Repairs in the Oklahoma Real Estate Contract
Confusing to both home Buyers and Sellers are how repairs are handled in the Oklahoma Real Estate contract. Repairs are handled differently from state to state, so if you're not purchasing or selling real estate in Oklahoma, this may not apply to you at all.
When a Buyer makes an offer on a Tulsa home for sale, we literally "guestimate" how much we think we'll spend in repairs. So, we negotiate a figure for repairs which is a "repair cap" that the home Seller agrees to. We do not conduct inspections until all terms of the contract are agreed upon, earnest money is deposited and we have an executable contract.
Once inspections are done, the Buyer's Realtor submits a form called a TRR (Treatments, Repairs, Replacements) to the Listing Realtor which includes a list of requested repairs. We generally perform the following inspections: EMP (electrical, mechanical, plumbing); Structural; Termite; Roof and a Chimney inspection if there is a fireplace - pool inspection if there is a pool.
It's the Seller's (or his Realtor's) duty to get estimates for requested repairs. IF the repair cap is exceeded, either party (Buyer or Seller) can cancel the contract. But WHY would you want to do that?
The Seller is often confused because something was discovered that his inspector missed five years ago when HE bought the home. Buyers are sometimes uncomfortable with the type or quantity of needed repairs. It can all be very emotional, and keeping a real estate transaction together AFTER inspection is often more challenging than negotiating the sales price and other terms of the contract.
NOBODY would have anticipated that the home in Legacy Park built in 2004 would require over $2,000 in repairs, but it just happened that improper flashing around the guttering caused the exterior stucco veneer to separate from the home - and that was an expensive repair. We knew the Owen Park home built in 1925 had not been updated, but did not realize that the entire basement walls were crumbling beneath the earth.
After the repair bids come in, Buyers and Seller begin a second round of negotiations when the repair bill exceeds the agreed-upon repair cap. Sometimes Buyers will cross a few items off their list and complete those repairs later on their own dime. Sometimes the Buyer will insist that all repairs are made or they will walk away from the transaction and find another home to purchase.
Home Sellers need to ask themselvesif they really want to put their home back on the market and wait for another Buyer when they will likely have to make the repairs anyway. And depending upon the type of financing the Buyer has, the Seller may be REQUIRED to make all repairs, regardless of cost, to sell their home at all.
This is an emotional part of a real estate transaction and an opportunity for a true real estate professional to keep all parties in check, feet on the ground and remind everyone that "one of you wants to sell this house, and one of you wants to buy it - let's figure this out to make it work for all."
This is yet another reason why I encourage Tulsa home Sellers to have their home inspected PRIOR to listing - the fewer surprises after you're under contract, the better.
If you have questions about inspections or how repairs are handled in the Oklahoma Real Estate contract, give me a call - I'll walk you through it.
Copyright 2011-2012 Lori Cain All Rights Reserved - Originally Posted at: Midtown Tulsa Real Estate - Lori Cain
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Lori is a residential Realtor with Chinowth & Cohen Realtors serving the greater Tulsa area and specializing in downtown Tulsa and midtown Tulsa real estate.