Why this home buyer backed out of an accepted offer
Home buying is emotional and very exciting. You've spent hours on Zillow browsing for homes, and spent many weekends going to open houses. Finding the right home has taken over your life, and finally one day, you find the one. You quickly contact your agent and make an offer. You wait to hear back whether or not your offer was accepted. You get a phone call from your agent, who says your offer was accepted! You can't contain your excitement. The next day, your agent shares with you a big red flag on the home.
So, what do you do? Do you back out, or take on the risk and move forward? Do you renegotiate?
Firstly, this scenario is not super common, but it can happen. A good agent should raise any red flags on the home throughout the process and inform you, the buyer. Given what stage you are in the home buying process and the language you have in your offer, you may have options to walk away from the purchase.
At Nuhom, we recently had a first time home buyer back out from an accepted offer.
Here's what happened
A lovely couple in the Boston area with one child and another on the way submitted their offer to buy their dream home. This single family recently had renovations done on the first floor, but the second floor needed a little more work. For them, this was the home they wanted. Luckily for the couple, their offer was accepted at $580K.
Once their offer was accepted, the couple and Nuhom had just under a week until the purchase and sales agreement was to be signed. During this period, Nuhom conducted further diligence on the property and the couple was allowed to conduct a home inspection. Our early findings discovered that there were no permits opened on the property for the first floor renovations.
The sellers had decided to forgo the permitting required to renovate the home, cutting out the building inspections and saving themselves a few thousand dollars and time. This practice is particularly common in the Boston area as many of the properties are older and require some form of TLC. Some buyers are weary of findings like this because in some cases it could mean that the seller cut corners to get the house on the market. In instances like this, the buyer is also left to deal with the Building Inspector later if they discover an issue with the renovations and find out that permits were not pulled.
Solar panels with a ridiculous lease term
Our due diligence also brought to light an interesting finding that ended up being the straw that broke the camel’s back, so to speak. Nuhom found that two months prior to when the offer was submitted, a solar panel was installed on the property by Vivint. That panel had a 25-year lease and required a payment of $130 a month, which would be raised annually by 2.9%.
So, we at Nuhom reached out to our friends at EnergySage and asked them to assess this situation. EnergySage made it clear to Nuhom and the buyer that no one, not the buyer nor the seller, should have a lease of this magnitude, there simply wasn’t much of a net benefit for the homeowner. Based on the lease contract, there was also no backing out without paying the full value of the lease upfront. After receiving this information, the buyers did a little more research into Vivint and found lackluster reviews pertaining to their services.
30 year old furnace and faulty windows in need of replacing
In parallel, the buyers had decided to have the property inspected, a venture that cost them upwards of $500. During the inspection, the buyers found that the furnace was over 30 years old and would need to be replaced soon as well as discovering that all of the windows in the house did not function optimally.
So the buyers now found themselves in the ultimate predicament. Should they commit to their intent to purchase? Should they renegotiate what could have been $70,000 worth of findings? Should they just give up and walk away? Instead of trying to renegotiate accounting for the price of the solar panel, the expired furnace, the faulty windows, and the dated second floor, the sellers decided it would be best to walk away from this deal. For this couple, they didn’t love the home enough and with a baby on the way didn’t want the potential headaches. Both the buyer and seller signed a release in order to terminate the agreement, and the buyer was given a refund of their $1,000 good-faith deposit.
As exciting as buying a house can be, it’s essential that you understand your options. You have the power to buy. You have the power to negotiate. And while sometimes at a cost, you always have the power to walk away. At Nuhom we give you the power, and help you along the way to ensure that your buying experience is as simple as find, buy, and live your life. Let us uncover the concerns and offer you total transparency when providing you with all of the information you need to make the most informed decision regarding your potential purchase. It’s a big one, so let’s do it right!
Also, the couple we told you about earlier? They found another home soon after they walked away from the first deal. Let Nuhom help you find your dream home and take care of the semantics in the process, leaving you to simply relax and enjoy your new home.