Industry Standard on repair/replacement payment

I am a first time homebuyer. I just went under contract for a house and
have a question regarding the industry standard for my area.

I agreed to pay the first $300 of any repairs that the VA appraiser
would say need to be made in order for it to pass inspection. The
seller can opt out of the contract if the repairs are over 5oo.

I talked to someone that has bought a couple dozen homes and he said he
had only heard of either contracts for "as-is" or the buyer would pay
for all repairs/replacements required.

I know the realtor is friends with the seller.

Did I get taken advantage of as a first time buyer?

Is this the norm?

If so, about how often? half or 80-90% of the time? If it isnt the
norm, how rare is it for the buyer to agree to pay the above? a third
of the contracts? a tenth of the contracts?

thanks in advance for any help.
EH

Re: Industry Standard on repair/replacement payment

In article <>,
"Ed" <> wrote:

> I agreed to pay the first $300 of any repairs that the VA appraiser
> would say need to be made in order for it to pass inspection. The
> seller can opt out of the contract if the repairs are over 5oo.
>
> I talked to someone that has bought a couple dozen homes and he said he
> had only heard of either contracts for "as-is" or the buyer would pay
> for all repairs/replacements required.
>
> I know the realtor is friends with the seller.
>
> Did I get taken advantage of as a first time buyer?
>
> Is this the norm?

This is very, very common, especially with VA and FHA sales.
Both the VA and FHA are a bit more particular on the inspections
than banks or mortgage brokers are. They set up these clauses
as "outs" to let either party get out if there are major
undiscovered problems with the property.

> If so, about how often? half or 80-90% of the time? If it isnt the
> norm, how rare is it for the buyer to agree to pay the above? a third
> of the contracts? a tenth of the contracts?

Nearly every inspection will turn up one or two items. Most
of it is trivial, like a missing smoke detector, missing
GFCI, or the need for a stair rail. Those things are cheap
and easy to fix. Every so often, a major problem is found.
That might include something structural, building shift, water
intrusion, mold, etc. In that case, as a first time buyer, you
probably don't want to take on any of those problems. The seller
might choose to live with those problems, and not fix them just
to make the sale. Or the seller might want to do it themselves
on their own schedule, and sell later.

The bottom line is that in real estate, everything is negotiable.

For example, let say the place needs $1500 in repairs. And the
seller backs out. If it is a really nice house, and the deal
is otherwise pretty good, you can step up and kick in the $1500
to make the house sale go through. If the house is marginal and
there are other houses out there that you like, then this is your
out to drop the purchase and go after something else. When you
do that, the buyer might suddenly come back willing to fix the
problems or even drop the price to make it happen.

This is one reason you want a good Realtor, rather than doing it
yourself or getting some weekend wonder real estate hack.

-john-

--
============================================================ ==========
John A. Weeks III 952-432-2708
Newave Communications
============================================================ ==========

Re: Industry Standard on repair/replacement payment

Thanks for your answer

I just wanted to make sure my realtor was being square with me as she
is listing the house as well. And thanks for the time you spend on ths
forum. I will become a regular reader as I would like to start
investing as well
EH
John A. Weeks III wrote:
> In article <>,
> "Ed" <> wrote:
>
> > I agreed to pay the first $300 of any repairs that the VA appraiser
> > would say need to be made in order for it to pass inspection. The
> > seller can opt out of the contract if the repairs are over 5oo.
> >
> > I talked to someone that has bought a couple dozen homes and he said he
> > had only heard of either contracts for "as-is" or the buyer would pay
> > for all repairs/replacements required.
> >
> > I know the realtor is friends with the seller.
> >
> > Did I get taken advantage of as a first time buyer?
> >
> > Is this the norm?
>
> This is very, very common, especially with VA and FHA sales.
> Both the VA and FHA are a bit more particular on the inspections
> than banks or mortgage brokers are. They set up these clauses
> as "outs" to let either party get out if there are major
> undiscovered problems with the property.
>
> > If so, about how often? half or 80-90% of the time? If it isnt the
> > norm, how rare is it for the buyer to agree to pay the above? a third
> > of the contracts? a tenth of the contracts?
>
> Nearly every inspection will turn up one or two items. Most
> of it is trivial, like a missing smoke detector, missing
> GFCI, or the need for a stair rail. Those things are cheap
> and easy to fix. Every so often, a major problem is found.
> That might include something structural, building shift, water
> intrusion, mold, etc. In that case, as a first time buyer, you
> probably don't want to take on any of those problems. The seller
> might choose to live with those problems, and not fix them just
> to make the sale. Or the seller might want to do it themselves
> on their own schedule, and sell later.
>
> The bottom line is that in real estate, everything is negotiable.
>
> For example, let say the place needs $1500 in repairs. And the
> seller backs out. If it is a really nice house, and the deal
> is otherwise pretty good, you can step up and kick in the $1500
> to make the house sale go through. If the house is marginal and
> there are other houses out there that you like, then this is your
> out to drop the purchase and go after something else. When you
> do that, the buyer might suddenly come back willing to fix the
> problems or even drop the price to make it happen.
>
> This is one reason you want a good Realtor, rather than doing it
> yourself or getting some weekend wonder real estate hack.
>
> -john-
>
> --
> ============================================================ ==========
> John A. Weeks III 952-432-2708
> Newave Communications
> ============================================================ ==========

Re: Industry Standard on repair/replacement payment

"Ed" <> wrote in message
news:

> I know the realtor is friends with the seller.
>
> Did I get taken advantage of as a first time buyer?

You should realize that the realtor owes financial allegiance first to the
seller, whether or not the two are personal friends. However you look at it,
a first time buyer is vulnerable. You will most likely come out ahead if you
focus on whether or not the overall asking price is typical of similar
houses in your area, rather than whether or not some small repair cost is
fair.

Re: Industry Standard on repair/replacement payment

"Ed" <> wrote in message
news:
>I am a first time homebuyer. I just went under contract for a house and
> have a question regarding the industry standard for my area.
>
> I agreed to pay the first $300 of any repairs that the VA appraiser
> would say need to be made in order for it to pass inspection. The
> seller can opt out of the contract if the repairs are over 5oo.

It depends on every market. But, typically, if a buyer agrees to some
repairs, the seller should not be able to opt out!

www.AmericanWest.biz

>
> I talked to someone that has bought a couple dozen homes and he said he
> had only heard of either contracts for "as-is" or the buyer would pay
> for all repairs/replacements required.
>
> I know the realtor is friends with the seller.
>
> Did I get taken advantage of as a first time buyer?
>
> Is this the norm?
>
> If so, about how often? half or 80-90% of the time? If it isnt the
> norm, how rare is it for the buyer to agree to pay the above? a third
> of the contracts? a tenth of the contracts?
>
> thanks in advance for any help.
> EH
>
>