May 31, 2018
Real estate transactions depend upon good faith between buyers and sellers. Unfortunately, sellers don’t always extend this courtesy during a real estate trade. In particular, RECO sometimes hears from buyers who are very upset when they discover on moving day that the home they purchased was altered or damaged after their offer was accepted.
In one recent complaint, RECO heard from a buyer who found that the carpets and appliances had been damaged sometime between his last pre-closing visit and the day he and his wife took possession. This led to thousands of dollars in unexpected costs. He was well within his rights to take the seller to court. However, this could have been a lengthy, expensive and stressful process.
In this case the buyer’s representative was not at fault, as it was the seller who was acting in bad faith. However, there are still proactive steps you can take to protect your buyer client from this type of situation and elevate your level of service.
1. Insert protective clauses in the offer. This could include clauses that speak to the state of the home and its contents on completion date. If there are substantial changes or damage to the home or its contents, the clauses could require the seller to either restore the property to its original condition or compensate the buyer for any necessary repairs.
The offer could also include a clause that allows your client to have a pre-closing visit close to the actual closing day. This will enable the buyer to confirm that the home is in the same condition as when they first saw it, and that the seller has completed any agreed-upon repairs. Remember that pre-closing visits are negotiable. Should the buyer believe that more than one is necessary based on your advice, you could insert a condition to conduct additional visits when you draft the buyer’s offer.
2. Take pictures and document the model and serial numbers for the appliances and other chattels and fixtures that are included with the property according to the Agreement of Purchase and Sale. This protects the buyer in case the seller attempts to replace these items with different models.
3. With a lawyer’s help, negotiate a holdback. Your client’s lawyer might be able to negotiate a holdback of $500 to $1,000 with the seller’s lawyer that would only be released to the seller after closing, once the buyer is satisfied the property is in good condition. This could be particularly relevant if there is reason to suspect the home won’t be delivered in the agreed-upon condition.
It’s important to remember that buying a home is the most significant transaction most people make. By anticipating potential problems and taking steps to protect your client, you can demonstrate strong professionalism and increase client satisfaction with the process.