How to Use Property Defects to Improve your Deal
- 15.04.2008
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How do you set the stage for renegotiating your deal when you discover problems with a house under contract? When you buy a house, ask the seller if there are any facts concerning the house that you need to know to make an informed decision. When he says no, that set up a situation where confronting him with a long list of undisclosed problems gives you an excellent opportunity to get him to reduce the price, reduce the cash needed to make the deal, reduce your share of the settlement costs, or improve the terms under which the house is being bought.
The best way to give yourself ample opportunity to inspect a property is to provide in your purchase contract that ‘final acceptance of this contract is subject to the buyer’s approval of the condition of the premises, title, and financial information on the date of settlement.’ There’s a reason for making the date of settlement the date when the contract can be accepted or rejected:
First of all, you’ll have all the loan payoff data in the event you’re taking title “subject to” the existing financing.
Next, you’ll have had ample opportunity to examine the title being conveyed together with any defects reported on the title insurance policy.
Finally, you’ll be able to inspect the premises with all the seller’s furnishings removed to discover faded paint, worn spots in the carpeting, holes behind mirrors and pictures, inoperable appliances or equipment, and neglected landscaping.
Hiring a professional inspector is always a good idea, but it’s still a good idea to look things over personally to be sure nothing important has been missed. Based upon what you find when you inspect the property, you’ll be able to renegotiate the deal to provide any funds or profit margin required to offset the expenses of making needed repairs and upgrades.
