Rental Property Investor · Brighton, IL · Member since 2019 · 431 posts · 139 votes
Got an offer accepted on a property, home inspection showed some pretty big concerns, but my realtor says I can’t negotiate further since the seller is selling AS IS?
Is this right? If so any other thoughts/options versus just backing out?
@Account Closed As a Realtor I would say always always you are the customer and even if the other party denies your request that should be what happens, not your Realtor stopping you from making a move. I would encourage you to just state you want to send an amendment to the price (or repair addendum showing what want fixed, usually price reduction is easiest with amendment for AS-IS properties), attach a copy of a quote from a GC/sub so the other party knows it is legit, and then move forward if the numbers still work, or back out if the deal is dead. Hopefully the other party will help with covering some of the unforseen issues, not everyone is unreasonable. But I would do all that first instead of walking away because you already paid for an inspection. I hope this helps!
That is a tough situation. Everything in real estate is negotiable, however if the seller is holding firm with an 'as is' sale there isn't much you can do. If you aren't willing to buy the property without any other concessions or repairs, walking away might be your best option. The last thing you want to do is buy a money pit and sink capital into something way over your head.
This market is crazy, however if you did walk away, sometimes sellers will get desperate if they have no other offers. Use this to your advantage as you could come back at a later time and buy the property at a lower price point. Having already completed the home inspection you know what is needed on the home compared to a brand new buyer. Hopefully this helps!
@Account Closed As a Realtor I would say always always you are the customer and even if the other party denies your request that should be what happens, not your Realtor stopping you from making a move. I would encourage you to just state you want to send an amendment to the price (or repair addendum showing what want fixed, usually price reduction is easiest with amendment for AS-IS properties), attach a copy of a quote from a GC/sub so the other party knows it is legit, and then move forward if the numbers still work, or back out if the deal is dead. Hopefully the other party will help with covering some of the unforseen issues, not everyone is unreasonable. But I would do all that first instead of walking away because you already paid for an inspection. I hope this helps!
Got an offer accepted on a property, home inspection showed some pretty big concerns, but my realtor says I can’t negotiate further since the seller is selling AS IS?
Is this right? If so any other thoughts/options versus just backing out?
I would say ok thank you I am going to put in an amended offer
It can be with you or the listing Agent. Please let me know your reply today sonic a proceed with the offer
@Account Closed You can approach it as an option and say to the relator you would like them to approach the seller with a price concession or you withdraw and submit a new offer. Are the big concerns something you would/should have seen and considered in your offer, Or are these hidden issues like structure that you have now uncovered. If they are newly uncovered issues then a seller may be more receptive. Its different then saying the roof is 20 years old and the furnace is 30 years old when you knew they were old and should have considered it when you made the initial offer. You can always try to negotiate but the seller has no obligation to entertain your offer.
If you withdraw for a lower offer you have to be willing to walk as you are then not in contract.
First it blows my mind that agents with their clients make an offer on an as-is property not checking or understanding the major components of a property. If your agent does not know what he/she is looking at then they should bring someone who does!! How can you not know major issues before making an offer?
As a listing agent I would get really upset with a buyers agent who comes back and wants a new roof. You didn't see that??
Second when you say pretty big concerns, what does that mean? Are those 10k issues, or 5k issues?
As-is does not mean you can't negotiate! It just means they will not do any repairs. The reason is often that they don't have the money or the ability to do any work. Your agent should know this. Just state the issue and request a price reduction, better yet a closing cost credit.
(And after you have closed this deal find a better agent lol)
@Colleen F. Great stuff! Yes, hidden issues that I nor my Realtor saw when we walked the house initially. Water potentially going back behind walls and support issues under the house
@Account Closed if that is the main issue you can try to get a structural inspection (amend to extend inspection period if needed) and then approach them.
You can negotiate off an as-is clause and with how competitive the market is, it is an approach that is being done more frequently. The seller and their agent will not appreciate you doing this but if you are bringing up serious issues that you couldn't see when you viewed then they are more likely to play ball.
@Marcus Auerbach your view of AS is is in a balanced or buyer market. As is, the only thing that is for sure is they want the offer to be the offer. They can have the money and the ability to fix and they just don't want to or they may not have money. Its a mindset. In a competitive market they may just not want people locking up a property and then negotiating down. You can always try to negotiate of course and your relator should do so if you request it but what is behind an AS is clause may be influenced by the market.
I do think there is a good case for trying to negotiate on hidden issues.
1) Does it allow for you to back out if you aren't satisfied with the inspection(s)?
2) Does it contain any additional language/terms that say something like "Inspections for buyer's information only"? If this statement is in your contract and you back out, you may not be entitled to your deposit back!
If either of those things is true, you really don't have much ability to renegotiate. If neither of those things is true, you can negotiate because you can back out of the deal so you have some leverage.
Every property I buy is sold as is, but I have often renegotiated for unknown issues. If an issue pops up that I had no reason to know about, then I renegotiate the bill. For issues I can see, I do not renegotiate, such as siding needing replaced or flooring in poor condition. But, if the inspector finds issues that I should not have reasonably known about, then I send back what I want them to pay for. This is also a negotiation as I generally send back more than I care about. Things like ac units or structural damage are issues I would not reasonably know about, but thw owner should know.
There is no such thing as "you cannot negotiate". Fire your realtor because he or she is representing his personal wallet, the seller is the second most-important person and you are his meal ticket. Your realtor prefers that you pay the asking price vs. taking a risk that may benefit you.
I wrote many posts telling investors that they should never listen to realtors or brokers when it comes to negotiating and I will tell one story, again.
The first apartment building I purchased was 28 units and the asking price was $2.2 million. I found the building by myself by visiting real estate agents and the agent who had the listing insulted me about 5 times in less than 1 minute. So, I grabbed the listing off his desk and walked out.
I looked at the building, called a broker friend and told him I wanted to offer $1.9 million for the building. He told me I was crazy, the offer was insulting and he would not write the offer. So, I told him I would take the listing to another broker and he changed his mind and made the offer.
The seller came back with a counter-offer of $1,950,000. So, I saved $300,000 by not listening to my broker. Then, I put the property in escrow, did my inspections and argued with my broker and the seller until I got a $50,000 discount for repairs. In addition to that, the seller gave me the $18,000 for security deposits and for some reason I was mad at my bank because the bank said they made a mistake for some reason and the loan had an extra $35,000 that was returned to me.
Real estate agents and brokers are geniuses compared to what I know about their profession, but most are lacking with it comes to negotiating for their clients. You should always negotiate for the best deal and you will often be surprised when you find that your agent tells you the seller won't budge and then the seller caves in.
@Marcus Auerbach your view of AS is is in a balanced or buyer market. As is, the only thing that is for sure is they want the offer to be the offer. They can have the money and the ability to fix and they just don't want to or they may not have money. Its a mindset. In a competitive market they may just not want people locking up a property and then negotiating down. You can always try to negotiate of course and your relator should do so if you request it but what is behind an AS is clause may be influenced by the market.
I do think there is a good case for trying to negotiate on hidden issues.
Yes you can, at least price - probably not repairs, and I think that's what I said. Even now with 5 to 30 offers on any listings, once the seller has an AO its hard to go back. You will never get the same price again, that you got the first time. That's the inventive for the seller; sometimes has to be explained when you have a rookie agent on the other side.
It is my understanding that once you have shared the findings of your inspection with the seller that they would have to disclose to the next buyer any issues you discovered so that puts you in a good negotiating place.
It cant hurt to try and negotiate . But if its like my market in Maryland . The answer would be a rather quick NO . Properties are selling over asking , sellers are only taking as is , non contingent offers , and if it doesnt appraise the buyer has to come up with the difference cash money .
You hold all of the power in the negations you're the buyer. Based on years of experience working with commercial property investors and their agents they love the come up with sales prices that will never be able to get financing. Remember, when you find a lender willing to finance, they will preform their own due diligence by ordering various reports such as a property inspection, appraisal and environmental.
This in-turn will determine the potential risk of any proposed loan. For example, loan to value, loan to cost, after repair value, interest rate, amortization period and fixed term is there is one.
Always be willing to walk away. A bad deal could bankrupt you.
Technically speaking, every property is sold “As is” - there is legally no difference between an As-Is-Where-Is and a regular sale, except the seller is openly marketing the fact that they do not intend to make any concessions or repairs. Basically saying “Take it or leave it”.
With these types of sales, negotiating is like pulling teeth. You’re better off giving a conservative number to start. If the seller declines, encourage them to hold onto your contact information in case things change and follow up every few weeks to reiterate your interest. That’s about all you can do.
Technically yes, "as-is" in Illinois is take it or leave it. However reality is if the list agent gets that email cancelling the contract from the attorney, they'll for sure ask: "What caused the deal to fall apart?"
- "Well, the roof is shot"
"Ok, so how much do they want to reduce the purchase price to make this deal work and close?"
- "Oh, $x,000"
Then we have to go BACK to the attorney to rescind the cancellation and amend the contract. So discussing any adjustments between agents before sending the cancellation between the attorneys is a much more expedited solution. Unless of course, the listing state up-front that all inspections should be done pre-offer or you waived inspection.
@Kevin Sobilo much appreciated and no it actually has the contingency clause that I can go back and look to remediate if there are items found that are deemed visible on a reasonable inspection. Well, the items found my home inspector had to crawl through water to find. I don’t feel that’s reasonable to be seen on a typical walkthrough of a property