Negotiating Repairs in Tulsa Oklahoma – compromise and compromise are key

In the state of Oklahoma, Buyers and Sellers agree to a “repair cap” when negotiating a real estate contract BEFORE inspections are done. I understand from real estate blogging that it’s not done this way in other states, but that’s how we do it here.

The amount agreed to in the real estate contract is the CAP that the Seller agrees to spend on repairs. After inspections, should the required repairs exceed the cap, the Seller has the right to back out of the contract or we re-negotiate which repairs will be completed and who will pay for what. I encourage Buyers and Sellers to divide the excess equally and sometimes I encourage the Buyer to be selective about which repairs really must be done.

When I’m representing a Buyer, I will look for things that I know will need to be repaired such as wood rot or a hot water heater that needs to be raised. We come up with a best guestimate as to what will be needed and determine the amount to request for repairs – all dependent upon how fair (high or low) our sales price offer is and whether or not we are asking for closing cost assistance from the Seller.

Typically, I will encourage my Buyer to ask for a low amount in repairs. If you ask for $1,000 and only $500 is needed in repairs, the Buyer is not refunded the unspent $500. The Seller is prepared to spend $1,000, but will net $500 more on the transaction if the entire $1,000 is not needed.

The majority of my transactions will result in a few plumbing issues that are inexpensive and easy repairs, perhaps some wood rot that is also easy and inexpensive or maybe the home inspector will identify a window that is not sealed properly. Everyone involved in the transaction sighs with relief when inspections yield such minimal results.

But let’s consider worse case scenarios.

The structural engineer discovers that piering is needed in one corner of the home and estimates that cost to be $3000 ($500 per required pier). Or the termite inspector discovers mold in the crawl space and recommends treatment in addition to a plastic vapor barrier and additional ventilation – that gets expensive.

If any result of the inspections CONCERNS the Buyer, they can withdraw from the contract and be refunded their earnest money, just as the Seller has the right to withdraw from the contract if the repair cost exceeds his repair cap.

At this point, the Seller has taken his home off the market for almost two weeks and the Buyer has spent $500 on inspections and another $375 on an appraisal, so both parties have a vested interest in keeping the transaction together.

Depending on the type of financing the Buyer has, some repairs may HAVE to be made prior to closing. Focus on the NEEDED repairs and give the WANTED repairs a lower priority if necessary. And if either party is short of funds, the Realtor can often recommend a repair person who will wait to be paid at closing.

Negotiating Repairs in Tulsa Oklahoma – compromise and compromise are key

We’re not opponents. One of you wants to sell your home and the other party wants to buy it.

The Seller really didn’t know about the needed piering – when you live in a home, you get use to creaks and groans – we don’t always notice when something begins sagging.

And Mr. Buyer, you knew the home was built in 1950 and you are buying a sixty year-old home – you didn’t really expect it to be perfect, did you?

Let’s compromise. If the Seller will pay for 75% of the piering cost, will you pick up the other 25% and wait to repair the dishwasher out of your year-end bonus?

Compromise allows us all to sleep better at night. Look for solutions, because they are likely right in front of you, waiting to come to light.

If you are interesting in buying or selling a home in the greater Tulsa area, please contact me!