How to deal with uncooperative seller during due diligence

18 Replies

Hi all...

Thank you for all the help you’ve contributed on this project...

This will definitely be a victory for the BP community when all is said and done.

Here’s the situation:

I got the inspection report back and have some concerns I want quotes on. Seller is unwilling to let me back in the building.

I am corresponding with her boyfriend now via email.

They say that they’re willing to handle everything that’s not cosmetic.

How can I ensure they’re doing what needs to be done and not pinching pennies to appease me or a future buyer?

One thought I have is having them give me the names of the companies doing the work and show me the invoices. Then I can follow up with the companies.

Is this good enough?

Or would you send your inspector out AGAIN after owner claims to be finished?

How would you navigate this? Any advice?

@Ben Gabin Under the circumstances I'd want it re-inspected. What about rent roll, leases and financials? Be sure and get all that. Plus I'd want security deposits and last months rents at closing. Probably do Estoppel certificates with the tenants too. I am very suspicious of uncooperative sellers. 

@Ben Gabin your real estate agent should be able to help in this process. Depending on what your Purchase Agreement says you should still have an opportunity to do your due diligence, however, I'd refer back to what is in the agreement.

Typically, at the VP or final walk through I ask for all of the receipts to be provided and the do an inspection of the items that were agreed upon.

In the California standard agreement if the items are not completed during the final walk through it does not allow the buyer to get our of the contract.  Often if the amount is small there will be money held back in escrow or it has to be resolved in court.

You can request:

  • Before and after pictures
  • Name and invoice from company that performed the work (and require them to be contractors licensed through DPOR so their brother-in-law doesn't do the work poorly)
  • Second inspection after the work is completed

Depending on the project, bullet points 1 and 2 would be good enough for me since I know a licensed contractor is doing it.  If it's something out of my wheelhouse that I don't feel comfortable with, then you can always get a second inspection to be safe.

@Ben Gabin

Exactly what you are planning to do, second inspection and if they aren't allowing it walk. If they are going to screw you around and waste your time, there are plenty more fish in the sea! 

Originally posted by @Thomas S. :

I do not allow sellers to do any repair work. I make a counter offer and do the repairs myslf. Or walk.

I wish more buyers would do this..  but fact is they wont..  and its a cluster trying to coordinate repairs. any buyer wants to do legit repairs I am all for it.. and would give a credit as you suggest.. 

I will sort of being the one going against the grain here. But your agreement will dictate. I recommend to my sellers that after inspection the buyer does not enter the building until final walkthrough. At such time all receipts are provided and they can inspect those items. 

Reason being that for some strange reason everytime I let someone in "just to check the upstairs window and nothing else" they always seem to find "new" problems in the basement that are now deal killers. 

@Ben Gabin Have you been to the property, talked to them personally, seen the issues? Or are you a wholesaler trying to do this from a distance. If the latter, I would tell you to take a hike. No matter how motivated the seller, if a buyer or wholesaler beats a seller down on the price, and then has an inspector tell them that more needs to be done, and then you want tons of info about the renters, leases, contracts, etc, etc, etc.

If you are a cash buyer, go look at the property, make a decision and then do the deal. If you are a wholesaler, then I am with the seller and will be stubborn.

PS  I had enough of wholesalers.  

@Barron Brittingham

It is common. Think about it from the sellers perspective. You come to an agreement on your property with buyer Fred. You turn down 3 other offers, cancel 4 showings and mark it under contract in the MLS. You have agreed on a 7 day inspection with a 3 day window to discuss terms. Fred does a home inspection and has concerns. You two come to an agreement on price or repairs. Say you dropped another $1500 are putting some handrails in and a couple GFCI outlets. Great this deal is going to work. So you get to fixing and making sure everything is good for final walk through before closing.

If you let Fred back in again to look at the handrails and the GFCI outlets 3 weeks before close. I will "guarantee" without a shadow of a doubt that Fred or his agent is going to call you and say "We noticed there is some leakage at the H2O tank and the door to the cellar sticks, there was an odd smell coming out of the dump sink in the basement and we noticed when the furnace kicked on it made a weird sound. We need another $800 to address those or you have to get them checked out by licensed contractors before we close. You can either decline and put it back on the market and hope some of your other interested parties are still interested or cave in to a shakedown. 

@Mike Cumbie fair point. He at least needs confirmation that the repairs were done correctly. Pictures and invoices could suffice, but seeing the work in-person would be better. Seller could make it clear that they have upheld their end of the deal and no additional work requests will be considered. But understand your point about jeopardizing the deal.