Advice Needed: Seller's Counter Offer Raises Concerns - LTV, Inspection Timing.

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Advice Needed: Seller's Counter Offer Raises Concerns - LTV, Inspection Timing.

Abhishek AgarwalPro Member
Investor · San Jose, CA · Member since 2024 · 20 posts · 5 votes

Hello fellow homebuyers,

I recently made an offer on a house with an inspection contingency covering the roof, foundation, electrical, plumbing, backyard fencing, and pest infestation. The house is already occupied by a tenant and is on lease until April next year. The seller has countered with the following conditions:

  1. - Loan to value (LTV): 80%
  2. - Earnest money held by seller's recommended property management company
  3. - Final inspection within 1 day of closing
  4. - Commission paid by to buyer's agent is 2% of final sales price.

I'm seeking advice on how to proceed, as I have some concerns:

  1. - Why would the seller request an 80% LTV? What benefit does this provide them?
  2. - Does the "final inspection within 1 day of closing" replace my initial inspection contingency? If so, this seems risky as it leaves little time to address any issues? 
  3. - Could the seller be trying to hide potential major issues in the house by leaving no room for inspection results or could it be just ensuring not to disturb the tenant?
  4. - Is it normal for the seller to specify the buyer's agent commission? What 
  5. - Should I be concerned about the earnest money being held by the seller's recommended company?

Any insights or recommendations would be greatly appreciated. I want to make sure I'm not overlooking any potential risks or unusual requests in this counter offer.


Thank you in advance for your help!

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Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y

@Abhishek Agarwal these really aren't that bad once you really understand them!

1) LTV - seller doesn't want to you claim at last minute that you didn't get approved for a 10% NOO loan, so can't close and you want your EMD refunded.

2) PMC Holds EMD - PMC needs to be a licensed RE broker to do this. Seller wants them to hold EMD as easier for them to liquidate if you violate purchase contract.

3) Final Inspection - this really has nothing to do with your inspection request. Many buyers want to do a Final Walk-thru the day of or day before closing to make sure there are no surprises since their inspection.

4) Seller wants to only pay 2% commission, you will need to compensate your agent if they want more or your Buyer's Contract requires more.

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y

    @Abhishek Agarwal

    Are you using an agent? Hey your agent involved to get answers to the questions and speak directly with seller / sellers agent

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  • Abhishek AgarwalPro Member
    OP
    Investor · San Jose, CA · Member since 2024 · 20 posts · 5 votes
    1y

    @Chris Seveney Yes, working with an agent. I will have them look into this. I posted here to get some insights from our community so that I can ensure that I am not missing anything. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    1y

    @Abhishek Agarwal

    Those are very weird requests from a seller which really don’t make sense- which is what I am guessing your thoughts - which are correct

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  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Abhishek Agarwal these really aren't that bad once you really understand them!

    1) LTV - seller doesn't want to you claim at last minute that you didn't get approved for a 10% NOO loan, so can't close and you want your EMD refunded.

    2) PMC Holds EMD - PMC needs to be a licensed RE broker to do this. Seller wants them to hold EMD as easier for them to liquidate if you violate purchase contract.

    3) Final Inspection - this really has nothing to do with your inspection request. Many buyers want to do a Final Walk-thru the day of or day before closing to make sure there are no surprises since their inspection.

    4) Seller wants to only pay 2% commission, you will need to compensate your agent if they want more or your Buyer's Contract requires more.

    [email protected]248-209-6824
    Logical Property Management4.9458 Reviews
    WebsiteView Page
    5Reply
  • Abhishek AgarwalPro Member
    OP
    Investor · San Jose, CA · Member since 2024 · 20 posts · 5 votes
    1y
    Quote from @Drew Sygit:

    @Abhishek Agarwal these really aren't that bad once you really understand them!

    1) LTV - seller doesn't want to you claim at last minute that you didn't get approved for a 10% NOO loan, so can't close and you want your EMD refunded.

    2) PMC Holds EMD - PMC needs to be a licensed RE broker to do this. Seller wants them to hold EMD as easier for them to liquidate if you violate purchase contract.

    3) Final Inspection - this really has nothing to do with your inspection request. Many buyers want to do a Final Walk-thru the day of or day before closing to make sure there are no surprises since their inspection.

    4) Seller wants to only pay 2% commission, you will need to compensate your agent if they want more or your Buyer's Contract requires more.


     Thanks Drew. This is helpful context.

    0Reply
  • Tony Savage
    Real Estate Broker · San Diego, CA · Member since 2016 · 187 posts · 117 votes
    1y
    1. - Loan to value (LTV): 80%: Why does the seller care what the LTV is as long as he nets what's expected from the purchase price
    2. - Earnest money held by seller's recommended property management company: Do not let the sellers PMC hold your EMD even if the company has a licensed broker. Wire the EMD to escrow
    3. - Final inspection within 1 day of closing: With the home being occupied I would want at least three days before closing to conduct the final walk-thru. You never know what a tenant will do to a place
    4. - Commission paid by to buyer's agent is 2% of final sales price: There has been a change in the industry as to how buyer agents get paid.  The seller is willing to pay a 2% commission to the buyers agent, that's not bad.  If you are represented by an agent. You should of signed a buyer broker agreement stipulating how much you're going to pay your agent.

    Good Luck!

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