Ask Phyllis: a blog series of frequently asked real estate questions.
How to avoid an escrow renegotiation
Dear Phyllis,
I am a fan of your column, and this has been bothering me. My mother sold her La Crescenta home last year. She received three offers and accepted the highest. After the escrow was opened, the buyer did their inspection and asked for a $35,000 credit. They explained that this amount was due to the old plumbing, roof, and heating. My mother and her Realtor never claimed the home was updated, and the missing shingles made the aging roof obvious. She and her Realtor agreed to provide a $25,000 credit. In your opinion, what is the best way to avoid a renegotiation in escrow?
Lilly
Dear Lilly,
This is a great question! I am a fan of pre-inspections. Even when a seller provides a pre-inspection, the buyer can still have their own inspection.
Disclosing a pre-inspection report to potential buyers gives them a clear picture of the property’s condition, reducing the chances of buyer’s remorse or unexpected renegotiations due to the home’s condition. When buyers feel confident about the property’s condition due to a pre-inspection report, they might be more comfortable waiving the inspection contingency, especially when multiple offers are in play. This can streamline the buying process. Buyers might find the listing less risky since they already know what they’re getting into, potentially leading to more offers.
Sellers often address minor issues before listing or adjust the price accordingly, which is preferable to renegotiations after accepting an offer. Proactively resolving problems can prevent delays and complications during the closing process. With fewer contingencies and less likelihood of renegotiation during escrow due to condition surprises, the closing can proceed more smoothly and quickly, which benefits both parties.
Although you didn’t ask, I wanted to chime in. As your mother had three offers, did her Realtor contact the other two Realtors representing those offers? It’s good practice to do so before agreeing to any credit. Perhaps one of the other buyers would have matched the higher price and accepted the disclosed condition of the property.
I hope this puts this issue to rest for you!
