't like having to give our info to yet another mortgage lender.)
- If through no fault of the seller escrow is delayed more than 3 calendar days (grace period) & Seller and Buyer agree to extend the closing, a flat fee of $1000 shall be paid by the buyer to the seller for consideration of an extension not to exceed 7 calendar days.
- Item 7a2 Termite to be removed from contract
- Buyer is aware that the apartment above garage is not permitted
- Seller paid Home Warranty not to exceed $500 (Our agent originally put in $685 for an upgraded policy since we saw the pool equipment leaking. To us only offering a $185 less policy was nickel and diming. But we are new to the market so we don't know.)
Can anyone give me any insight on this counter? Do you see Red Flags or are we just being overly cautious since this is our first home?
Also what do you think about the Seller Agent? His company offers to buy your house if it doesn't sell in a certain period of time. To us it seems like this could be a conflict of interest if the seller agent decides they really want the house. Thoughts?
Thanks BP for any light you can shed in this situation.
The seller is pretty good , they have covered their back side rather well
Originally posted by @Matthew Paul :
The seller is pretty good , they have covered their back side rather well
just typical sellers market.. and when your highest and best many times your paying above appraisal that's typical.
If there is something you aren't comfortable with, cross it off. If you think something else is up, then walk away. You don't want to second guess yourself.
Financing and inspection are normal. Adding in the unpermitted garage apartment is fine. Talk to your lender before signing anything to find out if 3 days is reasonable...also make sure those are three business days.
I find it odd that they want a specific title and escrow company. What if you have your own that you want to use? Do a search on those companies to see what they are like and ask the seller why they want you to use those.
The selling agent's company buying it if it doesn't sell is a gimmick they are using. They will probably buy it but as a % of the list price.
I’ve never had to deal with termites but should it bother you they don’t want to know? Supposedly if they already know they have to tell you.
Do you know what the permitting department will do with the undermined addition? Will they require you just pay fines and permits? Or open the walls or prove it was done right and then rebuild it? Or will they require it’s torn down?
A realtor could chime in on if you can ask the seller for a list of known problems? (Should be on a disclosure form somewhere?) just in case after the purchase you discover a problem that they obviously should have known about, like the leaking pool equipment.
It's a seller's market with multiple offers on it. The seller wants the best terms. How many total offers are there? That should help determine the strength of the other offers. Was the $599k list price below market? I know my area listing agents will purposely list homes $100k below market on purpose.
Ask yourself how much do you love the house? How do you feel about the unpermitted space? Review it with your agent and come back with your final and best. If you get it great if not then it wasn't meant to be and more than what you were willing to pay so it doesn't matter.
In my opinion take a look at their reasoning and then decide if you can live with it. If not that's "OK" and go find another one. But when I have put items like that in it's usually to make sure there is clarification. The worst thing is when both sides are not on the same page. causes all sorts of confusion and anger the later the process goes.
Buyer to submit Highest and Best Offer, Buyer to waive appraisal contingency (this concerned us, since they did an appraisal already. Our perspective is that they know our offer is more than what the appraisal came out to be.) Are you really offering what you wrote or are you offering "Whatever price an appraiser says it is worth"?
- Property is sold "AS IS" with no guarantee of repairs: Standard in my market, just clarifying that you can inspect whatever you want but keep in mind it's for your benefit and we have no plan on re discussing a purchase price when you are done. Also every house in NY is AS-IS. We just want to say it one more time even though the contract says it. If you come back 9 months from the date of purchase and say there is a leak in a gutter we can point to it again. If we were just accepting your offer, I most likely wouldn't bother countering with this, but if I am countering mine as well put it again.
- Escrow to be with **** Escrow – Standard in my market, Our listings have who escrow is held with. If someone wanted to put it somewhere else, we need to be on the same page.
- Title to be ***** : No opinion as our lawyers do most of that.
- Buyer to remove all inspection contingencies within 10 days of acceptance : Inspect away, but you have 10 days. I don't want to wait 30 days to have you go.... We just don't feel comfortable with the missing GFCI we want out and we are using the inspection contingency to get our EMD back.
- Buyer must cross qualify with certain person at certain mortgage company within 3 days. (We didn't like having to give our info to yet another mortgage lender.) You provided a POF with someone who we do not know or trust. Let someone we know run your info to make sure you are a real buyer and not someone who got an online pre-approval and then everything falls apart at the end. Mortgage checks count once. You can most likely fight this one if you have a decent local bank. If your pre-approval is from weapproveallforamortgageregardlessofcredit.com welllll. Once you lose 2 months and have a deal fall apart because the "buyer lost their job 4 years ago" and has been collecting cans to eat Ramen. You like to make sure they are real buyers.
- If through no fault of the seller escrow is delayed more than 3 calendar days (grace period) & Seller and Buyer agree to extend the closing, a flat fee of $1000 shall be paid by the buyer to the seller for consideration of an extension not to exceed 7 calendar days. If you put a close date can you actually perform or are you "pretty sure" your team can make that date?
- Item 7a2 Termite to be removed from contract. If you test I have to disclose and I have no idea who your tester is. If you choose to test I personally don't care just don't tell me your results. Same for Radon, Lead Based paint or anything else. It can't be used as a reason to leave the contract so I don't have to know.
- Buyer is aware that the apartment above garage is not permitted: Buyer will not be coming back and using it as an excuse to get EMD back.
- Seller paid Home Warranty not to exceed $500 (Our agent originally put in $685 for an upgraded policy since we saw the pool equipment leaking. To us only offering a $185 less policy was nickel and diming. But we are new to the market so we don't know.) We offered a home warranty (not really standard in my market) we considered it a nice gesture, you poked us in the throat and wanted an upgrade. GOD we should have never bothered offering that and now these people want a friggin upgrade.. Are you kidding me..... I mean our dumb agent said "Offer a warranty, it will be nice he says, it's just $500 it will help sell the house and these people want an upgrade".
Good luck and I hope it helps! All first time home buyers get cold feet and read alot into it. It's normal. Be cautious but trust in the people you have on your side. You hired them for a reason.
@Mike Cumbie Thanks so much for the line by line breakdown. Super grateful for it! Yeah it just jars us cause we are very new to this. Great points made though. Clears so much up for us. All the best to you!
Thanks for all the insight guys. My husband and I decided to pass. We felt that 10 days might not have been enough for the unpermitted apartment. Only because we wanted to get an engineer in there to figure out costs to permit it. Since we are on a strict budget, the lack of appraisal contingency wouldn't work for us if the house appraised for less and our bank would obviously want us to cover the difference. We would also worry that the unpermitted addition might not be covered by home owners insurance. For a first house hack we will want everything on the up and up, since we can't afford extra liabilities from potential tenants that might find out and come after us for it. But at least for a standard single family these terms won't scare us away now. Really appreciate all the replies. Best to you all!
I'm glad you guys passed on it actually, Yes, it is a Seller's market but you guys may be left with a ton of headaches after you buy the property. It's not worth the angst.
Good luck on finding another! 👍
For first time buyer if you feel unpermitted unit can cause problem I will decline and look for a clean home all permitted. Here north in Silicon Valley most sellers used to act like so now the market has softened and contingencies are more often accepted.
Seems like the standard California market. I used to live there, I know. You couldn't double my salary now to move back. If the buyers agent doesn't have a problem with all this; your choices are to counter offer, decline, or get a new realtor. Personally, I like counter offer.