Strategies for making offers on home

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jplee3
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Strategies for making offers on home

Post by jplee3 »

Hey all,

We're in a curious situation right now regarding the timing of making an offer on a home we like. The list price feels higher for what it is based on previous comps, etc. I say this because of the overall condition of the home. It's partially updated but things that also aren't, and the updates aren't super current either (there are a few dated/original fixtures and furnishings). Many people out there would probably want to replace the wood flooring and re-do the kitchen (both updated and not original) and other parts but it's technically move-in ready at least from our perspective. There is definitely going to be some light touch-up (patching drywall, maybe some touch-up painting) and also likely either [hopefully] minor termite remediation or wood rot repair (seller's agent was *saying* that the seller would cover this but I'm not so sure about that...it'll depend on what other offers come in) plus whatever else might come back from the inspection report. The owner lived in the home for a while but mostly left it sitting vacant, using it for "storage" for years and years. He kept it well-maintained and it has been re-piped with PEX throughout in addition to dual-pane windows installed in *most* places.
The seller's agent indicated (to us and presumably everyone else) that the sellers have been on vacation and aren't coming back until tomorrow (Wed) so there's no rush or need to submit offers before then as they won't start reviewing offers until tomorrow. That said, there are no offers on the table as our agent has been checking in with him. I would think that, regardless of him suggesting waiting, if other buyers *really* wanted the property they would have already submitted offers by now. I'm wondering if the market slowing down has caused buyers around here to be more cautious and play more the waiting game (waiting/holding out for other offers to come in before bidding and potentially escalating) rather than rushing in with insane offers.

My agent was thinking that we could potentially submit an offer *before* tomorrow and also below the list price by a margin of $20k, yet he is somewhat hesitant because the agent seemed confident in expecting offers at the list price or above.

Do you guys think we should put an offer in now and below list? Or at list? The idea of putting an offer in below list is appealing but at the same time feels like it could be something that causes us to be weeded out by the competition. This property is one that ticks all the major boxes - I wouldn't call it a dreamhouse but pretty darned close (if it weren't for dated fixtures/features and minor things like that) and is good enough for us.

Or is it better just to wait and see what the other offers are that come in (the risk of course with this is that you immediately get priced out of the game without knowing that you could have put an offer in, even if there is a low chance of it getting accepted...)

EDIT: I asked this on another forum and a couple friends and the small consensus thus far is to go in at the asking price, waiving appraisal and inspection contingencies (we will still do an inspection regardless) and add an escalation clause as well.
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JoeRetire
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Re: Strategies for making offers on home

Post by JoeRetire »

Find an agent you trust that knows your target market.
Follow their advice.

Real Estate is hyper-local. General strategies in my locale may not work in your locale.
I asked this on another forum and a couple friends and the small consensus thus far is to go in at the asking price, waiving appraisal and inspection contingencies (we will still do an inspection regardless) and add an escalation clause as well.
I would never waive inspection contingencies. Maybe you will get lucky.
Just remember: it's not a lie if you believe it.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

JoeRetire wrote: Tue Jul 20, 2021 5:35 pm Find an agent you trust that knows your target market.
Follow their advice.

Real Estate is hyper-local. General strategies in my locale may not work in your locale.
I asked this on another forum and a couple friends and the small consensus thus far is to go in at the asking price, waiving appraisal and inspection contingencies (we will still do an inspection regardless) and add an escalation clause as well.
I would never waive inspection contingencies. Maybe you will get lucky.
I'm in Orange County CA - waiving the inspection contingency is just as much as part of a "competitive offer" as waiving the appraisal contingency and also offering 40-50% down to be taken seriously. Things may have changed as of late but this was definitely the case when we were making offers as far back as March. We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency. Desperate times call for desperate measures. We actually backed out of escrow on another place a month ago and were prepared to fail to perform but the seller mutually agreed to cancel escrow and went with the next buyer, who they had to lower the price by $30k for (so I'd like to say "you're welcome" to those buyers but I believe they purchased a lemon... that's another story though). Anyway, going about it this way at least gives us an out. I think a lot people, when you tell them you're waiving the inspection contingency, think you're not going to do an inspection at all...
Last edited by jplee3 on Tue Jul 20, 2021 5:45 pm, edited 1 time in total.
adamthesmythe
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Re: Strategies for making offers on home

Post by adamthesmythe »

In markets as hot as we have been reading about none of the minor things you mention would be a negative. Buyers would bid up the price just to get something.

Bidding below or at asking means you are betting things are slower in your area right now. Look around, ask your agent, and make your bet.

Think about probabilities. Offer 20% above asking and you are certain to get it. Ask 10% below asking and you are making a long shot bet.

By the way, if you know the sellers are on vacation all other buyers know it too. The admission that there are no current offers is probably not a useful piece of information.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

adamthesmythe wrote: Tue Jul 20, 2021 5:45 pm In markets as hot as we have been reading about none of the minor things you mention would be a negative. Buyers would bid up the price just to get something.

Bidding below or at asking means you are betting things are slower in your area right now. Look around, ask your agent, and make your bet.

Think about probabilities. Offer 20% above asking and you are certain to get it. Ask 10% below asking and you are making a long shot bet.

By the way, if you know the sellers are on vacation all other buyers know it too. The admission that there are no current offers is probably not a useful piece of information.
Yea, I think you're right. I've been seeing more inventory sitting stale in the area though so making offers under at least on those stale properties makes more sense.
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JoeRetire
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Re: Strategies for making offers on home

Post by JoeRetire »

jplee3 wrote: Tue Jul 20, 2021 5:43 pm I'm in Orange County CA - waiving the inspection contingency is just as much as part of a "competitive offer" as waiving the appraisal contingency and also offering 40-50% down to be taken seriously. Things may have changed as of late but this was definitely the case when we were making offers as far back as March. We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.
you pays yer money and you takes yer chances...
Desperate times call for desperate measures. We actually backed out of escrow on another place a month ago and were prepared to fail to perform but the seller mutually agreed to cancel escrow and went with the next buyer, who they had to lower the price by $30k for (so I'd like to say "you're welcome" to those buyers but I believe they purchased a lemon... that's another story though). Anyway, going about it this way at least gives us an out. I think a lot people, when you tell them you're waiving the inspection contingency, think you're not going to do an inspection at all...
(shrug)

Not something I would ever do. But we each get to decide our own path.
Just remember: it's not a lie if you believe it.
presto987
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Re: Strategies for making offers on home

Post by presto987 »

The OC market has cooled. Lots more places sitting on the market for a while and cutting prices. Homes that require some remodeling seem to be particularly affected, as buyers know that it is hard to find contractors and that the costs will be high.

Of course, if you're looking at a very desirable home, then there is sure to be competition among potential buyers.

If the home gets multiple offers, then presumably they would go back to the buyers and ask them for "round 2" offers. So I'd be comfortable bidding $20k below asking on round 1, especially if you know that no offers have been received yet. While it is true that other buyers could be delaying their offers because they know the sellers are out of town, it may also be the case that they won't get other offers at this stage. Point is: the fact they have no offers yet certainly give you some information compared to the knowledge that they have offers.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

Any house that’s been vacant for a number of years is probably a fixer, and it’s not just possible, but likely, that there are major systems that need attention. I don’t think i would make an offer without an inspection contingency. You want to be able to walk away or renegotiate the deal, when you find out what’s really going on.

It kind of depends on how desperate you are for the home and what the alternatives are if you don’t get this particular house. If this were me and I was not super desperate, I would bid what it’s worth based on the comps, with full contingencies. If I really, truly wanted *this* house, I would probably do a preinspection, then do an escalation clause, without the inspection contingency.
Yes, I’m really that pedantic.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

quantAndHold wrote: Tue Jul 20, 2021 6:49 pm Any house that’s been vacant for a number of years is probably a fixer, and it’s not just possible, but likely, that there are major systems that need attention. I don’t think i would make an offer without an inspection contingency. You want to be able to walk away or renegotiate the deal, when you find out what’s really going on.

It kind of depends on how desperate you are for the home and what the alternatives are if you don’t get this particular house. If this were me and I was not super desperate, I would bid what it’s worth based on the comps, with full contingencies. If I really, truly wanted *this* house, I would probably do a preinspection, then do an escalation clause, without the inspection contingency.
Vacant but it sounded like he was regularly going back to the house to check on things and store stuff. It's not super old (built 1989) and looks to be in decent shape.

BTW: what do you mean by "preinspection"? Where does that fit in with the timeline on everything?
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snackdog
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Re: Strategies for making offers on home

Post by snackdog »

Offer the absolute max you would feel comfortable paying without any regrets later about overpaying or missing out.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

presto987 wrote: Tue Jul 20, 2021 6:25 pm The OC market has cooled. Lots more places sitting on the market for a while and cutting prices. Homes that require some remodeling seem to be particularly affected, as buyers know that it is hard to find contractors and that the costs will be high.

Of course, if you're looking at a very desirable home, then there is sure to be competition among potential buyers.

If the home gets multiple offers, then presumably they would go back to the buyers and ask them for "round 2" offers. So I'd be comfortable bidding $20k below asking on round 1, especially if you know that no offers have been received yet. While it is true that other buyers could be delaying their offers because they know the sellers are out of town, it may also be the case that they won't get other offers at this stage. Point is: the fact they have no offers yet certainly give you some information compared to the knowledge that they have offers.
I think we will just instruct my realtor to make the offer at asking and only waiving the appraisal contingency. We will add an escalation clause of $3k or 5k.
casualflower
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Re: Strategies for making offers on home

Post by casualflower »

Offer list as soon as possible.
Don't waive inspection.
If you can afford to pay all cash, or to cover a sizable ($100K appraisal shortfall) and if already putting 20%, waive the appraisal contingency.
If you can afford to pay all cash, waive the financing contingency.

Stop overthinking the strategy. Just offer and wait.
Normchad
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Re: Strategies for making offers on home

Post by Normchad »

Are you in love with this house? If you just have to have it, you need to make your best offer.

If there are other similarly desirable homes nearby, you don’t need to make such a great offer.

Have you ever owned a home before? How smart are you about maintenance problems?

I ask because letting a home sit for years as storage, is surprising bad for a home. It’s been repiped with PEX. People don’t just do that, something really wrong happened. (Maybe there is hidden water damage or mold that was caused by failed pipes. And that’s why they got replaced?). Termites can be a huge concern. They can cause 10s of thousands of dollars in hidden damage that an inspector is unlikely to find…..

I agree with JoeRetire here, I would never waive the inspection. Ever. I’d rather offer more money and get the inspection. Now if you are really smart about these things, maybe you’re smart enough to do your own mini inspection before making an offer. I think I am that smart, but I still insist on inspections. I think it’s insanity not to do that.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

Normchad wrote: Tue Jul 20, 2021 8:05 pm Are you in love with this house? If you just have to have it, you need to make your best offer.

If there are other similarly desirable homes nearby, you don’t need to make such a great offer.

Have you ever owned a home before? How smart are you about maintenance problems?

I ask because letting a home sit for years as storage, is surprising bad for a home. It’s been repiped with PEX. People don’t just do that, something really wrong happened. (Maybe there is hidden water damage or mold that was caused by failed pipes. And that’s why they got replaced?). Termites can be a huge concern. They can cause 10s of thousands of dollars in hidden damage that an inspector is unlikely to find…..

I agree with JoeRetire here, I would never waive the inspection. Ever. I’d rather offer more money and get the inspection. Now if you are really smart about these things, maybe you’re smart enough to do your own mini inspection before making an offer. I think I am that smart, but I still insist on inspections. I think it’s insanity not to do that.

Good points. Just to be very clear here, even though we would consider waiving the inspection contingency we would absolutely not be waiving or foregoing an actual inspection. There is a difference.

We would probably consider having a termite inspector and a plumber come out to do a follow-up check on things in light of those concerns.

With water damage, if the PEX repiped was due to a slab leak or whatever and they remediated everything then (including water and mold remediation) what would the outstanding concerns be? We would be pressing for disclosures around water damage of course
Last edited by jplee3 on Tue Jul 20, 2021 8:21 pm, edited 2 times in total.
marcopolo
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Re: Strategies for making offers on home

Post by marcopolo »

JoeRetire wrote: Tue Jul 20, 2021 5:51 pm
jplee3 wrote: Tue Jul 20, 2021 5:43 pm I'm in Orange County CA - waiving the inspection contingency is just as much as part of a "competitive offer" as waiving the appraisal contingency and also offering 40-50% down to be taken seriously. Things may have changed as of late but this was definitely the case when we were making offers as far back as March. We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.
you pays yer money and you takes yer chances...
Desperate times call for desperate measures. We actually backed out of escrow on another place a month ago and were prepared to fail to perform but the seller mutually agreed to cancel escrow and went with the next buyer, who they had to lower the price by $30k for (so I'd like to say "you're welcome" to those buyers but I believe they purchased a lemon... that's another story though). Anyway, going about it this way at least gives us an out. I think a lot people, when you tell them you're waiving the inspection contingency, think you're not going to do an inspection at all...
(shrug)

Not something I would ever do. But we each get to decide our own path.

What happened to:
JoeRetire wrote: Tue Jul 20, 2021 5:35 pm Find an agent you trust that knows your target market.
Follow their advice.
What if that was their advice? Sounds like that is the case in some locales?
Once in a while you get shown the light, in the strangest of places if you look at it right.
Normchad
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Re: Strategies for making offers on home

Post by Normchad »

jplee3 wrote: Tue Jul 20, 2021 8:12 pm
Normchad wrote: Tue Jul 20, 2021 8:05 pm Are you in love with this house? If you just have to have it, you need to make your best offer.

If there are other similarly desirable homes nearby, you don’t need to make such a great offer.

Have you ever owned a home before? How smart are you about maintenance problems?

I ask because letting a home sit for years as storage, is surprising bad for a home. It’s been repiped with PEX. People don’t just do that, something really wrong happened. (Maybe there is hidden water damage or mold that was caused by failed pipes. And that’s why they got replaced?). Termites can be a huge concern. They can cause 10s of thousands of dollars in hidden damage that an inspector is unlikely to find…..

I agree with JoeRetire here, I would never waive the inspection. Ever. I’d rather offer more money and get the inspection. Now if you are really smart about these things, maybe you’re smart enough to do your own mini inspection before making an offer. I think I am that smart, but I still insist on inspections. I think it’s insanity not to do that.

Good points. Just to be very clear here, even though we would consider waiving the inspection contingency we would absolutely not be waiving or foregoing an actual inspection. There is a difference.

We would probably consider having a termite inspector and a plumber come out to do a follow-up check on things in light of those concerns.
I haven’t bought a house in 10 years, so I am ignorant here.

If you don’t have an inspection contingency, what would happen if your inspector found a $40K foundation problem? I just don’t know.
Trader Joe
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Re: Strategies for making offers on home

Post by Trader Joe »

jplee3 wrote: Tue Jul 20, 2021 5:31 pm Hey all,

We're in a curious situation right now regarding the timing of making an offer on a home we like. The list price feels higher for what it is based on previous comps, etc. I say this because of the overall condition of the home. It's partially updated but things that also aren't, and the updates aren't super current either (there are a few dated/original fixtures and furnishings). Many people out there would probably want to replace the wood flooring and re-do the kitchen (both updated and not original) and other parts but it's technically move-in ready at least from our perspective. There is definitely going to be some light touch-up (patching drywall, maybe some touch-up painting) and also likely either [hopefully] minor termite remediation or wood rot repair (seller's agent was *saying* that the seller would cover this but I'm not so sure about that...it'll depend on what other offers come in) plus whatever else might come back from the inspection report. The owner lived in the home for a while but mostly left it sitting vacant, using it for "storage" for years and years. He kept it well-maintained and it has been re-piped with PEX throughout in addition to dual-pane windows installed in *most* places.
The seller's agent indicated (to us and presumably everyone else) that the sellers have been on vacation and aren't coming back until tomorrow (Wed) so there's no rush or need to submit offers before then as they won't start reviewing offers until tomorrow. That said, there are no offers on the table as our agent has been checking in with him. I would think that, regardless of him suggesting waiting, if other buyers *really* wanted the property they would have already submitted offers by now. I'm wondering if the market slowing down has caused buyers around here to be more cautious and play more the waiting game (waiting/holding out for other offers to come in before bidding and potentially escalating) rather than rushing in with insane offers.

My agent was thinking that we could potentially submit an offer *before* tomorrow and also below the list price by a margin of $20k, yet he is somewhat hesitant because the agent seemed confident in expecting offers at the list price or above.

Do you guys think we should put an offer in now and below list? Or at list? The idea of putting an offer in below list is appealing but at the same time feels like it could be something that causes us to be weeded out by the competition. This property is one that ticks all the major boxes - I wouldn't call it a dreamhouse but pretty darned close (if it weren't for dated fixtures/features and minor things like that) and is good enough for us.

Or is it better just to wait and see what the other offers are that come in (the risk of course with this is that you immediately get priced out of the game without knowing that you could have put an offer in, even if there is a low chance of it getting accepted...)

EDIT: I asked this on another forum and a couple friends and the small consensus thus far is to go in at the asking price, waiving appraisal and inspection contingencies (we will still do an inspection regardless) and add an escalation clause as well.
Yes. offer whatever you believe is appropriate after you do thorough due diligence.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

Normchad wrote: Tue Jul 20, 2021 8:16 pm
jplee3 wrote: Tue Jul 20, 2021 8:12 pm
Normchad wrote: Tue Jul 20, 2021 8:05 pm Are you in love with this house? If you just have to have it, you need to make your best offer.

If there are other similarly desirable homes nearby, you don’t need to make such a great offer.

Have you ever owned a home before? How smart are you about maintenance problems?

I ask because letting a home sit for years as storage, is surprising bad for a home. It’s been repiped with PEX. People don’t just do that, something really wrong happened. (Maybe there is hidden water damage or mold that was caused by failed pipes. And that’s why they got replaced?). Termites can be a huge concern. They can cause 10s of thousands of dollars in hidden damage that an inspector is unlikely to find…..

I agree with JoeRetire here, I would never waive the inspection. Ever. I’d rather offer more money and get the inspection. Now if you are really smart about these things, maybe you’re smart enough to do your own mini inspection before making an offer. I think I am that smart, but I still insist on inspections. I think it’s insanity not to do that.

Good points. Just to be very clear here, even though we would consider waiving the inspection contingency we would absolutely not be waiving or foregoing an actual inspection. There is a difference.

We would probably consider having a termite inspector and a plumber come out to do a follow-up check on things in light of those concerns.
I haven’t bought a house in 10 years, so I am ignorant here.

If you don’t have an inspection contingency, what would happen if your inspector found a $40K foundation problem? I just don’t know.
You back out on a mutual cancellation agreement or you fail to perform on the loan contingency - we did the former after discovering multiple issues with a home we were recently in escrow on. Basically, the sellers failed to disclose a $17k water damage insurance claim from 2017 after we asked them directly if there was water damage. They disclosed slab leaks from 2013 and 2014 but somehow conveniently forgot about the more recent $17k worth of damage. Shady. We had very good reason and grounds to back out even after having waived the inspection contingency - I think people are conflating "waiving inspection contingency" and "waiving inspections" - those are mutually exclusive and not the same thing.
Last edited by jplee3 on Tue Jul 20, 2021 8:28 pm, edited 1 time in total.
gtg970g
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Re: Strategies for making offers on home

Post by gtg970g »

Normchad wrote: Tue Jul 20, 2021 8:16 pm
I haven’t bought a house in 10 years, so I am ignorant here.

If you don’t have an inspection contingency, what would happen if your inspector found a $40K foundation problem? I just don’t know.
Buyer can still walk away during due diligence, at least here in GA. Not having an inspection contingency indicates that you aren’t going to nickel and dime the seller and are only interested in potential major issues. We’re going through this right now and unfortunately a major issue was found (structural support for back of house is insufficient). Not sure what’s going to happen yet.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

gtg970g wrote: Tue Jul 20, 2021 8:27 pm
Normchad wrote: Tue Jul 20, 2021 8:16 pm
I haven’t bought a house in 10 years, so I am ignorant here.

If you don’t have an inspection contingency, what would happen if your inspector found a $40K foundation problem? I just don’t know.
Buyer can still walk away during due diligence, at least here in GA. Not having an inspection contingency indicates that you aren’t going to nickel and dime the seller and are only interested in potential major issues. We’re going through this right now and unfortunately a major issue was found (structural support for back of house is insufficient). Not sure what’s going to happen yet.
Bingo. It's basically just you taking away another "bargaining chip" as it pertains to getting the seller to give you credits or lower their pricing.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

A preinspection is an inspection done before you make the offer, that doesn’t have any paperwork. Basically, the inspector inspects, tells you what they found, and you make your offer, or not, based on your knowledge from that, without an inspection contingency. It’s common in multiple offer situations.

As far as this house, which had a slab leak that was repiped and the water damage remediated…oh, yeah. I’m definitely inspecting that. 1980’s houses had nightmare plumbing. I would want to make sure the entire house has been repiped properly, and the water damage has all been fixed properly. Also, a lot of other expensive systems in 30 year old houses are at end of life. I’d want to inspect all that stuff before I bought a cracked heat exchanger.
Yes, I’m really that pedantic.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

quantAndHold wrote: Tue Jul 20, 2021 8:40 pm A preinspection is an inspection done before you make the offer, that doesn’t have any paperwork. Basically, the inspector inspects, tells you what they found, and you make your offer, or not, based on your knowledge from that, without an inspection contingency. It’s common in multiple offer situations.

As far as this house, which had a slab leak that was repiped and the water damage remediated…oh, yeah. I’m definitely inspecting that. 1980’s houses had nightmare plumbing. I would want to make sure the entire house has been repiped properly, and the water damage has all been fixed properly. Also, a lot of other expensive systems in 30 year old houses are at end of life. I’d want to inspect all that stuff before I bought a cracked heat exchanger.
How or when do you even do all that though? Presumably the buyer has to give you clearance/authorization and that's even if they want to entertain you... It seems that in a hot environment they wouldn't want to waste their time and would go with the other offers that are on the table no? I could see this making more sense in a slower market or less desirable property though.

So does a "full house repipe" pretty much always mean there was a leak somewhere (major or not) ? How would plumbers know if the piping was done properly if they cant see everything behind the walls? And how can you check or know what longer term water damage looks like? Is it more so just looking for existing areas that are still moist or wet, smelling for mildew, etc? Basically using FLIR guns and moisture meters/probes around all the different fixtures etc? Would the plumber be the one to check all this? Or a water damage/remediation company? Or both?

They mentioned in the description that the ac/furnacelwater heater were all replaced but that could have been back in 2002-2004 lol.
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cchrissyy
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Re: Strategies for making offers on home

Post by cchrissyy »

hi jplee nice to see you here!

in your area, do the seller disclosure packets have an inspection report?

i'm in the bay area and every house on the market the seller has an inspection done before listing, and so, each time i seriously considered offering on one i spent many hours studying the inspector report along with all the other disclosures. i learned a lot!
in the case of the house i bought, the disclosure packet also included the full inspection report and disclosures from when the sellers had bought it several years before.
i understand people are skeptical if those reports would be biased. but i felt comfortable based on all that information in making an offer with no inspection and no contingency, fully understanding that once it was mine i would have various professionals doing work and perhaps identifying issues that i would need to handle. that didn't bother me since the price of any such issues was not material to my big picture decision to own this house.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

cchrissyy wrote: Tue Jul 20, 2021 9:28 pm hi jplee nice to see you here!

in your area, do the seller disclosure packets have an inspection report?

i'm in the bay area and every house on the market the seller has an inspection done before listing, and so, each time i seriously considered offering on one i spent many hours studying the inspector report along with all the other disclosures. i learned a lot!
in the case of the house i bought, the disclosure packet also included the full inspection report and disclosures from when the sellers had bought it several years before.
i understand people are skeptical if those reports would be biased. but i felt comfortable based on all that information in making an offer with no inspection and no contingency, fully understanding that once it was mine i would have various professionals doing work and perhaps identifying issues that i would need to handle. that didn't bother me since the price of any such issues was not material to my big picture decision to own this house.
Hi cchrissyy! seller disclosure packet w/ an inspection report? Hardly... many of the homes I've seen are expectedly sold as-is. At least between March-May that was definitely the case. Even then, I don't think a lot of people provide those because they figure there's no need to in a seller's market. Unless you're saying that most of the sellers up there provide disclosure reports including inspections that were done when the seller purchased? Either way, this doesn't sound commonplace down here. I'm surprised that's such a thing up there... although, I know my parents had a pre-sale inspection report done on the property they sold as advised by their realtor.
rascott
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Re: Strategies for making offers on home

Post by rascott »

This is not an answer you can get here. Nobody knows your market and what's currently going on there.

I'll say that overall the market is cooling nationwide.

Don't get emotional about it. Patience will do you well right now.
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JoeRetire
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Re: Strategies for making offers on home

Post by JoeRetire »

marcopolo wrote: Tue Jul 20, 2021 8:14 pm
JoeRetire wrote: Tue Jul 20, 2021 5:51 pm
jplee3 wrote: Tue Jul 20, 2021 5:43 pm I'm in Orange County CA - waiving the inspection contingency is just as much as part of a "competitive offer" as waiving the appraisal contingency and also offering 40-50% down to be taken seriously. Things may have changed as of late but this was definitely the case when we were making offers as far back as March. We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.
you pays yer money and you takes yer chances...
Desperate times call for desperate measures. We actually backed out of escrow on another place a month ago and were prepared to fail to perform but the seller mutually agreed to cancel escrow and went with the next buyer, who they had to lower the price by $30k for (so I'd like to say "you're welcome" to those buyers but I believe they purchased a lemon... that's another story though). Anyway, going about it this way at least gives us an out. I think a lot people, when you tell them you're waiving the inspection contingency, think you're not going to do an inspection at all...
(shrug)

Not something I would ever do. But we each get to decide our own path.

What happened to:
JoeRetire wrote: Tue Jul 20, 2021 5:35 pm Find an agent you trust that knows your target market.
Follow their advice.
What if that was their advice? Sounds like that is the case in some locales?
Any agent I would trust wouldn't advise trying to weasel around a "no inspection contingency" by failing to perform on a loan contingency.

Your mileage may vary.
Just remember: it's not a lie if you believe it.
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JoeRetire
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Re: Strategies for making offers on home

Post by JoeRetire »

marcopolo wrote: Tue Jul 20, 2021 8:14 pm
JoeRetire wrote: Tue Jul 20, 2021 5:51 pm
jplee3 wrote: Tue Jul 20, 2021 5:43 pm I'm in Orange County CA - waiving the inspection contingency is just as much as part of a "competitive offer" as waiving the appraisal contingency and also offering 40-50% down to be taken seriously. Things may have changed as of late but this was definitely the case when we were making offers as far back as March. We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.
you pays yer money and you takes yer chances...
Desperate times call for desperate measures. We actually backed out of escrow on another place a month ago and were prepared to fail to perform but the seller mutually agreed to cancel escrow and went with the next buyer, who they had to lower the price by $30k for (so I'd like to say "you're welcome" to those buyers but I believe they purchased a lemon... that's another story though). Anyway, going about it this way at least gives us an out. I think a lot people, when you tell them you're waiving the inspection contingency, think you're not going to do an inspection at all...
(shrug)

Not something I would ever do. But we each get to decide our own path.

What happened to:
JoeRetire wrote: Tue Jul 20, 2021 5:35 pm Find an agent you trust that knows your target market.
Follow their advice.
What if that was their advice? Sounds like that is the case in some locales?
Any agent I would trust wouldn't advise trying to weasel around a "no inspection contingency" by failing to perform on a loan contingency, despite the "desperate times".

Your mileage may vary.
Just remember: it's not a lie if you believe it.
gips
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Re: Strategies for making offers on home

Post by gips »

it’s hard to read the market but here in ny, i’d wait to see if we move back to pre-covid levels. but in oc, which sounds like a crazy market all the time, who knows what that means in terms of pricing…

personally, i think of $20k as noise on a house one is going to live in for say 10 to 20 years. i mean yes, it’s a lot of money, but if as you say, it’s the perfect house and you’ve looked at say 50 other places, i’d offer asking.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

Our realtor got some more details: two offers currently on the table that are not above asking. That could mean they are below asking but it could also mean that they are at asking too. The agent didn't disclose that much.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

jplee3 wrote: Tue Jul 20, 2021 9:04 pm
quantAndHold wrote: Tue Jul 20, 2021 8:40 pm A preinspection is an inspection done before you make the offer, that doesn’t have any paperwork. Basically, the inspector inspects, tells you what they found, and you make your offer, or not, based on your knowledge from that, without an inspection contingency. It’s common in multiple offer situations.

As far as this house, which had a slab leak that was repiped and the water damage remediated…oh, yeah. I’m definitely inspecting that. 1980’s houses had nightmare plumbing. I would want to make sure the entire house has been repiped properly, and the water damage has all been fixed properly. Also, a lot of other expensive systems in 30 year old houses are at end of life. I’d want to inspect all that stuff before I bought a cracked heat exchanger.
How or when do you even do all that though? Presumably the buyer has to give you clearance/authorization and that's even if they want to entertain you... It seems that in a hot environment they wouldn't want to waste their time and would go with the other offers that are on the table no? I could see this making more sense in a slower market or less desirable property though.

So does a "full house repipe" pretty much always mean there was a leak somewhere (major or not) ? How would plumbers know if the piping was done properly if they cant see everything behind the walls? And how can you check or know what longer term water damage looks like? Is it more so just looking for existing areas that are still moist or wet, smelling for mildew, etc? Basically using FLIR guns and moisture meters/probes around all the different fixtures etc? Would the plumber be the one to check all this? Or a water damage/remediation company? Or both?

They mentioned in the description that the ac/furnacelwater heater were all replaced but that could have been back in 2002-2004 lol.
A preinspection happens while the house is on the market, and yes, owners will give consent, especially in a market where they expect multiple offers. We sold in that kind of market. We welcomed them, because we knew that all of the buyers were going to waive the inspection contingency. The buyers who had done preinspections knew what they were getting, and we were more confident that they intended to go through with the deal.

All of your questions are exactly why you need an inspection. An inspector will go into the attic, in crawl spaces, and anywhere they have access to, looking for problems. When a house with plumbing in the slab gets repiped, the new plumbing goes somewhere more accessible, often the attic. The inspector can inspect it there. The inspector will also look for signs of water damage, mold, etc. They can’t see everything inside the walls, but they will see stuff that you’ll never see just looking around, partly because they crawl around into places you won’t, and partly because they know what they’re looking at.

A lot of houses that were built in Southern California in the 80’s (I don’t know about other locations, but I do know about here) were originally piped with plastic pipes. Then in the 90’s, there was an epidemic of burst pipes in those houses, and every one of those houses had to be completely repiped, and a nonzero number of them had extensive water damage. It was common to go through a subdivision and see the same plumbing trucks, moving from house to house to house, down a single street.
Yes, I’m really that pedantic.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

quantAndHold wrote: Wed Jul 21, 2021 2:33 pm
jplee3 wrote: Tue Jul 20, 2021 9:04 pm
quantAndHold wrote: Tue Jul 20, 2021 8:40 pm A preinspection is an inspection done before you make the offer, that doesn’t have any paperwork. Basically, the inspector inspects, tells you what they found, and you make your offer, or not, based on your knowledge from that, without an inspection contingency. It’s common in multiple offer situations.

As far as this house, which had a slab leak that was repiped and the water damage remediated…oh, yeah. I’m definitely inspecting that. 1980’s houses had nightmare plumbing. I would want to make sure the entire house has been repiped properly, and the water damage has all been fixed properly. Also, a lot of other expensive systems in 30 year old houses are at end of life. I’d want to inspect all that stuff before I bought a cracked heat exchanger.
How or when do you even do all that though? Presumably the buyer has to give you clearance/authorization and that's even if they want to entertain you... It seems that in a hot environment they wouldn't want to waste their time and would go with the other offers that are on the table no? I could see this making more sense in a slower market or less desirable property though.

So does a "full house repipe" pretty much always mean there was a leak somewhere (major or not) ? How would plumbers know if the piping was done properly if they cant see everything behind the walls? And how can you check or know what longer term water damage looks like? Is it more so just looking for existing areas that are still moist or wet, smelling for mildew, etc? Basically using FLIR guns and moisture meters/probes around all the different fixtures etc? Would the plumber be the one to check all this? Or a water damage/remediation company? Or both?

They mentioned in the description that the ac/furnacelwater heater were all replaced but that could have been back in 2002-2004 lol.
A preinspection happens while the house is on the market, and yes, owners will give consent, especially in a market where they expect multiple offers. We sold in that kind of market. We welcomed them, because we knew that all of the buyers were going to waive the inspection contingency. The buyers who had done preinspections knew what they were getting, and we were more confident that they intended to go through with the deal.

All of your questions are exactly why you need an inspection. An inspector will go into the attic, in crawl spaces, and anywhere they have access to, looking for problems. When a house with plumbing in the slab gets repiped, the new plumbing goes somewhere more accessible, often the attic. The inspector can inspect it there. The inspector will also look for signs of water damage, mold, etc. They can’t see everything inside the walls, but they will see stuff that you’ll never see just looking around, partly because they crawl around into places you won’t, and partly because they know what they’re looking at.

A lot of houses that were built in Southern California in the 80’s (I don’t know about other locations, but I do know about here) were originally piped with plastic pipes. Then in the 90’s, there was an epidemic of burst pipes in those houses, and every one of those houses had to be completely repiped, and a nonzero number of them had extensive water damage. It was common to go through a subdivision and see the same plumbing trucks, moving from house to house to house, down a single street.
Thanks! That makes sense - I guess the risk there is if you do the preinspection but your offer gets passed up or you get outbid, then you're out $300-500 or whatever the cost of the inspection was.

The inspector we had come look at the place we backed out of escrow on *verbally* called out PEX in the attic but didn't include it in his report, then he couldn't remember that he even mentioned that he saw PEX in the attic a couple days after inquiring with him again. This turned out to be a big deal and led to part of the reason we backed out on that home - when I mentioned to a plumber that the inspector said he saw PEX in the attic, the plumber immediately called out "slab leak." We asked the sellers about this and they produced receipts from 2013 and 2014 for slab leak repairs in the kitchen (which I think cost $1000-1500 to fix each time). They didn't disclose until we asked. We asked again and no response (other than "this place is sold as is no credits no repairs blah blah blah" and "we're ready to go with the next buyers in line"). I then found out from the insurance provider who gave us quotes for home insurance that there was a $17k water damage claim filed in 2017 - I'm really not sure how you can find some receipts from 2013-2014 for those slab leaks but somehow conveniently "forgot" and or left out disclosing $17k worth of water damage that was processed through insurance. Felt super shady and that alone was enough for us to back out. The other lasting concern, which we didn't even investigate further, was a potential foundation repair issue in one corner of the house - seemed like there was a good amount of erosion under a corner of the garage which led to more than usual settling (and in turn, there is a slight but noticeable drop-off as you walk into the bedroom that's over that part of the garage). The home is situated on kind of a cut/fill slope from two directions and on top of that the entire neighborhood is situated under an aquifer. Clay soil in SoCal is expansive and soil compacting standards didn't tighten up until *after* that home was built (built 1985). All of those factors made us very uneasy. The more I think about it (only two ways in and out of the tract, potential planned home construction further up the hill from that home, all the dated original fixtures that we would have to update, the potential for discovery of even more expansive termite damage etc), the more I'm glad and relieved we didn't proceed any further with it.

All that to say, though it was good that the inspector *verbally* called out the PEX (and I'm glad he did) I was a bit irked by the fact that he failed to specifically include it in his report (let alone remember what he saw AND called out verbally). I've heard many complaints and the general stigma there is against inspectors in that a lot of them are worthless and a waste of your money. I don't think this one was, in particular, and he was very detailed but I think sometimes they may miss calling out the "tip of iceberg" problems.
presto987
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Re: Strategies for making offers on home

Post by presto987 »

I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

presto987 wrote: Wed Jul 21, 2021 4:35 pm I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
The presence of PEX in the attic indicates a slab leak - that's what the plumber was pointing out.

They may have very well repiped to avoid leaks - I checked the building permit site for my city and I see a "copper repipe" that was done in 2009. So actually not sure if/when the PEX was done but it says so in the listing. Definitely something to look into if we end up getting the offer accepted.

I noticed the flooring all downstairs is laminate. This could have just been a "remodeling choice" by original owner because he felt like he wanted to hardwood floors... or it could have been that there was a slab leak and he decided to rip out the old flooring/carpet and install laminate. *shrug*
We can ask for this stuff in the disclosures I'm sure. I guess it doesn't really matter though... as long as there are no active leaks or water damage that was left un-remediated.
Supergrover
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Re: Strategies for making offers on home

Post by Supergrover »

I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Normchad
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Re: Strategies for making offers on home

Post by Normchad »

jplee3 wrote: Wed Jul 21, 2021 4:58 pm
presto987 wrote: Wed Jul 21, 2021 4:35 pm I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
The presence of PEX in the attic indicates a slab leak - that's what the plumber was pointing out.

They may have very well repiped to avoid leaks - I checked the building permit site for my city and I see a "copper repipe" that was done in 2009. So actually not sure if/when the PEX was done but it says so in the listing. Definitely something to look into if we end up getting the offer accepted.

I noticed the flooring all downstairs is laminate. This could have just been a "remodeling choice" by original owner because he felt like he wanted to hardwood floors... or it could have been that there was a slab leak and he decided to rip out the old flooring/carpet and install laminate. *shrug*
We can ask for this stuff in the disclosures I'm sure. I guess it doesn't really matter though... as long as there are no active leaks or water damage that was left un-remediated.
That’s interesting stuff. Sounds like you might have dodged a bullet in that house. I understand the sellers though, they have other willing buyers who aren’t asking questions…..

The last inspection I paid for was 10 years ago. Our inspector took pictures if everything and included them in the written report. Of course it takes a couple days to make the report, so it wouldn’t have been fast enough to have it hand before making an offer. But yeah, I’d expect inspectors to take pictures, even if it’s just to jog their memory.

PEX is good stuff. I’d like to have it in my home. The reason to bring it up in a inspection is that it’s unusual to see it in the US in older homes, so there is a story there that can be quite revealing.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Last edited by jplee3 on Wed Jul 21, 2021 6:08 pm, edited 2 times in total.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

Normchad wrote: Wed Jul 21, 2021 5:59 pm
jplee3 wrote: Wed Jul 21, 2021 4:58 pm
presto987 wrote: Wed Jul 21, 2021 4:35 pm I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
The presence of PEX in the attic indicates a slab leak - that's what the plumber was pointing out.

They may have very well repiped to avoid leaks - I checked the building permit site for my city and I see a "copper repipe" that was done in 2009. So actually not sure if/when the PEX was done but it says so in the listing. Definitely something to look into if we end up getting the offer accepted.

I noticed the flooring all downstairs is laminate. This could have just been a "remodeling choice" by original owner because he felt like he wanted to hardwood floors... or it could have been that there was a slab leak and he decided to rip out the old flooring/carpet and install laminate. *shrug*
We can ask for this stuff in the disclosures I'm sure. I guess it doesn't really matter though... as long as there are no active leaks or water damage that was left un-remediated.
That’s interesting stuff. Sounds like you might have dodged a bullet in that house. I understand the sellers though, they have other willing buyers who aren’t asking questions…..

The last inspection I paid for was 10 years ago. Our inspector took pictures if everything and included them in the written report. Of course it takes a couple days to make the report, so it wouldn’t have been fast enough to have it hand before making an offer. But yeah, I’d expect inspectors to take pictures, even if it’s just to jog their memory.

PEX is good stuff. I’d like to have it in my home. The reason to bring it up in a inspection is that it’s unusual to see it in the US in older homes, so there is a story there that can be quite revealing.
Yea, I *think* the buyers may have bought sight unseen only relying on the realtor they were using to close... with some snooping I found that it's a couple with four kids who was/is in Italy and is moving over. Unless one of them flew over, they may have had the realtor handle all the logistics (including inspections etc). If that's really the case, they're going to be in for some potentially nasty surprises with that one IMO. Apparently they did a certain amount of renovation on their home that they "invested in" in Italy, so who knows? Maybe they're seasoned RE experts :)

I agree - everything I've heard about PEX is good overall. You're right though - if it's in an inspection, it may indicate that there were past leaks. This isn't necessarily a bad thing I think, but you also want to make sure it was done right and done well based on what I've been hearing and reading.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

Normchad wrote: Wed Jul 21, 2021 5:59 pm
jplee3 wrote: Wed Jul 21, 2021 4:58 pm
presto987 wrote: Wed Jul 21, 2021 4:35 pm I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
The presence of PEX in the attic indicates a slab leak - that's what the plumber was pointing out.

They may have very well repiped to avoid leaks - I checked the building permit site for my city and I see a "copper repipe" that was done in 2009. So actually not sure if/when the PEX was done but it says so in the listing. Definitely something to look into if we end up getting the offer accepted.

I noticed the flooring all downstairs is laminate. This could have just been a "remodeling choice" by original owner because he felt like he wanted to hardwood floors... or it could have been that there was a slab leak and he decided to rip out the old flooring/carpet and install laminate. *shrug*
We can ask for this stuff in the disclosures I'm sure. I guess it doesn't really matter though... as long as there are no active leaks or water damage that was left un-remediated.
That’s interesting stuff. Sounds like you might have dodged a bullet in that house. I understand the sellers though, they have other willing buyers who aren’t asking questions…..

The last inspection I paid for was 10 years ago. Our inspector took pictures if everything and included them in the written report. Of course it takes a couple days to make the report, so it wouldn’t have been fast enough to have it hand before making an offer. But yeah, I’d expect inspectors to take pictures, even if it’s just to jog their memory.

PEX is good stuff. I’d like to have it in my home. The reason to bring it up in a inspection is that it’s unusual to see it in the US in older homes, so there is a story there that can be quite revealing.
Usually on a preinspection, the inspector doesn’t produce a written report. You follow the inspector around, he points stuff out, and you take your own pictures and write your own notes.

The last regular inspection we had, the inspector had his wife sitting in the car, and they were connected with headsets. He dictated as he was going through, texted pics to her as he took them, and when he finished, she printed out the report, which he handed to us on the spot. That was efficient.
Yes, I’m really that pedantic.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

quantAndHold wrote: Wed Jul 21, 2021 6:09 pm
Normchad wrote: Wed Jul 21, 2021 5:59 pm
jplee3 wrote: Wed Jul 21, 2021 4:58 pm
presto987 wrote: Wed Jul 21, 2021 4:35 pm I thought PEX was a good material to use for pipes? Or is your point that the presence of PEX indicates that the house was repiped, presumably due to a slab leak?

I heard that some people proactively repipe to avoid potential leaks. So the fact that they repiped isn’t necessarily a bad indication.
The presence of PEX in the attic indicates a slab leak - that's what the plumber was pointing out.

They may have very well repiped to avoid leaks - I checked the building permit site for my city and I see a "copper repipe" that was done in 2009. So actually not sure if/when the PEX was done but it says so in the listing. Definitely something to look into if we end up getting the offer accepted.

I noticed the flooring all downstairs is laminate. This could have just been a "remodeling choice" by original owner because he felt like he wanted to hardwood floors... or it could have been that there was a slab leak and he decided to rip out the old flooring/carpet and install laminate. *shrug*
We can ask for this stuff in the disclosures I'm sure. I guess it doesn't really matter though... as long as there are no active leaks or water damage that was left un-remediated.
That’s interesting stuff. Sounds like you might have dodged a bullet in that house. I understand the sellers though, they have other willing buyers who aren’t asking questions…..

The last inspection I paid for was 10 years ago. Our inspector took pictures if everything and included them in the written report. Of course it takes a couple days to make the report, so it wouldn’t have been fast enough to have it hand before making an offer. But yeah, I’d expect inspectors to take pictures, even if it’s just to jog their memory.

PEX is good stuff. I’d like to have it in my home. The reason to bring it up in a inspection is that it’s unusual to see it in the US in older homes, so there is a story there that can be quite revealing.
Usually on a preinspection, the inspector doesn’t produce a written report. You follow the inspector around, he points stuff out, and you take your own pictures and write your own notes.

The last regular inspection we had, the inspector had his wife sitting in the car, and they were connected with headsets. He dictated as he was going through, texted pics to her as he took them, and when he finished, she printed out the report, which he handed to us on the spot. That was efficient.
Ah that makes sense. So it's more a 'condensed' inspection if anything. I'm assuming the cost is going to be less doing this too. I've also heard of people bringing a general contractor out with them to walk the house and call out problems. Not sure how this works in terms of attic access though.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

Yeah, I’ve never done a preinspection, but I’ve heard it’s cheaper. The risk, as you noted, is that you pay for an inspection, then don’t get the house.

When we were selling, three of the buyers did preinspections (including trying to look in a section of the attic that was filled with insulation. That was fun to clean up). Two of them went in together on a sewer scope, and one of them even had an electrician out to do an electrical inspection. We got and answered questions about the decommissioned oil tank buried in the yard that we didn’t know was there (our realtor was able to find the contractor from 45 years earlier to answer the question), and they dug up all the old permits from when the house was flipped before we bought it. By the time they made their offers, they knew quite a bit more about our house than we did.
Yes, I’m really that pedantic.
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jplee3
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Re: Strategies for making offers on home

Post by jplee3 »

So apparently we're one of the top three in the running and supposedly will be receiving a multiple counteroffer shortly... this could get ugly.
quantAndHold
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Re: Strategies for making offers on home

Post by quantAndHold »

jplee3 wrote: Thu Jul 22, 2021 5:09 pm So apparently we're one of the top three in the running and supposedly will be receiving a multiple counteroffer shortly... this could get ugly.
Good luck…
Yes, I’m really that pedantic.
MTF
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Re: Strategies for making offers on home

Post by MTF »

jplee3 wrote: Wed Jul 21, 2021 6:01 pm
Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Not where I'm from (a different country, so appreciate it may be different).

By contingency I assume you mean what we refer to as conditions, and by loan contingency I assume you mean that the offer would be conditional on you obtaining finance to complete the purchase.

The law here (and I suspect in the US too) is that you have a duty to take all reasonable steps to satisfy a condition, and it is relatively easy for a vendor to ask you to provide proof that you have applied for finance and been declined.

You could lose your deposit if you fail to perform on the contract and be sued for damages if the vendor sells to someone else at a lower price. Its also not very honourable to induce a vendor into a contract in this way.
Saving$
Posts: 2199
Joined: Sat Nov 05, 2011 8:33 pm

Re: Strategies for making offers on home

Post by Saving$ »

jplee3 wrote: Thu Jul 22, 2021 5:09 pm So apparently we're one of the top three in the running and supposedly will be receiving a multiple counteroffer shortly... this could get ugly.
Maybe the skeptic in me, but I tend not to believe these types of hyped up scenarios. Just offer what you think is fair, and what you would be willing to pay and happy with if you fount out later there were no other offers and you were bidding against yourself.
soxfan10
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Re: Strategies for making offers on home

Post by soxfan10 »

MTF wrote: Fri Jul 23, 2021 2:08 am
jplee3 wrote: Wed Jul 21, 2021 6:01 pm
Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Not where I'm from (a different country, so appreciate it may be different).

By contingency I assume you mean what we refer to as conditions, and by loan contingency I assume you mean that the offer would be conditional on you obtaining finance to complete the purchase.

The law here (and I suspect in the US too) is that you have a duty to take all reasonable steps to satisfy a condition, and it is relatively easy for a vendor to ask you to provide proof that you have applied for finance and been declined.

You could lose your deposit if you fail to perform on the contract and be sued for damages if the vendor sells to someone else at a lower price. Its also not very honourable to induce a vendor into a contract in this way.
I am a bit surprised no one has brought this up, but yes this is all correct.

It is an important point for people considering waiving and inspection contingency with the thought that thye can backdoor problems through the financing contingency, you buy the house when you sign the P&S, not closing. It seems like the seller isnt going to push for it in the situation above, but in many jurisdictions, theyd be entitled to the difference in proceeds from the buyer who breached (I guess "fail to perform" is new nice language for intentional breach). Beyond being a bit on the shady side, there is a good amount of risk in going in with a no inspection contingency with this type of approach as a backstop.
Nowizard
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Joined: Tue Oct 23, 2007 5:33 pm

Re: Strategies for making offers on home

Post by Nowizard »

It's like investing, the pros know more than you do about what is occurring in the market, though it may or may not be rational. Ultimately, the only thing you control is developing a process that incorporates logic, information and your circumstances. The pros and sellers have the upper hand at the moment. The only thing I think may have an impact with multiple offers is if you make an emotional appeal. For example, realtors typically recommend that any religious paintings or objects be removed, and most people are aware of that in our area at least. We obtained our present home after noting the presence of religious items and writing a letter to the owners about how that possibly represented a risk but one we appreciated. Frankly, it was more of a strategic decision than anything esle.

Tim
Supergrover
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Joined: Tue Jan 12, 2021 3:15 pm

Re: Strategies for making offers on home

Post by Supergrover »

MTF wrote: Fri Jul 23, 2021 2:08 am
jplee3 wrote: Wed Jul 21, 2021 6:01 pm
Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Not where I'm from (a different country, so appreciate it may be different).

By contingency I assume you mean what we refer to as conditions, and by loan contingency I assume you mean that the offer would be conditional on you obtaining finance to complete the purchase.

The law here (and I suspect in the US too) is that you have a duty to take all reasonable steps to satisfy a condition, and it is relatively easy for a vendor to ask you to provide proof that you have applied for finance and been declined.

You could lose your deposit if you fail to perform on the contract and be sued for damages if the vendor sells to someone else at a lower price. Its also not very honourable to induce a vendor into a contract in this way.
OP, when you say
We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.

Aren’t you saying you’re “failing to perform” on the contract to get around the fact that you waived the inspection contingency? That’s what I’m trying to understand.
Supergrover
Posts: 74
Joined: Tue Jan 12, 2021 3:15 pm

Re: Strategies for making offers on home

Post by Supergrover »

soxfan10 wrote: Fri Jul 23, 2021 6:45 am
MTF wrote: Fri Jul 23, 2021 2:08 am
jplee3 wrote: Wed Jul 21, 2021 6:01 pm
Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Not where I'm from (a different country, so appreciate it may be different).

By contingency I assume you mean what we refer to as conditions, and by loan contingency I assume you mean that the offer would be conditional on you obtaining finance to complete the purchase.

The law here (and I suspect in the US too) is that you have a duty to take all reasonable steps to satisfy a condition, and it is relatively easy for a vendor to ask you to provide proof that you have applied for finance and been declined.

You could lose your deposit if you fail to perform on the contract and be sued for damages if the vendor sells to someone else at a lower price. Its also not very honourable to induce a vendor into a contract in this way.
I am a bit surprised no one has brought this up, but yes this is all correct.

It is an important point for people considering waiving and inspection contingency with the thought that thye can backdoor problems through the financing contingency, you buy the house when you sign the P&S, not closing. It seems like the seller isnt going to push for it in the situation above, but in many jurisdictions, theyd be entitled to the difference in proceeds from the buyer who breached (I guess "fail to perform" is new nice language for intentional breach). Beyond being a bit on the shady side, there is a good amount of risk in going in with a no inspection contingency with this type of approach as a backstop.
This is what I was trying to say. Thank you.
Topic Author
jplee3
Posts: 214
Joined: Thu Nov 13, 2014 9:15 pm

Re: Strategies for making offers on home

Post by jplee3 »

Supergrover wrote: Fri Jul 23, 2021 7:44 am
MTF wrote: Fri Jul 23, 2021 2:08 am
jplee3 wrote: Wed Jul 21, 2021 6:01 pm
Supergrover wrote: Wed Jul 21, 2021 5:50 pm I don’t understand the difference between waiving the inspection contingency and failing to perform on the contract.
Waiving the inspection contingency is basically you giving up a bargaining chip to potentially get concessions/credits/lowering the home price by the seller (it doesn't mean you can't still do an inspection though). It's just one more contingency that you, as the buyer, needs to sign off on before proceeding in escrow.

Failing to perform on the contract means you failed to remove any given contingency or other do paperwork/signatures for other key items by the agreed upon dates/timeframes in the contract, for any reason: you were just dragging your feet, having second thoughts and taking too long, or intentionally moving slowly because you're trying to negotiate something and you end up exceeding the "due date" - in this case the seller has the right to cancel escrow (buyer could lose their earnest money deposit too in some cases)
Not where I'm from (a different country, so appreciate it may be different).

By contingency I assume you mean what we refer to as conditions, and by loan contingency I assume you mean that the offer would be conditional on you obtaining finance to complete the purchase.

The law here (and I suspect in the US too) is that you have a duty to take all reasonable steps to satisfy a condition, and it is relatively easy for a vendor to ask you to provide proof that you have applied for finance and been declined.

You could lose your deposit if you fail to perform on the contract and be sued for damages if the vendor sells to someone else at a lower price. Its also not very honourable to induce a vendor into a contract in this way.
OP, when you say
We would waive the inspection contingency (barring major health and safety issues) but we would still do an inspection. If there is something major called out that the seller isn't willing to address or work with us on, we basically fail to perform on the loan contingency.

Aren’t you saying you’re “failing to perform” on the contract to get around the fact that you waived the inspection contingency? That’s what I’m trying to understand.
Yea, I think I was misunderstanding what I was trying to say and or conflating "failing to perform" (not taking any action and letting things drag) with being proactive and keeping the communication open. Basically, it's more like "if a major [health & safety] issue comes up where it's going to cost so much $$$ that now you're down payment is impacted because now you have to spend $50k to fix those things (for example), you could argue that the $50k was supposed to be part of your original down payment and thus has impacted your ability to qualify for the loan, etc"
Not so much "oh I hate the way the paint looks in this place and now I have cold feet so I'll just fail to perform" - but I think it might have come off that way when I initially was talking about it lol
Topic Author
jplee3
Posts: 214
Joined: Thu Nov 13, 2014 9:15 pm

Re: Strategies for making offers on home

Post by jplee3 »

BTW: We're now in a counteroffer battle with one other buyer. They're asking for highest and best offer. Not sure how much higher we want to go...ugh I hate these situations. This happened with the last place that we ultimately backed out on too
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