Home Repairs in Escrow

When I sit down with a seller, I always counsel them on the process of selling a home. Some people have done it many times, some people have gone through it recently, and then some folks haven’t ever sold a home. So it is important to understand the process, especially after a buyer commits to buying the Costa Mesa home.

 

Don’t get me wrong – the hard part is always finding the right buyer – each home is different, and each Costa Mesa neighborhood is different. Most of my focus will be on the marketing of the home – to other agents, to home buyers, and other residents in the neighborhood. Once the buyer is found, makes an offer, and that offer is accepted, the escrow process starts.

 

The buyer will typically make inspections within the first week of the escrow period, and from those inspections, there will be presented findings of things that might be wrong.

 

 

This is where the process for some sellers can get really interesting. It can be anything from small cosmetic changes to major repairs. There are two kinds of repairs – safety hazards (like faulty furnaces, or electrical issues) or broken items/end-of lifespan issues. An end-of-lifespan issue would be like a roof that has a 20-year warranty and has been on the home for 30 years. Or a water heater that is usually good for 10 years but is now 18 years old.

 

 

Buyers see this, and of course, they want the safety issues fixed. They see the end-of-life issues, and they want new replacements made to those areas.

 

It gets interesting because this now opens a whole new negotiation on the house.

 

As you can imagine, this is not always a favorable topic. I am usually met with two kinds of challenges.

 

You get the “My water heater works just fine, and it will for them too,” to the “How on earth would they want Aunt Mable’s gold flake water faucet replaced? I know it doesn’t work, but it’s an antique!”

 

It’s important to detach yourself from the home, as I always tell my sellers. It won’t be your house after you accept the contract, it’s almost as if you become a tenant until escrow closes.

 

The best approach I’ve found with home repairs in escrow is to deal with repair issues ahead of putting the Costa Mesa home on the market. Not doing simple repairs (or big ones, like a roof) will ultimately cost you thousands in the end. I’m good at getting the most money possible for a home, but it’s got to be in sellable shape. All the basics have to be in working order.

 

 

I know expensive repairs such as windows, furnaces, roofs, etc., and not everyone can afford to make these repairs. But if these items need to be repaired or replaced, the price must reflect those repairs needed. Nothing screams “DON’T BUY ME” like a 40-year-old furnace and a 30-year-old roof. I have also heard from sellers that they would rather wait until after the home inspection and see if the buyer wants those items repaired, “why fix it if I don’t have to”. I always felt this was the wrong approach to selling your home. You want your home to show its best and costly needed repairs will turn away a large group of buyers. As a result, your home will sit on the market longer and eventually, you will have to decrease the price. So in theory, you didn’t want to spend $3,000 on that new furnace, but you have reduced the price of your home since listing it by $10,000.

 

It will only get you in the end – handle the obvious repairs upfront. Can you do AS-IS? Yes, we will talk about that tomorrow.

 

Colin Delaney

 

E-mail me for ideas, or good upgrades if you are thinking of selling your Costa Mesa home.