Articles From Experts
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Express Newsline Articles From Experts |
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When you are either buying a house or selling one, you must be very clear on the issues related to house repairs. You would not want to be surprised about a certain repair work needed on the house after the closing has taken place. Based, on the thought to being cheated, so that later complications don’t arise between the buyer and seller, every contract should contain a repair contingency, a clause that states both the buyer and seller's options if problem issues are discovered. And it's critical that you understand the wording, because once everyone has signed the document, they've agreed to its terms and the offer becomes a contract. Repair Contingency The agents have a repair contingency, which clarifies all the repair issues, which will be handled before the contract is finalized. It will dictates items that are expected to be working properly at closing, and to details about inspections for wood destroying insects. Seller has the option of completing or refusing to complete the repair work. Depending upon this, the seller and the buyer can work out the cost factor if they want to finalize the deal otherwise the deal is cancelled. Every state is likely to have different wordings in the repair contingency. The point is that if you do not understand any aspect of an offer, find someone who can explain it to you. Keep asking questions until you are sure you understand. In Seller’s interest Unless the buyer makes unrealistic demands, it's often in the seller's best interests to negotiate and make repairs. Why? Because once a problem is known, it becomes a material fact that must be disclosed to all potential buyers. Sometimes sellers think they can up the price of the house in order to cover the repair, but if the house is already priced correctly that doesn't usually work. An overpriced house sits on the market instead of selling and the sellers continue to make payments instead of moving into a new house. Banks Might Refuse to Lend Potential problems that are noted on an appraisal throw up a red flag to lenders, causing them to ask for a structural inspection to verify that there are no problems with the house. The bank might even refuse to lend until repairs are made. Buyers Should Delay Some Expenses Buyers should delay as many expenses as possible until repair issues are known and resolved. Why spend money for a title search, survey and other expensive closing cost until you know the house will be yours? Get your inspections out of the way early so that you can negotiate repair issues and get on with the business of closing. Repairs Made Before Closing If the seller elects to make repairs before closing, take your home inspector back for a recheck as soon as you receive word that repairs are complete. Do not wait for the final walk-through! You don't want to find out on the day of closing that repairs have not been made, or have been made poorly. Repairs Made After Closing There are a few basic scenarios for repairs made after closing: --The seller can give you a lump sum at closing to cover the cost of repairs. --The seller can prepay a repairperson to do the work. --A portion of the seller's proceeds can be held in trust after closing and used to pay for repairs. The method you use depends on the complexity of the repairs. Simple items, where you feel the estimate you've received is sufficient, could probably be paid as a lump sum. Extensive repairs often uncover more issues as they progress and nearly always cost more than anticipated. Buyers should consult with an attorney to make sure their interests are protected before agreeing to make repairs after closing.
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