Vivre Real Estate September 21, 2023
Buying a Home
Can you negotiate with the seller during the escrow process in the Bay Area? It’s a very frequently asked question about one of the more arcane parts of the San Francisco Bay Area home-buying process, so we’re here to answer. And the answer is a resounding yes!
In an SF Bay Area real estate transaction, every aspect is open for discussion. However, the success of your negotiations depends on a handful of various factors, including the specifics of your purchase and the expertise of your real estate agent. (You did hire one of the top San Francisco Buyer Agents to help you, right? 😉)
So, say you've found your dream home, made an offer and entered the escrow process. But what happens if your home inspection reveals issues? Can you still negotiate with the seller for repairs or credits? Negotiation is a skill that can make or break a deal. In this blog post, we'll explore how you can effectively negotiate during the escrow process to get the best deal possible.
Before making an offer, you'll likely receive a disclosure package containing essential information about the property. This package contains crucial information about the property, including its condition and location. It may also include recent Pest and General Home Inspections that the seller and their San Francisco listing agent hired.
Consulting with your agent about the reliability of these companies is crucial. This is one reason why it's beneficial to work with experienced San Francisco Realtors who are well-versed in local market conditions and the quality and reputation of inspectors who may have performed the work.
Even if you receive a comprehensive disclosure package, it's always advisable to have an inspection contingency in your contract. This allows you to hire your own inspector for a second opinion. If the inspection reveals new issues, you have several options:
If you opt for negotiation, the seller has three choices:
Repairs agreed upon are usually completed before the close of escrow. Make sure to specify any requirements, such as permits, in writing. Credits can be applied towards your closing costs or directly to a contractor of your choice. Always consult your mortgage broker to ensure compliance with lender rules.
Entering escrow should be done in good faith. Your aim is to buy the property based on the information available. However, negotiation is an integral part of the real estate process. In today's seller-friendly market, skilled negotiation is critical to safeguard your interests and potentially yield significant credits or repairs.
But remember, the goal is not to negotiate for the sake of negotiation. A confrontational approach rarely yields positive results.
Lastly, the appraisal can offer another opportunity for negotiation. We have many times negotiated price reductions based on appraisals that came in lower than the purchase price.
For example, we recently assisted buyers in purchasing a San Francisco home. They submitted an offer of $2,650,000 for a home, which was accepted. To protect their interests, an appraisal contingency was added to the contract, specifying that the home must appraise at no less than the agreed purchase price.
However, the appraisal valued the property at only $2,600,000. Although there were sufficient comparable sales to justify the $2,650,000 price, the lender's appraisal covered the entire zip code, not just the specific sub-district. This approach included less attractive neighborhoods in the valuation, affecting the appraisal outcome and our negotiating position. In this case, we were able to ask for a reduction in sale price because of the lower appraisal.
Whether you are a home buyer or seller working with Vivre Real Estate, we will advocate fiercely for on your behalf to ensure no money is left on the table in your transaction.
We hope this guide has shed some light on the negotiation process during escrow in the San Francisco Bay Area. If you have more questions, our boutique collective of SF Bay Area real estate specialists is always here to help! Click here to contact us.
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