Hysteria is not a business plan.
Not in real estate or in any sector.
Yet it is the primary tool of those hoping to wow an Instagram/Facebook/TikTok audience. Among those, some potentially well-meaning influencers who say you should Walk Away, Run Away, Back Away or Retreat whenever there’s a bump in the road in your transaction or a blemish on the house you love.
In a splashy and exciting Instagram Reel last week, one such influencer gave a list of Dangerous Defects that should prompt any thinking buyer to run away immediately.
Among them: Siding damage, mold, a “failed” roof, outdated wiring, lack of GFCIs (ground fault protectors for outlets), a pest infestation or an unpermitted (eek!) renovation.
Let’s put away the fear-mongering for a moment and instead assess the actual impact of some of these Dangerous things and see if there might be a fix that does not require the buyer to pour cash into a “money pit.”
Money pit defined: A house so damaged that it cannot be feasibly fixed. Few houses fall into this category in any case, but the term “Money pit” has been increasingly used to describe houses whose agreed-upon sale price is too high for repairs to pencil. That’s not a money pit, it’s a negotiation failure.
Every one of the afore-mentioned “issues” is reparable during the 30 days it takes to complete a transaction. Some of them aren’t even expensive. Most of them, with the help of an experienced negotiator on your side And on the seller’s side, can be fixed with significant help from the seller if not a full seller-paid repair/replacement.
The caveat is this: If you received a significant discount when you originally offered on the house, help from the seller will be limited or potentially non-existent. If your offer was good, and the repair is something Most buyers would request, you stand a very good chance of getting the fix you need and redeeming the house you love.
To win the seller, you will need to channel your inner Reasonable Person. A seller will not replace items that aren’t actually damaged. Have the item assessed. If the siding, despite its label, is in excellent condition, a seller likely will not replace it, although a partial allowance for a replacement might be possible. If sections of it are showing damage, chances are the seller will replace the damaged sections during the escrow and pay the contractor out of proceeds at closing. Of course, we are assuming that the seller has also channeled his or her inner Reasonable Person.
The core of a successful negotiation is knowledge. A buyer’s agent and a seller’s agent should be knowledgeable about most routine repairs and their costs rather than just assuming they’re going to be untenable. They should be gathering data about the exact condition — extent of damage, where it is and how accessible it is — and getting bids from reasonable contractors (most agents know which contractors are charging 30 percent more than others) so that buyer and seller can make decisions based on facts.
In the case of outdated (knob and tube) wiring, most vintage home owners know that knob-and-tube homes are difficult to insure and may even be prepared for the request. Roofs are routinely replaced during transactions, sometimes fully on the seller’s dime but sometimes shared 50-50. Mold is not just sealed these days, but actually removed by environmental companies for $500- $2000 in most cases. GFCIs cost about $150 each, installed by an electrician. Pest infestations are so common in Oregon that no house more than a year or two old would ever sell if pests were a reason to terminate a deal; also, exterminators generally charge less than $1000 — most sellers will pay for it. Lastly, on unpermitted additions: Retroactive permitting is common – a seller need only ask for the city to inspect the addition, make any changes required and then present the approved permit to the buyer. It is seldom a deal-killer.
For most sellers, the decision to repair or not to repair often comes down to whether the deal remains a win for them, even with the cost of the fix. Other considerations have to do with logistics and whether repairs can be paid for at closing rather than up front. Or whether, if you terminate, the next buyer might want exactly the same thing. It always helps if sellers have a Realtor who can prepare them for issues that are likely to arise so they can know their options in advance.
If a seller isn’t game to do the larger repairs, the buyer will need to decide if the deal is still good enough to justify moving forward with the purchase. Only the buyer, armed with facts of both the repair and the purchase deal, can weigh cost and benefit and answer that question.
Among the influencers in the buyer’s life are inspectors, the professionals who find the defects in any home and can advise on what an effective repair would look like and even how much it might cost. But an inspector’s knowledge ends there. It does not extend to the value of the deal on the table. It’s possible that the house needs a $20,000 repair. Does the inspector know that the buyers are paying $50,000 below market for the property or that the seller already agreed to pay their closing costs? Probably not. Does the inspector know that the property is dividable and within the city’s urban growth boundary? Or that it received multiple offers? Probably not.
In the end, a buyer can decide not to tolerate a house that needs a repair. In which case, they should be looking at newer construction. And sellers can refuse to make any repairs, potentially lose a sale and face starting all over again. But these things are up to them, not their Realtors, their inspectors or Tiktok.
For buyers, the impact of a walk-away in a low-inventory market can be significant. It would be one thing if the next great house was right around the corner or down the road but despite increases in inventory in the past two years, we remain under-supplied. Buyers who walk away from a house are not guaranteed to find another that suits them anytime soon, the money spent on inspections is lost and locks on their guaranteed lower interest rates likely will expire.
There are times when walking away may be necessary. But chances are, if you love the house, walking away from it over a repair will be something you regret for a long time.
