A Simple Mistake That Gets Offers Rejected

Smart home buyers are modifying their Offers, promising the seller that they will accept the first ($2,000.00, $3000.00, $5,000.00) in repairs of conditions identified in the home inspection. This safety net inspection contingency gives the seller the security that comes with believing the buyer will not renegotiate over minor issues. Difference makers like this one are often the reason a home seller selects one Offer over others. 

Safety Net Inspection Contingency—Very Smart

A batch of offers on several properties caught my attention this summer. They all had a similar version of the same contradicting, Offer-killing contingencies. The safety net inspection contingency became diluted by a risk-to-the-seller condition of a radon test. Each of the Offers with these contradicting contingencies suffered the same fate of REJECTION. I think this is an avoidable error made when agents or lawyers draft offers and include the radon testing contingency for the wrong reason—protecting the buyer from radon gas. I’ll explain it.

Radon Test $200. Mitigation $600 – $1,200

First, a radon testing contingency will not protect anyone from radon. The contingency only allows the seller to install a mitigation system before closing and give the buyer a retest, showing that the radon level is below an agreed-upon rate. The least expensive EPA approved mitigation method is about $600. I’m sure there are some oddball examples, but ask any mitigation specialist to show you what they’ve charged in the last three years, and you will see $1,100 -$1,200 is typical. The chance is excellent; you can reduce radon in a home to a level below the EPA action level, with a system that is not detrimental to the house’s look for $1,000 +/-.  

Be logical to avoid defeat

A radon test is paid for by the buyer at the cost of $200.00. The buyer who is willing to cover the first $2,000 of the inspection identified defects can save the $200 test cost and install a $1,200 aesthetically pleasing, effective system. It’s illogical and self-defeating to say the seller we will cover the cost of fixing things that cost $2,000, but we will make them cure a condition that will cost only $600 to $1,200. 

Torpedoed By Radon Testing

When comparing Offers, it’s easy to eliminate some because they’re poorly written, have flaws, or are high risk for the seller. In the end, there are usually two or three Offers to decide between. With all else relatively equal, the radon testing contingency torpedoes otherwise acceptable Offers. 

When drafting Offers, it’s wise for the agent or lawyer or buyer to review before signing and ask two questions, WHY IS THIS CONTINGENCY INCLUDED? And DOES THIS CONTINGENCY CANCEL OFFSET ANOTHER CONTINGENCY?

Avoid Training. Pursue Learning

Learning is not training. Contract flaws like this illogical combination of conditions repeatedly happen because training doesn’t require a person to make an effort to learn (in this case, radon is deadly, everywhere, and mitigated inexpensively) the issues, and understand the implications of contingencies. Training tells you what to do. Learning is when you know why you’re doing it.

We often say we can write a safe offer to wrap a buyer in bubble wrap contingencies so that the seller won’t accept the Offer. When a person isn’t committed to owning a property, bubble wrap contingencies will help keep them out of danger of owning. But when a person commits to own, it’s up to us to give them reasonable ideas to make their Offer acceptable. I hope never to see a person lose a home they want to own because an unnecessary contingency makes its way into an Offer.

Author: Tom Meyer, Owner-Broker, Essential Real Estate, LLC Madison, WI

The real estate transaction, disclosure, and confidentiality are the business of a Wisconsin licensee. It's in the transaction where the skill of the licensee, and their commitment to the law where the public is protected or placed at risk. What you see REALTORS do to brand themselves and their firms, promote their service, advertise, and process paper do not require a license. I believe negotiations to create and honor a real estate purchase agreement is where the agent has the greatest value in a transaction. Paying professional fee rates for the administrative services is a choice consumers deserve. Old business model driven commission rates are taxing the home equity of American home sellers. Essential Real Estate was created to put more money in the hands of the consumer by eliminating expenses for the firm and charging a fair price for the real real estate service.

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