Sean’s Blog

So what happens if the home inspection turns up something big and you and the seller cannot come to an agreement on how to fix it during the rememdy phase.  I’ll give you an example.  We made an offer on a house and it was accepted.  During the open house and during our walkthrough with our realtor the detached garage was locked.  When we had the home inspection we specifically asked the owners to make sure the garage was open.  They said that they kept alot of camping equipment in the garage and that was why it was locked.
When we came for the home inspection, the garage was open.  The problem was, the front support columns had been eaten out by termintes, the main roof supports had been burned in a fire, and the back was knocked off the foundation.  Our inspector said the whole thing was structurally unsound and it would probably be cheaper to tear it down then to fix all the structural damage.
We got one estimate on what a new garage would cost and sent them the estimate to see if they would escrow the money.  The cost seemed a bit high to us, so we also told them if they would like to get several more estimates we would be willing to see them.  The sellers came back and said they did not want to get estimates and they would take $600 off the final price.  The estimate we got was $25000.
After several more go rounds it became apperent that the sellers were not going to meet us even half way on the garage issue.  So that left us with 2 choices.  We could buy the house with the garage issue, knowing that we would have to invest a considerable amount of money to fix it.  Or we could walk away.
We eventually decided that purchasing the house would not be in our best intrerest.  We did really like the house, but there was no way we could afford to replace the garage without a majority being paid by the seller, and even if we could afford it, it added very little value to the house since it was being sold as a house with a garage.  So we asked our agent to draw up what was needed to walk away, which we did.
Things I’ve learned from backing out:

• Sometimes honest attempts just do not work out.  If you’ve made an honest attempt to rememdy everything you should not be upset or feel guilty walking away.
• A house is a home, but is also an investment.  Even if you love the house sometimes it just does not make financial sense to complete the transaction.
• Money off the loan is not the same as money in escrow.  Even if they knocked $20000 off the price of the house I would still have to come up with $20000 dollars to make the garage serviceable.
• If you put up ernest money, you may have to wait for a period of time to get it back or even forfiet it depending on the terms of the agreement.  Talk to your agent about the ramifications.