Their finances needed a little work as do many first time buyers. Over the next two years they religiously built up a credit history and saved money.
They were ready to purchase a home by the winter of 2016. Unfortunately, right when they looking, prices picked up and every had multiple offers on it.
We came across a pristine home, well maintained and updated. It too had multiple offers on it. Offers ABOVE our client’s budget.
We put in a bid for the home anyways. Our offer had one secret weapon. Something the other buyers were too scared to try.
Heather advised our clients to waive the seller warrantied items and opportunity to request seller paid repairs. The plan we presented had ZERO risk (will detail below).
First, why would any seller accept an offer for less, simply because it waived part of the inspections?
Sellers are scared of your inspections
Lets take a few moments and put on our seller’s shoes…
When I list homes for sale I advise my sellers to set aside a budget for repairs during this inspection period. This budget is NO LESS than $1,500 for a perfectly clean home with no visible issues.
Buyers request repairs in vitally every contract. These repairs may range from necessary such as broken window to ridiculous such as a slow bathroom drain.
No matter the request it is astronomically expensive to perform repairs once an offer is accepted aka under contract.
Take the clogged drain for instance. This could be as simple as using a wire brush to clean the sink. Yet once under contract, you have to show invoice from a licensed contractor to do what you could have done for free.
Do not like the buyer’s requests?
Then your home goes back on the market, and you find a new buyer. To top this off, you may be short on money, and supporting your family in another town. Suddenly the inspection period feels like you have a gun to your head.
Let’s step back into your shoes as a buyer. Wouldn’t you notice many of the major issues at a glance? Such as broken windows? Why would you blind side a seller with these items?
The right answer is you should NEVER blindside a seller, EVER! By documenting diligence you have already completed in the contract you stand to get a MUCH BETTER deal.
Gain leverage without sacrificing your diligence
Back to my example with the young family. We had them do as MUCH diligence on the home as possible before submitting their offer. They were confident in their purchase and repairs visible from their preview as well as disclosed by the seller. Knowing this they waived their opportunity to ask for repairs in their offer. This simple gesture gave got them the house, even when other buyers were offering MORE money. Partly because, the seller did not risk $1,500 in repairs. So my friend, what if you too:
- Had done some or all of your diligence up front?
- Already knew you wanted the home?
- Had little reason to back out of the purchase?
- Already knew you did not want any repairs?
You will gain tremendous leverage by communicating this in your offer. Leverage you can use to get things you need from the seller such as a lower purchase price, faster closing, or the furniture thrown in.
There are a few ways you can communicate diligence completed to the seller up front:
Level 1: Sign the seller disclosures and submit with your offer:
ALWAYS do this. Signatures on the disclosures communicate that you have reviewed the docs and are serious about your purchase. Note: some sellers refuse to provide these until you are under contract.
Level 2: Waive the seller provided warranties in your offer:
This communicates that you are not going to haggle the seller for repairs. There are two instances where the seller STILL has to repair HVAC, Plumbing, and Electrical systems. First if these items were working when you offered on the home they have to be working when you close on the home. Second if you are using a loan the bank will require they work as well.
Level 3: Waive your option to request ANY repairs:
If you missed any repairs you have two options (1) cancel the purchase or (2) complete them on your own after you close. There is little risk in this as well as you can quickly get an idea of the expensive repairs during your preview.
Level 4: Waive your inspection contingency:
Seldom do we have clients do this however, it’s EXTREMELY powerful. You cut out the entire inspection contingency from the contract. This accelerates the timeline and eliminates the risk of you backing out. This is well worth considering if you can fit in all your diligence including a professional inspection before offering.
Two tips to reduce inspection risks
If you have already completed inspections then there is no risk in removing them from the offer you make.
You can doubly reduce your risk by doing the following:
TIP 1: Request warranties that survive closing in your offer:
Either you or the seller pays for additional warranties. Many homes already have them too. So it is of no consequence for the seller to transfer those warranties to you.
TIP 2: Request repairs at time of offer:
If there was something wrong with the major systems of the home feel free to negotiate it with your offer. Many times seller’s appreciate having these items pointed out anyways. Back in 2013 I sold a home where the HVAC compressor was missing. We requested it be replaced in our offer. The seller took out a home warranty claim and put on a new HVAC. My client got the home for $10,000 under appraised value.
Buying homes listed “AS-IS”
I recently represented a buyer on a transaction where the seller marketed their home “AS-IS”. This means the seller will not agree to any buyer requested repairs.
My client ran through the home and checked the major systems, HVAC, Plumbing, & Electrical. We wrote the offer and it was accepted!
Then they performed all their inspections to verify it was a good purchase. The home turned out to be one of the cleanest homes I have ever sold with very few minor findings!
The best news was, the same floor-plan was built two doors down. That home was on an inferior lot with no mountain view, swimming pool, or spa. It sold right after our offer was accepted for $85,000 more!
We have countless examples of success stories in completing diligence up front or waiving repairs from the contract. Most are not this extreme, but most everybody comes out very well in the end.
I look forward to helping you out
Drop me a line in the email form below. I’d love to hear from you if you would like to continue this conversation or are interested in buying a home yourself.