Friday, October 15, 2021
Sellers, receive a high dollar request for repairs? Get a second opinion...
Request for Repairs...the scope of work consisted of several big-ticket items -- replacing the sewer line, re-plumbing the entire house, and making substantial repairs to the swimming pool and pool equipment. I think the full value of the work based on the bids the buyers had obtained was in the $50,000 range. YIKES!
The seller, of course, was understandably upset about this and they were trying to wrap their minds around either absorbing the costs of repairs or absorbing a massive price reduction. Even in this hot Sacramento real estate market, some sellers may consider negotiating or accepting requests like this without questioning the validity of the request. Sellers, please don't do that.
I immediately wanted to know two things: (a) were these issues legitimate? And (b) if the issues were legitimate, were the bids the buyers provided competitive prices?
Some home sellers do not realize -- in the face of massive requests like this, you can and should get a second opinion. We quickly called a couple of my go-to contractors and the seller's pool guy for second opinions and competitive bids.
So to replacing the sewer line: (a) yes the issue was partly legitimate. As it turns out the second contractor was of the opinion that only about half the repairs recommended by the buyer's contractor were actually necessary. And (b) the competitive bid was about a third the price ($8,700 vs. $28,000)!
To re-plumbing the entire house: (a) no, not legitimate. The seller had disclosed some plumbing leaks and the buyer decided that they would prefer to re-plumb the house, however this work turned out to be an upgrade rather than a necessity. And (b) the seller did not obtain a second bid and flatly rejected this part of the request.
To resurfacing the swimming pool: (a) no, not legitimate. They stated that resurfacing would be an upgrade and not a necessity. And (b) the seller did not obtain a second bid and flatly rejected this part of the request.
Repairing the pool equipment: (a) yes, some repairs were necessary. And (b) competitive bid was much less!
In the end, the seller agreed to reduce the price by $10,000 to offset the future expense of repairs, and the buyer completed the purchase of the home as-is...$10,000 is still a chunk of money but still less than the cost of the legitimate repairs...and without validating the request and getting other opinions and bids, that could have easily been a much higher number, and it is a FAR cry from a $50,000 haircut. This is a great outcome for the seller.
So the moral of the story -- sellers, don't let a buyer walk all over you. Validate exorbitant requests like this one and get second opinions and competitive bids.