Negotiations After Getting Into Escrow

We’ve marketed your home and received an acceptable offer.  The buyer now has the opportunity to inspect the condition of your home.  The California Association of Realtors (CAR) residential purchase agreement (RPA) allows 17 days after acceptance for physical inspections of the property.  This timeframe can be negotiated, but this is the general timeline.

Common Ways Buyers Will Make Requests

Once a buyer gets the inspection reports they have the right negotiate.  If there are things in the reports needing repair the buyer’s agent will advise them to submit a written request to the seller.  They will most likely do so in the following ways.

  1. Seller’s Credit For Repairs:  The buyer asks for money to be held in escrow after the close.  The buyer would obtain a licensed contractor to do the repairs.  The contractor would be paid from these funds.
  2. Reduction In Price:  The buyer will ask for a reduction in the purchase price in the amount of the repairs.
  3. Seller Makes Repairs:  The buyer may ask the seller to make repairs prior to the close of escrow.  The buyer may need this done to obtain their financing.

Once we receive a request for repairs the seller has a few options.

  1. Agree To Request:  We can agree to the full amount of the request and the form in which the buyer is asking for it.  If we agree the contract moves forward as stipulated.
  2. Make A Counter Offer:  We offer them a different amount or a different way the amount is delivered.  We may not want to do the work prior to the close, but may agree to a reductions in price.  The buyer has the right to agree to this and move forward or counter us.  We must then make a decision based on the buyer’s counter offer.
  3. Say No:  Flat out refuse their request and see what happens.

If we cannot come to an agreement with buyers they may back out of the contract.  If that happens they receive their full deposit back.  We wish them the best of luck and place your home back on the open market.

When negotiating I advise the seller to look at the pros and cons of the request.  We contact the inspectors to answer questions about the reports.  We then come to an educated decision in our best interests.  As a rule I do not advise my clients to make cosmetic repairs.  For example buyers asking to re-finish hard wood, or paint would be advised against.  We should give consideration to requests for health and safety issues.  For example no leaking roof, or dry rot repairs should be considered.

Always consult with your Realtor before making a decision to move forward with a buyer’s request.


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