Selling Your House with Me-Part 2

Once you have a buyer:

Many people think finding the buyer and signing a sales contract means it’s all over. This could not be more wrong.
Clients ask me “When can I be sure the deal will close?” My answer is “When the money hits your bank account at the end of the process.”
Opening escrow with a buyer is the start of a process with many hurdles, and it may still present you with uncomfortable decisions to make. It is vital to stay engaged in the process and understand the things that will, or may, happen.

Things to understand:
1) You are in a contract. It is a fact of life that it is much easier for the buyer to withdraw than for the seller to withdraw. If the buyer fulfills their obligations, and meets timelines, it is very difficult for you to pull out from selling your house, and if you do so without good legal reason, they can sue you for “specific performance” and make you sell it. This very rarely happens but it is important you do not think you can change your mind easily once under contract.
2) The buyer has the right to make any non-destructive investigations they want during the “contingency period” ( usually 17 days), at their own expense, and you must provide access for this. Usually a buyer just does a “home inspection” using a licensed inspector, but they could, if they choose, do a mold inspection, a roof inspection, a geo-technical inspection, a chimney inspection etc., and you cannot say “No”.
3) It is normal ( except in bank-owned and sometimes short-sales) for the seller to pay for a “wood destroying pest” ( termite) inspection, and also to pay for the work that is needed to remedy problems found. This can cost more than you might expect, and may even involve fumigation of the house , for which you will have to move out for a few days. A typical cost can be $ 2500 but it can sometimes cost a lot more.
4) During the contingency period of the escrow, the buyer conducts their investigations/inspections, finalizes their loan approval, and the lender does an appraisal to evaluate if they think the house is worth the price that has been agreed. After inspections, the buyer may present a “Request for repair”, which you are at liberty to accept in full or in part, or reject. The buyer is at liberty to cancel the sale depending on the response given so the response is a “double-edged sword”. The repairs and response are often a subject of negotiation.
5) Once the contingency period is over, the buyer is asked to remove those contingencies, having hopefully agreed repairs, and had the loan approved, and an acceptable appraisal. Many sellers assume that at this stage, if the buyer pulls out, the seller will get the buyer’s deposit money. While the contract could be read that way, and it may seem fair, it is very, very rare for it to happen, so do not expect it. In general buyers can find a way out and get their money back.
6) Many people want to sell “as is”, thinking this is a way to avoid having to make repairs. This is not always the case. Firstly, selling “as is” may make a buyer assume there is a lot of work to be done and this will affect the price they are willing to offer. Secondly, “as is” does not eliminate the buyers right to make inspections during the contingency period, and they can still make a “request for repair” based on their findings. You can reject that request, but they can also withdraw from the deal on that basis. So, “as is” has it’s place, but is not a simple way to avoid expense and can be counter-productive in the wrong place.
7) If you have altered or added-on to the house, but did not pull permits to do so, it is likely that the appraiser will not include these improvements in the appraisal. Any value you are going to get for such work would be at the behest of the buyer, and they may have to pay cash for the amount over the appraisal.
8) You will be sent a lot of paperwork during the process. One of the most important issues is “Disclosure”. You will be asked to disclose everything you know about the house, good or bad. It is very important that you do this thoroughly and honestly. If the buyer buys the house and you told them that 3 days a week semi trucks run their engine all day by your back window, then they cannot claim to be surprised when it happens. If you didn’t tell them, and a court deems this to me a material factor in their decision to buy, then you are in trouble.