I recently made an offer on a house, which was accepted. My agent
filled out the "offer" paperwork, which I signed. Before sending it to
the seller's agent he was informed that the Ernest money needed to be
$5000 versus $1000. My agent said that this seemed a little high but
convinced me that in this market this should be acceptable. The
inspection period started after the last counter-offer was accepted
which was 05/03/2005 and therefore ends on 5/13/2005. Here's the catch
as it's related to the inspection period, which make no sense to me.

Apparently once my agent presents the inspection results to the
seller's agent with the list of things that I'd like to be repaired,
the $5000 goes hard (becomes non-refundable). With this in mind, my
agent has told me that he will not submit the results and my request
for repairs until 05/13/2005, the official end of the inspection
period. He tells me to do so would prematurely end the inspection
period. My question is: What's the seller's incentive to negotiate my
requested repairs if he knows that by me simply providing him with my
requested list of repairs he already has $5000 of my money? I thought
the inspection period would be a discovery period where I find out
about any problems with the house, and the 10 days are used by the
seller and myself to negotiate the repairs for the purchase of the
house? Is this just the way it is? Thanks in advance for your thoughts
and opinions.

Whoever you have for a real estate agent sounds like an idiot. The
process should work like you think it does and there should be no
advantage to delaying giving the seller the inspection report until the
last day of the inspection period. Typically, there is an inspection
period with a deadline to give the seller the report. I've never seen
a contract where there is an advantage to delaying giving the report.
It's in both parties interest to get this resolved one way or the other
and the faster the better.

More importantly, with any decent contract, in no way should delivery
of the report mean that your deposit becomes non-refundable. If it
worked that way, you could bid on a house, find $100K worth of problems
during inspection, and if you then walked, you'd lose your $5K.

But then, you signed the contract, didn't you? Did you read it? Have
you read it now? Surely it has the answer to your question. BTW, this
is an example of why most people need a lawyer to help them before they
sign a contract like this.

In article . com,
"tdirodis" wrote:

Before sending it to the seller's agent he was informed that the Ernest
money needed to be $5000 versus $1000.

That should be "earnest" as in, "marked by or showing deep sincerity or
seriousness" -- not "Ernest" (someone's name).

I don't remember the specifics, but I vaguely recall that in our
contract, sending the report to the seller started a clock for him to
respond -- his response started a new clock for us to accept/decline his
offer -- etc. The earnest money's return to us was always
non-refundable if we backed out of the contract we signed.

Kendall

--
Kendall P. Bullen http://www.his.com/~kendall/
kendall@---^^^^^^^

Never e-mail me copies of Usenet postings, please.
I do read the groups to which I post!

First, to be blunt, you have a real problem because (a) you're being
screwed and (b) you don't know what you're doing. Been there !

I'll go one step further and venture to say that your realtor, like
many, is playing the game where they try to get you to buy the house
irrespective of deficiencies in the inspection. Even if your realtor
is a "buyer's agent" - you and he/she have a contract that he/she works
for you - realtors still try to screw you and get you to buy the house,
by playing down defects.

If your agreement works the way they do here, the $5000 earnest money
does not transform into hard money when you present the inspection
list, it becomes a real commitment the moment the purchase agreement is
signed by both parties. The money is to compensate the seller should
you choose to back out of the contract without a valid reason.

Valid reasons include the refusal of the seller to repair items found
faulty during the inspection. The items can't generally be trivial
things, under the purchase agreements here they have a real effect on
the value, longevity, or safety of the house. A roof leak counts, a
missing globe on a vanity light doesn't.

The 10 days (here) are not used to negotiate the repairs, the 10 days
is for you to do whatever inspections you want to do. Sometimes
there's a period defined in the purchase agreement after that during
which you can go back on the seller, using an amendment to the purchase
agreement, and ask for things to be fixed. If for example you ask the
seller to fix certain things on the 12th or the 13th, you still give
them a few days to respond, so they can get estimates and think things
over. The 10 days are for you to do your thing.

Whether your P.A. includes a separate response period or not, the
seller then looks at the list of things you want fixed and responds in
writing to your list. If the seller refuses to fix something on your
list that has a real effect on the value, longevity, or safety of the
house, then you as the buyer can cancel the contract, and assuming your
realtor doesn't try to screw you further, you will get your earnest
money back without any problems. Here there's a form that is signed
called a mutual release, releasing the money back to the buyer from the
escrow agent.

There is a very small chance that the seller might refuse to make
significant repairs that you legitimately requested but then, if you
refuse to go forward, seller refuses to release escrow. Then you have
to sue seller in small claims court to get your money back, but the
odds are they won't do this because it will keep their house from being
actively listed the whole time until the thing goes thru court. The
seller does NOT automatically get your money, that would be ludicrous.
The escrow is NOT non-refundable unless you decide on a whim not to buy
the house. Keep copies of ALL your paperwork in case you have to go to
court. Suing in small claims is not that big a deal and if you have
all your paperwork and your repairs were of a nature that were
permitted to be rectifiable under the P.A., the judge will order the
escrow to be released to you.

At this point what you should be doing is reviewing the inspection and
preparing your request for repairs. If you've already done that tell
your realtor to send the inspection and the request for repairs to the
seller (or their agent). The only possible catch would be if you want
to have more inspections done in the next couple days. If you do, you
have very little time to get them done, it doesn't sound like you need
more inspections. Be careful that you ask for everything significant
that you want seller to fix, the realtor may try to talk you out of
things; make sure they're significant though - termite damage, leaky
roof, leaky plumbing, code violations, etc.

If you don't need further inspections tell your realtor to send the
list of repairs now so they don't f*** up and do it a day late by
accident. Your realtor works for you and whatever you tell them to do
(right or wrong) they have to do, that's why they're called an agent.

The system is gamed even now with the concept of buyer's agents, to get
you to buy the d*** house. Realtors (tm) will go to almost any length
to get you to buy the thing, they'll downplay defects, they'll tell you
that you'll lose your earnest money, whatever. Nobody loses their
earnest money when the seller refuses to fix a legitimate defect.

The above is not legal advice and applies to my locale, you can pay a
lawyer for an hour to look over your mess if you're uneasy.

On 10 May 2005 03:59:02 -0700, someone wrote:


Is this just the way it is? Thanks in advance for your thoughts
and opinions.

And what does YOUR LAWYER say? (Instead of asking a bunch of
anonymous people on the internet from other states.)

If the Seller accepts your list and fixes the stuff, you're on the
hook unless you wanna claim that the fixes were not done right. If he
rejects it, the deal is off, you get your $ back. If he wants to
negotiate, than you mutually want an extension to do that. But all
this is what I say as a "usual" situation - what YOUR contract calls
for, ASK YOUR LAWYER.

(BTW - when I sell, my inspection clause is take it or leave it. You
found it, now decide if you want to go forward or walk away.)


Reply to NG only - this e.mail address goes to a kill file.

The "Ernest" was a spell check issue. Thanks for your reply.

In article . com,
"tdirodis" wrote:

The "Ernest" was a spell check issue.

Sorry, with the cap 'e' I thought maybe it was on purpose.

Thanks for your reply.

No prob - good luck!

Kendall

--
Kendall P. Bullen http://www.his.com/~kendall/
kendall@---^^^^^^^

Never e-mail me copies of Usenet postings, please.
I do read the groups to which I post!

The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed, including
financing." I had no problem with this at the time because it's called
an "inspection PERIOD". This goes back to my original posting - when
is an inspection period not an inspection period? To reiterate my
belief is that this should be a period where discovery is made as to
problems with the home and there are on-going negotiations between the
seller and myself until we come to an agreement or I decide to walk
away. Since (according to my realtor), the second I deliver the
inspection report with my requests to the seller my deposit is lost
what's the point? I guess the only point is that since I now know what
the problems are with the home, to use that information to make my best
guess as to how much it will cost to repair the problems and be
prepared to fix them at my expense or just walk away from the deal.

Tom

The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed, including
financing." I had no problem with this at the time because it's called
an "inspection PERIOD". This goes back to my original posting - when
is an inspection period not an inspection period? To reiterate my
belief is that this should be a period where discovery is made as to
problems with the home and there are on-going negotiations between the
seller and myself until we come to an agreement or I decide to walk
away. Since (according to my realtor), the second I deliver the
inspection report with my requests to the seller my deposit is lost
what's the point? I guess the only point is that since I now know what
the problems are with the home, to use that information to make my best
guess as to how much it will cost to repair the problems and be
prepared to fix them at my expense or just walk away from the deal.

Tom

In article .com,
wrote:

Your realtor works for you and whatever you tell them to do
(right or wrong) they have to do, that's why they're called an agent.

Most people don't have a true buyer's agent, but rather, a selling agent
who's paid half the commission, and so technically works for the listing
agent...who works for...wait for it...the seller! IMHO, most of the
agent & indeed most of the realty business is geared to help the seller
and thus, an in imperfect world, potentially screw the buyer.

Just my two (jaded) cents.

Cheers,
Kendall

--
Kendall P. Bullen http://www.his.com/~kendall/
kendall@---^^^^^^^

Never e-mail me copies of Usenet postings, please.
I do read the groups to which I post!

"The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed, including
financing."

Even this makes no sense. Are you saying you never signed a contract
for sale? Where were the inspection period, contigencies, who holds
the deposit, etc. specified then? If I were you, I'd get to a lawyer
immeadiately. I can't believe anyone would hand over $5K without
reading and understanding exactly what they were signing.

In article .com,
"tdirodis" wrote:

The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed,

The inspection period *sounds* like the ten days you had to get the
inspection done, which you did.

IANAL, but the key phrase is clearly, "and all contingencies are
removed." The inspection contingency isn't removed till you and the
seller sign something saying it's removed. We signed something that
said the seller would give us a $500 credit at closing and the
inspection contingency was removed.

Since (according to my realtor), the second I deliver the
inspection report with my requests to the seller my deposit is lost

Your realtor is on crack, since the phrase you quote clearly states "and
all contingencies are removed"...and they're NOT removed until you & the
seller say they are.

IMHO, as a non-lawyer, but this sounds similar to what I signed and
that's how mine worked....

Kendall

--
Kendall P. Bullen http://www.his.com/~kendall/
kendall@---^^^^^^^

Never e-mail me copies of Usenet postings, please.
I do read the groups to which I post!

In article .com,
says...
The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed, including
financing."

Things vary a lot by state, so take this with a grain of salt, but on
our purchase contract, inspection was a contingency -- there was a
period in which we could get an inspection, then one of the
contingencies was agreement over remedies for anything the inspection
found. If your offer is structured the same way, then your earnest
money does not become non-refundable until after you sign off on the
inspection contingency.

Disclaimer: neither a lawyer nor a real estate agent.

--
is Joshua Putnam
http://www.phred.org/~josh/
Books for Bicycle Mechanics and Tinkerers:
http://www.phred.org/~josh/bike/bikebooks.html

tdirodis wrote:
The only thing I've signed to date is a counter-offer where the an
entry exists that say "ernest deposit to become non-refundable after
inspection period and all contingencies are removed, including
financing." I had no problem with this at the time because it's
called
an "inspection PERIOD". This goes back to my original posting - when
is an inspection period not an inspection period? To reiterate my
belief is that this should be a period where discovery is made as to
problems with the home and there are on-going negotiations between
the
seller and myself until we come to an agreement or I decide to walk
away. Since (according to my realtor), the second I deliver the
inspection report with my requests to the seller my deposit is lost
what's the point? I guess the only point is that since I now know
what
the problems are with the home, to use that information to make my
best
guess as to how much it will cost to repair the problems and be
prepared to fix them at my expense or just walk away from the deal.

Tom

The counter-offer *IS* the Offer for Sale and Purchase or whatever you
call it where you are.

The "and" in the phrase "and all contingencies" is what covers you.
Your inspector's list of deficiencies constitutes a contingency that
the seller must address. If they address them reasonably, then you must
acknowledge that, and presto, the contingencies are removed. Then the
other contingencies get resolved (if there are any) and THEN the
earnest money is theirs.

If the inspection period expired and you never presented a list of
problems, then no contingency would arise from it. The wording is a bit
unclear, it strikes me that it was written by a non-lawyer who wanted
to avoid the unambiguous but unreadable legalese that traditional
contracts are written in.

I see no advantage to presenting the list at the very end of the
inspection period, but I'm not a poker player, as your agent may be.
Let's hope his strategy is good even if he's explaining it poorly.

Chip C
Toronto

"The counter-offer *IS* the Offer for Sale and Purchase or whatever you

call it where you are. "

The point is that the contract should spell out what the contigencies
are, how long the inspection period is, what the buyer/seller rights
are with regard to defects found, etc. This is the core of the issue
and I have yet to see where any of that was spelled out or addressed.

"I see no advantage to presenting the list at the very end of the
inspection period, but I'm not a poker player, as your agent may be.
Let's hope his strategy is good even if he's explaining it poorly. "

Yeah, he could just trust in some strategy from a realtor he doesn't
know. A strategy all the more suspect because I've never seen a case
where it makes sense to hide the inspection report from the seller
until the last minute and this guy claims that once the inspection
period ends, his deposit is binding. Or he could do the smart thing
and get a lawyer to figure out what the hell is going on before he
loses $5K.

Thank you for your in-depth and insightful response to my post. I'm a
first time home buyer (obviously), and unfortunately I'm learning some
hard lessons and not just with this particular issue. As for my
realtor, I genuinely believe he's a man of integrity and it wasn't his
intent to mislead me or hold back information. I think because this
was a fairly new home (2002), he believed that there would be few
problems, which turned out to be the case. If I were the realtor
knowing what I know now I would had the seller amend the clause from
"Earnest deposit to become non-refundable after inspection
period..." to "Earnest deposit to become non-refundable after
inspection period or upon delivery of request for repairs whichever is
sooner." Now of course as a buyer, if I saw it worded this way you'd
better believe I would have said, "No way!"

I think Chip C answers your question in his reply on the 11th. You've
contributed quite a lot to the thread and I appreciate your candor,
thoughts and opinions. I'm learning, and luckily to date the cost of
my ignorance has been too excessive.

I thought
the inspection period would be a discovery period where I find out
about any problems with the house, and the 10 days are used by the
seller and myself to negotiate the repairs for the purchase of the
house?

That is how it should be. Do you have a lawyer? Actually the lawyers
are the ones who should get the inspection reports and then handle any
necessary negotiations on repairs--and the only repairs you should ask
for are issues that are code violations and/or affect your immediate
safety or major structural issues.

"Actually the lawyers are the ones who should get the inspection
reports and then handle any
necessary negotiations on repairs--and the only repairs you should ask
for are issues that are code violations and/or affect your immediate
safety or major structural issues. "

The lawyers are the last ones that should be negotiating repairs. They
haven't seen the property, much less the repairs. How would the
lawyer know exactly what needs to be done, who is capable of, or wants
to do it, etc. The best approach is for the buyer to get estimates to
fix those items on the inspection that he thinks need to be fixed. Let
the seller get estimates too or agree to pick a couple contractors
agreeable to both. Then you can negotiate a discount in price to
cover the repairs, instead of having the seller fix it. That way, you
can get it done the way you want, not have a rushed job, and know that
it was done right. Some repairs you may even want to ignore, because
you're going to remodel a room, for example. In some cases, you may be
able to do it yourself. All this is for straightforward repairs.
Obviously, if you have somthing like a serious structural issue that
you can't easily determine the scope of, then I would walk.

On 10 May 2005 18:40:08 -0700, someone wrote:

.... I guess the only point is that since I now know what
the problems are with the home, to use that information to make my best
guess as to how much it will cost to repair the problems and be
prepared to fix them at my expense or just walk away from the deal.

So why is that "only". Good that you have the ability to walk away
based on what the report found. But as I said before, what does your
attorney say, not just a sales agent.

If the Seller wants to hold the contingency open to negotiate that's
fine. But he can also say take it or leave it.


Reply to NG only - this e.mail address goes to a kill file.

Just a follow-up and a thank you to everyone who responded to my
original question/concern. Everything turned out OK in that the seller
agreed to fix all disputed items. I signed the papers yesterday. This
is my first home and I learned a lot. I actually ended up paying
$1000.00 less than the closing cost listed on the GFE. I think it came
down to really getting to know my broker and real estate agent. Of
course I may have just been lucky and met people that were actually
looking out for my best interest. Ya, I realize that some of you may
think that's a very gullible thing to say, but the proof is in the
final outcome. In terms of the inspection period question, I think my
agent learned a valuable lesson in that whether he's' representing a
first-time home buyer or a seasoned home buyer that he shouldn't assume
anything in terms of what they may or may not understand. Thanks again
to everyone who took the time to give me their two-cents worth.