SEAL THE DEAL: Agents can repair unexpected glitches


July 4, 2004

Closing day was a glorious one for Dan Bertell. After many months on the market, his rental property, a three-story duplex on Maryland Street in Grosse Pointe Park, finally had a buyer.

With the contracts signed and the property exchange secured, Bertell's only task was to give the present tenants notice to vacate and to make some minor repairs the city required.

Then, the unthinkable happened -- a surefire deal buster.

"Two weeks before the tenants were to move out, I went to Florida for a vacation," said Bertell, who lives in Nashville, Tenn. "My Realtor called and said, 'There's been a fire.' I thought he was joking."

Realtor Mike LeVan of Adlhoch & Associates in Grosse Pointe Woods wasn't laughing. He said he got the initial call from the city's police chief because his For Sale/SOLD sign was still on the front lawn. Turns out a cigarette caused the flames that destroyed the entire third floor and a portion of the roof.

Bertell figured the buyer would back out of the contract, but LeVan's experience in working to avoid hurdles -- called "deal busters" in the industry -- told him otherwise.

"I was really worried," Bertell said. "I didn't know if I had a buyer anymore."

Certainly, real estate sales have fallen through for lesser problems, but LeVan knew this situation might just work to the buyer's advantage.

"We had to do quite a bit of additional negotiating because the house wasn't going to be delivered within the time frame or in the condition the buyer had seen it," LeVan said.

After consulting with LeVan and an attorney, the buyer kept the home and the terms of the original contract and even participated in the repair process.

"The moral of the story," LeVan said, "is that everything is negotiable, even the worst of situations involving such things as unscrupulous lenders, dishonest sellers and poor credit."

LeVan and Jon Boyd, a broker with the Buyer's Agent of Ann Arbor, agree that good agents can help their clients get or pay reasonable costs for repairs, resolve credit issues and offer guidance when a deal isn't worth the effort.

"I was negotiating an agreement on a home on Whitmore Lake that was about 30 years old," Boyd said. "When the inspector looked into the attic, he thought there had been a fire."

Upon closer inspection, he realized the black coating on the wood beams was mold.

That is a difficult repair to make and well beyond what the buyers were willing to do, he said. They backed out.

In another case, however, a home inspector reported that clay walls in a basement were deteriorating. The listing agent said the seller had a basement contractor inspect it and the contractor gave it his OK.

"Well, the basement contractor had no recollection of inspecting the house and the seller couldn't produce the report so we negotiated to have the seller share the cost of the repair," Boyd said.

"Most sellers agree to cover minor repair costs." Boyd said. "But not always."

"There are times when you just can't negotiate a settlement," LeVan added. "Sometimes the buyers want too much."

"For instance," he said, "if there is a problem with the furnace, it's unreasonable for the buyer to ask the seller to purchase a new one.

"That isn't a fair request for the seller to pay 100 percent for the new furnace when the buyer contracted to buy the house with a used furnace," Boyd said. "A repair of that item is a fair solution, but the buyer doesn't have the right to expect everything to be brand-new."

In some cases, the sellers won't budge.

There was a seller whose home had two fireplaces but only one worked, Boyd said. When he pointed it out to the buyer, he made it clear that he had two other interested buyers who were not concerned about the condition of the second fireplace.

"We didn't have to negotiate," Boyd said. "Our buyer bought the house." Boyd, whose company represents only buyers, said clients should be counseled beforehand that there are no perfect properties regardless of the price.

"We try to find the best match for their needs," he said.

"For example," he said, "potential homeowners may love the floor plan of a particular home, but hate the 1970s-style kitchen. But because the kitchen is a fixable issue, they typically wouldn't ask for anything from the seller."

The carpet, the paint, the kitchen are all changeable things, Boyd said. On the other hand, problems such as foul odors, electrical problems, roof repairs and water damage warrant some compensation.

Fixes reduce stress

Kay Jarboe, 38, got lucky with the home she chose to buy in Grosse Pointe Park.

"I really liked the house because it had a nice layout and a big backyard for my daughter," she said. The location was appealing, too. "I live in Wixom and work in downtown Detroit and wanted a shorter commute."

The roof was in poor condition, though, and the seller agreed to have it replaced before the new homeowner moves in this weekend.

Jarboe said she was impressed that her agent, LeVan, made several visits during construction to make sure the work was satisfactory. Minor repairs like replacing drywall in the garage were negotiated before the sale and the seller took care of those, too, she said.

"I'm a single mom and it's stressful enough to move into a new home, let alone having a list of repairs when I get there," Jarboe said. "Knowing that the home will be ready when I get there is a nice feeling."

Men and women, by the way, are not that different in what they expect from a home, LeVan said.

"There used to be the stereotype that women were more concerned about the decorations and the condition of the kitchen, but I don't think that's nearly as true as it used to be," he said. "I've seen just as many situations where the woman says she can live with the kitchen and the husband says it has to be gutted."

A driveway solution

Trevin Wallin, who's moving his family from Salt Lake City to the Ann Arbor area this month, said he and his wife were happy with the home they found in Dexter.

The 3-bedroom, 2 1/2-bath home with a partially finished basement they chose is in a nice community and in pretty good condition, he said.

It had one minor problem -- cracks in the driveway.

Their agent was able to get the seller to pay $700 for the repairs based on a contractor's estimate. The seller also paid closing costs.

"It was one of those things that wasn't a big deal," Wallin said, adding that he wouldn't have walked away from the purchase had the seller refused to cover the costs. "It was just something that needed to be addressed."

In this instance, the seller simply wrote a check for the costs and handed it to the buyer at closing.

Sometimes, to avoid a deal buster, the seller will reduce the price of the home, fix the problem, or put money into an escrow account for buyers to use once the cost of the repair is determined.

Boyd said sellers aren't too fond of the latter option because they think the listing office that holds the money in escrow is just going to hand it over to the buyer.

"If done properly, it doesn't happen that way," Boyd said. "And, quite honestly, buyers aren't too thrilled at letting the sellers fix the problem themselves."

Buyers want to have more control to ensure the problem will be fixed properly, he said.

The most popular option is a sellers' credit toward the buyers' closing costs.

This method is used 80 percent of the time, Boyd said. It gives the buyers some money after closing to pay for the work themselves.

Boyd said the downside is that a well-chosen mortgage won't have a lot of closing costs.

LeVan said cash at closing is a good option for people who are strapped already.

"More often than not, every penny a home-buyer has is tied up in the deal," he said. "If it turns out the roof needs repair, having that $3,000 in cash helps out."

For homeowners who don't need the cash up front, getting the price reduced makes better sense. An added benefit is that the local assessor will use that lesser amount to determine tax obligation, in theory reducing tax payments.

After the sale

Surprisingly, some negotiations can take place well after the buyer has moved in and hung pictures on the wall.

Sometimes problems come up after the sale because of misrepresentation on the seller's disclosure, LeVan said. For example, the seller might insist that the roof is sturdy or that the basement doesn't leak.

"But within three days of moving in, you have this huge puddle in the basement," he said. "These are cases where an agent can try to negotiate with the seller or know whether it's something that will need arbitration."

LeVan said agents who don't have emotional ties to the situation are better equipped to handle these situations.

"When you get a buyer who has just moved into his dream house, then finds out the basement and roof leak, all reason goes out the window."

LeVan said he was able to help one client get a better rate on her home loan after an unscrupulous lender changed the terms at the last minute when he learned that she had a tight closing deadline.

"She did, in fact, have to close so she accepted the offer," he said. "But afterward, she and I put enough pressure on the president of the company to renegotiate the terms with an even better rate than the original offer."



Copyright © 2004 Detroit Free Press Inc.