Last Update: 02/24/16
Buying a house or a condo here in South Florida may be the biggest purchase that someone makes in their lifetime, or one of the biggest. Buyers surf the web looking for the perfect home, as well as visiting potential properties with their real estate agent. Once a buyer has found the house or condo that they can envision living in with their families, that’s when things start getting interesting.
Once the buyer decides on a specific property, there is still the matter of making an offer on the house or condo, and waiting to see if the seller accepts their offer or makes a counter offer. Even sellers anxious to sell and buyers excited to buy can go a round or two in negotiations before there is a firm offer and an acceptance in place. Once the contract is signed and the earnest money deposit(s) is paid to the escrow agent, that’s when when the closing process begins.
Can a Buyer’s Offer Change After the Seller Accepts It?
Once that offer has been accepted by the seller, then the negotiations are pretty much completed, right? Not necessarily.
There are situations where offers to buy a residential property in Florida can be changed before the transaction closes. Real estate lawyers are often invaluable to both the buyer and the seller when these circumstances arise between the parties.
One common example of where the buyer tries to renegotiate the price is during the inspection period.
Here in Florida, particularly South Florida where we have humid and hot weather conditions, residential properties are almost always inspected by a third party inspector for things like mold, leaky roofs, or termites, for example. (Other items routinely inspected include electrical outlets, air conditioning, pool and septic tank)
If the home inspector or the pest inspector finds a problem, like mold behind drywall or termite damage in the attic, then the buyer may decide to either cancel the contract or ask to the lower the purchase price to allow for the cost of repairing the problems the inspector has found. (An alternate strategy is for the buyer and the seller to keep the sales price intact, but have the seller credit the buyer, at closing, the cost of fixing what the inspection has revealed – additionally, some purchase and sales agreements have repair provisions that require the seller to make repairs up to a certain dollar amount.)
Contingencies in the Purchase Agreement Allow for Price Change
Most standard contracts that buyers submit to the sellers include not only the amount of money that the buyer is offering to pay the seller to buy the home or condo, but they also include conditions that the buyer and seller must meet before the deal can go close. These conditions are also known as “contingencies.”
Here, the assistance of a knowledgeable Florida real estate lawyer can be very helpful, both for Florida buyers as well as Florida sellers — particularly if there are disputes during the closing process on whether or not contingencies have been met or satisfied.
(Lawyers are a must especially if the problems are discovered after closing, see “Does a Home Buyer Have a Claim Because They Weren’t Told About a Problem with Their Home?“)
Common conditions or contingencies that buyers place in a purchase agreement which can lead to a price reduction or change in the sales price include:
- Inspection rights – where the inspection reveals major flaws or damage to the property;
- The seller agrees to make repairs before closing, which are not completed;
- The seller agrees to make repairs before closing, which are not completed to the satisfaction of the buyer; and
- Undisclosed problems which are discovered during the inspection/closing process (i.e. title defects, municipal liens, Condominium Association or Homeowner’s Association liens, easements, encroachments, illegal conversions, non-permitted additions, etc.).
Can a Seller Avoid Having the Buyer Change the Price?
What if a seller wants the comfort of knowing that the purchase price they initially accepted will be the amount that they are paid at closing? To achieve this goal, the seller can, in the contract, allocate money that he or she is willing to pay for any needed repairs that are revealed during the inspection.
The seller can also decide at the outset that they will offer their home or condo “as is,” which means that the seller is not willing to the lower the price for any issues that the buyer may find during its inspection period, or otherwise; the buyer agrees to buy the home without any real bargaining power for a price reduction. However, selling a home “as is” may make it harder to sell the property, since it can be seen as a red flag to many that the property has some real flaws or defects. (Which may also keep the property on the market longer.)
What about other clauses or provisions in the purchase agreement? Most purchase and sales agreements contain time frames (i.e. 45 days from the effective date or 5 days prior to closing) that impose a deadline on the buyer to voice any complaints about the condition of property (for example, complaints about the title or the physical condition of the property) and, if the deadline is missed, then the complaint is considered waived and the buyer takes the property subject to the condition. Buyers, and their real estate agents, need to be aware of these deadlines (especially since most standardized sales contracts contain a time is of the essence provision) in order to preserve their rights to cancel or try to negotiate a reduction in the sales price.
A good piece of advice when you and your family are purchasing or selling your family home in one of the biggest transactions of your life is to at least talk with a Florida real estate lawyer. Getting someone to review all of the paperwork isn’t as costly as most of us think it is. And, it’s always a lot cheaper than paying to fix a problem after a closing occurs. Most real estate lawyers, like Larry Tolchinsky, offer a free initial consultation (over the phone or in person, whichever you prefer) to answer your questions.
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