Private Sewer Lateral - buyer or seller?

Question

We are selling an old house in the Bay Area that needs a full replacement of a sewer lateral (about $7k). This is a requirement by the city during the sale of a house and we have to be in compliance before transferring title. In your guys' experience, is this something that can be left to the buyer, or it is better if we pay for the repair ourselves before listing the house?

Lee Bell · Answer

$7k seems expensive. How long is this line? Are you on a hillside?

Either way it may be better to fix it first and advertise, new sewer line!

As Joel says a buyer may discount it more than the actual cost.

Joel Owens · Answer

What leverage you have as mentioned depends on the market in favor of the buyer or seller. Also if in your price range is mostly cash buyers or most use finance instead.

There is a HASSLE FACTOR that sellers often do not compensate for. You are saying the cost is likely 7k so assign a value of 7k. Buyer might think they have to do it post closing and live through all of that and the cost might be higher than expected so they assign a value of 20k in costs etc.

Justin Tahilramani · Answer

At a minumum you need to disclose the fee to the seller and the requirement that it be completed prior to closing.

Frank Wong · Answer

Hi Natalie,

In a seller's market that we are in the seller will disclose that the sewer lateral must be replaced and then ask the buyer to agree to replace it on their own in the contract.  Depending on where your property is located the buyer can ask for an extension of repair after the close of escrow and a deposit held for it.  All of this should be negotiated before an offer is accepted.

Marc Winter · Answer

That's probably something that will have to be in a seller disclosure (not sure of your state's laws), so you should always brag about it, not try to hide it.  "The main reason our price is so low is that we know it will take $7k to do this repair".

Most times, a buyer will way overestimate the cost of repairs as a negotiation tactic.  Personally, I would take care of the sewer line and include that it is new in the disclosure.

Otherwise, get at least two written estimates from local licensed plumbers as to replacement costs to provide to the buyer when it comes up.

Good luck with the sale.