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TAKING A CHANCE
Nelson Taylor, a realtor and founding partner of the Blackstone Team at Mott & Chace Sotheby’s International Realty in Providence, says he “tries to protect first-time homebuyers and other buyers without deep pockets who are not comfortable with removing those contingencies entirely. They can do this by putting a cap of, say, $40,000 to $50,000 on an appraisal waiver.”
“Many are also not comfortable removing an inspec- tion of a property before they buy it,” he says. “So we put a clause into their contract saying they reserve the right to conduct an inspection but will not negotiate any individual items that come up during an inspection that will cost less than $10,000 or $20,000 to repair.”
A third concession is the subject of a cautionary tale. Taylor explains, “Our market is extremely tight now, and lots of sellers don’t have a place to go. I often suggest that younger buyers who are living in flexible situations like rentals allow their sellers to live in the home rent-free after the closing for 45 to 90 days. This is a big issue for sellers who are waiting for a new home to be finished or are still looking for a new home to purchase. The incentive often closes the deal for my buyers.”
Unless, of course, the sellers have a suitable hous- ing contingency, which allows them to back out of the deal if they cannot find a new home to purchase. This is what happened to a Manhattan couple this summer. They were renting an apartment and after their baby was born in the spring, they started making frequent trips to Barrington, Rhode Island, where the wife had grown up and her parents and siblings still live. “I felt trapped in the city,” she says. “The baby hated her stroller and I didn’t want to take her on the subway. Since my husband can work remotely, we thought why not move up here?”
WATCH OUT FOR SQUATTERS
They started working with Taylor. “The first place we really liked, we lost to an all-cash offer with no contingencies,” her husband explains. “We were very sur- prised when our offer on the next house was accepted. The sellers had a clause in their contract that said the sale was subject to them finding suitable housing. Since our lease wasn’t up until September, we wanted to be flexible. We gave them 30 days to look for a new house, then 30 days more. By the middle of August, they were still there and our mortgage agreement, at a rate that was just over 6%, and our apartment lease, were about to expire.”
The couple scrambled through options. “We could move to Rhode Island, put our furniture into storage and move in with my mother or into a short-term rental,” the new mother says.
“Or sign a one-year lease in Manhattan and hope the sellers could find a suitable home soon,” her husband adds. “But we’d have to refinance at a higher interest rate.”
Finally, at the end of August, the sellers cancelled the contract and gave the couple the right of first refusal if, and when, they do find an appropriate new home. “I think buyers don’t have a lot of leverage here,” the husband observes. “The sellers have a house in a good school district and neighborhood. They can always find another buyer.”
“I’m not angry,” the wife concludes. “They didn’t go into this looking to disappoint a young family. They put in five offers on different properties and didn’t get them. We are all victims of the current housing market.”
