Dear Judy O.: Some first-time home-buyers of mine in escrow asked - How should we handle negotiating a credit for repairs?
Answer: I know that you are looking at a lot of out-of-pocket costs after your purchase to bring this property to where you want it to be. We have discussed this a number of different ways during the past few weeks–if not month. In the bigger picture though, if you did put $30,000 into this property – adding that to the purchase price – you would own a home at $545,000 with an amazing number of pluses you could not find at this price. After more than a year of looking, I think you know: A 3 bedroom 2 bath home with usable attic space, sitting on a 12,000+ sf lot with views, down a semi-private road in a great location is not going to be found for less than $550,000.
My point of reference with respect to inspections and credits is generally this: Anything the parties negotiate as a credit is really “good faith” money. It is not meant to be a dollar-for-dollar compensation for repairs that the buyer intends to make. The buyer can always cancel the transaction if they feel the value is not there or if they feel these costs are beyond their comfort level. That’s why there is an inspection contingency. I think you need to feel that the value is in your location. If you don’t, then I suggest you cancel this escrow and look for something newer and one without so many repairs.
If you have a question, you can even use “snail mail” me. My office address is 1714 Hillhurst Avenue, Los Angeles, CA 90027.