Pushing repairs to after closing?

Question

My wife and I are planning on closing on our first property Thursday. The buyer has asked if it is ok for us to close on our target date even though the repairs to the house that the seller is contracted to fix are not all done? He claims COVID is making it hard to get all the contractors out quickly. They promise they are all scheduled to be fixed. Thoughts? I don’t have a problem with this as long as they get fixed.

Thanks for the help

Steve Morris · Answer

For all the people advocating holdback, title companies hate having escrow sitting around after closing.  Add in that it's one more roadblock to a seller to get the money since both sides need to sign on a release, so the buyer has upper hand and can be an a-hole if he wants.

I'd still advocate for credit vs repairs.

Greg Scott · Answer

DO NOT agree to this just based on a promise. I've been burned by this in the past.

It is easy enough to have the title company withhold funds in escrow until the repairs are done.  That gives the seller incentive to get the work done.  If you choose, you could even take over the responsibility of getting the repairs done and the escrowed funds can be released to you instead of the seller.

Steve Milford · Answer

@Jeremiah Russell I would say go for the hold back of 1.5x; gives Seller incentive to get repairs done asap.

Theresa Harris · Answer

Guessing you are the buyer.  Tell him sure, but $X is held back until repairs are done.  Make sure that is more than the repairs will cost plus $Y (say $2K) and put a deadline on it.  After that date, you get to keep the $2K and (if you want) the $X for repairs transfers to you and you take care of the repairs.

Steve Morris · Answer

"The buyer has asked if it is ok for us to close on our target date even though the repairs to the house that the seller is contracted to fix are not all done? "

Well after closing the seller is a LOT less motivated.  How about getting a credit instead?

Mike Cumbie · Answer

I Agree with @Steve Morris

We are an attorney state so the attorney is the one holding the escrow. In theory it sounds simple enough. Replace banister $300 + %50 escrow $450 until banister is done.

A month goes by the expected contractor hasn't responded. 4 calls to each attorney (for no additional pay). Finally get some agreement on someone going out. New contractor goes out and does the work. The buyer feels the work was meh. Also the stain was supposed to be black cherry not burnt walnut. More calls to the attorneys who end up arguing over the wording on the SOW for release of funds. They can't close out their file (a few hundred dollars on their side) until it's solved. They have now become unpaid consultants on a repair, that they really don't know anything about.

Get a credit, hire your own people to do it after closing and it removes everyone else from the equation.

Just my 2 cents and good luck!

Anthony Wick · Answer

@Jeremiah Russell. If you want to keep the closing date, definitely have the repair funds placed into escrow, or given to you at close. That is what we have done in the past. Due to weather in January, we had work that was delayed. Simple fix. The seller simply cut a check for the repair cost to the contractor, and that check was then held by me until all the work was completed.

Michael Noto · Answer

Here are the options you have here from experiences in past transactions

- Don't close until the seller holds up their end of the current contract

- Have the seller put money into an escrow account for you to take care of the repairs

- Make sure you get your own independent estimates on what everything costs to fix. DO NOT go by what the seller quotes

- If you are uneasy coordinating the repairs do not put yourself in a situation where you are doing so. Make the seller do it.

Jeremiah Russell · Answer

@Greg Scott

I completely agree Greg and I will talking to the seller and have the funds put in escrow until finished.

Greg Scott · Answer

@Jeremiah Russell Anyone can sue anyone for any reason.  But, you are likely to waste a lot of time and money suing if that is your fall-back plan.  And, you might lose.  You are in the drivers seat now. You won't be after you close.

Pushing repairs to after closing?

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