This may just be more interesting than even the mad rush to reach the April 30th tax rebate deadline for buyers & sellers--the inspection contingency phase. Most home inspections will be done (if not already) in the next few days, which brings up some key negotiating points to the advantage and disadvantage of both parties. Let's take a look:
Buyers
The buyers that snuck in under the cover of 11:59 PM have to their credit a lump sum of money coming their way that's greatly to their benefit. Instant equity--whether eventually used for closing costs, home improvements, down payment, paying back mom & dad, or a buffer zone to later ease financial strain during a relocation.
However, not all is joyful in the land of potential home ownership. Some home inspections may be coming back with a laundry list of items that weren't carefully recognized as they dashed from house to house. There's the roof with the cracking & curling shingles, the windows w/ broken seals, a water heater on its last legs, a fireplace w/ a crumbling chimney. The seller knows that if you back out now and write a different purchase agreement, you wave "bye bye" to government stimulus dollars. What to do? Bite the bullet and proceed on a house you're now unsure of? Or do you back out & rationalize it saying the sellers of the home I really want may reduce their price even more in this post-tax rebate era?
Sellers
Congratulate yourself sellers--you have an accepted purchase agreement in a spring market when prices will most likely be the highest all year! This has now freed many of you to pocket $6500 and become that all important purchaser, and you see the merits of your investments clearly. However, the buyer has now requested a laundry list of things to be done on your home, and or has asked for the price to be reduced based upon inspection. You could just call their bluff, especially since they locked in for the 8k as a 1st time buyer--"no house, no money." In many ways, you might just be in the driver seat holding them randsom to their own sense of urgency brought about by many factors.
And yet, let's just say they decide this wasn't the best decision overall and could be willing to back out. Where does that place you? If you are one of those $6500 recipients, you're losing cash as well if your sale falls through. And if you go back on the market, you do so in uncharted waters as spring turns into summer which turns into fall & winter. Price adjustments, market time, the inability to move on with life. Are you willing to risk all of that for a simple punch list and a relatively smaller sum of cash?
Some thoughts to consider as sellers, buyers, and real estate professionals as we all work through some interesting days....thoughts?
Happy Houses!
Aaron
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