Real Estate Negotiations Suck…

It’s been a long time since the last post huh?! Don’t worry I’ll be back to regular posting next week catching you up on all the good things that have been going on around our household, but in the meantime enjoy this update about our current real estate transaction. We’re in the midst of negotiations with our Houston house and what a cluster… I’ve gotten worked up over this for all of about 18 hours yesterday before I “let it go”.

You’re welcome if this song gets stuck in your head.

Here’s a quick backstory.

The house didn’t get 1 showing the first 3 months. Lot of competition with new construction, and decent, but not amazing photos didn’t help. Then we got a few showings but it was still slow. When we moved our stuff out 3 weeks ago, we took new pictures and they came out great. We got about 10-12 showings after that and ended up with an offer. We began negotiating a price, then they read the disclosure and saw we treated the house for termites after they got into our front room (formal dining room). This is where the fun began!

 

Termites!

Prior to negotiating with our house, the potential buyers backed out of a deal because the seller lied about termite damage and some other water damage that came out in the home inspection. We’re talking major structural damage from termites and leaks. So of course, they were nervous about our house having had termites. We sent them all the paperwork we had with Orkin and explained where we saw the termites and the extent of “the damage” as we knew it. When we asked about looking behind the drywall for structural damage, Orkin recommended that we didn’t need to do that. The Orkin guys literally laughed at us and said, “Guys, this isn’t an infestation, this is you getting termites in your house. They haven’t been here long enough to warrant that sort of cost or do any structural damage. We’ve seen real infestations, and this is nothing…” So for us, the problem was settled. We repaired the small holes in the drywall where they came through during swarming and that was it.

These holes weren’t even big or extensive, I mean we’re talking essentially quarter to half dollar sized holes in a couple of spots in the upper corners of the dining room, towards the front of the house. I also touched up the holes Orkin made so they could treat every 12” along the floorboards, chair rail and crown molding around the 3 walls of the dining room. They drill thru the drywall inject chemicals, move over 12” and repeat. They also treated the room above it along the floorboards to be thorough. While they initially patched the holes, it wasn’t to my liking so I redid them. I patched them all up, retextured as needed and then repainted. Bada bing, bada boom!

Offer Accepted!

After they were appeased about the termites, they made a decent offer and want us to pay $4k in closing costs. We thought that was high so we countered with $1500 in closing and kept the house price the same. They have little cash to bring to the table to cover that so they countered with $3k in closing and added $3k to the house price to balance it out. Sure, that works for us so we accepted.

We entered the 10 day option period and they got the inspections and then the fun began… Because it’s an FHA loan the inspection was a bit more rigorous than usual. Not a big deal on our end because we maintained the house well and didn’t expect any big surprises. Most requests were mundane, 2 outlets aren’t grounded and need to be fixed, replace the water shutoff (on my to do list to get replaced if we hadn’t moved as it was pretty rust), some recommendations for roofing repairs we weren’t aware of, getting the AC serviced because the guy didn’t know how to turn it on. Seriously, he noted it had a 20 degree drop with the cooling side and it heated up to 120 degrees and noted it worked fine for his inspection but because he had trouble figuring out how to turn it on, we should get it serviced… That was about it, except for a small note stating, “in the dining room, soft spots in the drywall were noted indicating potential termite damage. This should be evaluated further by a professional.”

More Termites?!

You can imagine how they took that tidbit and ran with it. The husband wanted us to rip off all the drywall “to take a peek” and see what’s going on back there and confirm there’s no structural damage. Um, no. That was my stance and remains to be my stance. Why in the hell would we want to remove a lot of drywall, open ourselves up to who knows what might be found back there and put ourselves on the hook for whatever gets found? Not this guy.

We offered a compromise. Mrs. SSC researched how much it could cost to get drywall removed, replaced and retextured, repainted and put an estimate together for 200 sq ft. That should be enough to cover a peek, and we’d add in that money to the “repairs”. Another option we put forth was putting $2k into an escrow account that they could submit bills for and we’d cover those repairs after closing up to $2k. In the meantime, we scheduled a plumber and got the water main replaced. Then the buyers said that they’d rather have the $$ and do the repairs on their own after purchase, but they still want to open up the walls.

They also sent over a roofer that found an estimated $1400 worth of repairs and replacing “rotted decking” although he didn’t note where the decking was located, show pictures of “rotted decking” or define the extent of the decking that needed to be replaced. He didn’t even go in the house, so how did he find “rotted decking”? I don’t trust whoever put that report out and we debated about that cost as well. The original inspector never mentioned “rotted decking” and 4’ away was the closest picture he got to where he saw “damaged decking”. Yet the decking is covered with silver insulation on the underside of the decking inside of the attic, so you’d have to be right at a vent or some other place where the decking isn’t totally covered with insulation to see any damage. I don’t believe either one found “rotted decking” because neither provided pictures or specific locations, so that’s annoying. So we compromised to meet in the middle with the roofer costs.

However, we’re adamant about not opening up the walls and mentioned our $2k escrow offer which was more than double Mrs. SSC’s estimate for “taking a peek”. They would still rather have cash, and declined that offer. Instead they want to see the house one more time before the option period closes and “take a look”. We didn’t trust them to not mess with the walls so we sent our realtor out there with them. Plus, he could tell us where the “soft drywall” was located. After that trip we found out the soft drywall was nowhere near the termite damage, and was most likely a patch from the previous owner. We countered that we should remove the added in costs for drywall repairs ~$800 and then our realtor told us this…

 

$200 is a Big Deal…

We found out today, the reason the buyers have been dragging their feet is due to the husband trying to squeeze us for $200 more on the closing/repairs because he knows “we’re rich!” The wife just wants the house and doesn’t want to lose it, but the husband sees it as we have not one, but 2 houses and are living the dream! Well, he’s not far off, but really?! You’re going through all these negotiations squabbling over $200 on a house that’s costing you over $320k?! O…M…F…G… (The F is for well you can guess…)

Mrs. SSC wasn’t supposed to tell me because our realtor thought it would rile me up and well, he’s right. I said, “Great, let’s put the fridge for sale or see if our friend that has been checking on the house wants a free garage fridge… Or tell the buyers it will cost $300 if they want us to leave it there.” My “let it go” just grabbed it right back until Mrs. SSC reminded me I was being as petty as the buyer… Damn it, she was right…  She also reminded me that it’s nice to be in a situation that $200 isn’t that big of a deal. Damn it, she’s right again…

We all know by now, Mrs. SSC is usually right which is why I’ll never have a “fight-o-meter” like The Groovies. She makes a good point that it is nice to not have to worry about $200. It’s also nice not being in a situation where you are going into a significant home purchase with 3.5% down and you don’t have much more cash to bring to the deal much less actually fix any repairs that were uncovered. That’s nothing compared to a co-worker that took out a 105% loan on a new house. Evidently, that’s when the mortgage company rolls the down payment into the mortgage for you. WHAT?! Yeah that’s a thing! Didn’t we learn our lesson about that kind of loan back in 2008?! Evidently not. Regardless, it’s nice not being in either of those situations. So I just remember to be appreciative of where we are financially. While I don’t want to get financially taken advantage of, I’d also rather not have this house as a liability anymore.

Summary

After the revisit to the house, the negotiations stopped. They wanted an extra $2k in “repairs” added to closing costs, rather than “being repaired”. No budging or concessions on the buyers part at all. This $2k amount was what we’d come up with for the original repairs, minus the plumbing as we just got that done and paid for it, and the compromise for the roofer. So they didn’t get an additional $200 out of us, they got an additional $800. What a pisser…

Yup, that says it all…

The $800 was our estimate for the termite drywall peek and repair which is now a moot point. However, we agreed to their concessions for a few reasons. It saves us $800 in “empty house insurance” which was coming due, it saves making another mortgage payment of $1900, and who knows what else could come up with a different buyer. While it’s not the most optimal outcome, pending their financials coming through, we’ll be divested of our Houston house in 14 more days! It’s one ‘yuge liability off our hands and gives us even more extra cash to put towards reupping our brokerage accounts, paying down the mortgage here, updates/remodels of our new house or a little of all 3 options. It’s nice to have options!

What are your thoughts? Were we being too demanding? Were we too giving on the financial perspective? I’d love to hear your take on it that since you’re not emotionally involved.