Question: We signed a purchase contract with the seller to buy a Glendale home for $450,000, and then deposited $10,000 earnest money with the escrow company. We were very excited, because not only were we having difficulty purchasing any home, this home was probably worth at least $500,000. Three days later our Realtor tried to schedule our 10-day inspection, but the seller’s agent said that the sellers were very unhappy about the $450,000 purchase price, and that unless we raised the purchase price to $480,000, they would not allow us to do the 10-day inspection. Our real estate agent said that the seller is in breach of the AAR Purchase Contract, and that we can go to court and the court will order a 10-day inspection. Otherwise, our real estate sales agent says that, unless we agree to pay the seller’s “new” purchase price of $480,000, we should just cancel the AAR Purchase Contract and get our $10,000 earnest money back. We don’t want to buy a “pig-in-a-poke” without a home inspection, e.g., the home could be full of termites. We still, however, want the home. What can we do?
Answer: The seller believes that there is at least $30,000-$50,000 more value in the home than the purchase price of $450,000. You may just have to “roll the dice.” If the home looks good from the outside and the landscaping is well-maintained, you may want to waive the 10-day home inspection. Even if you waive the 10-day home inspection, however, you may still have to sue the seller for specific performance of the $450,000 purchase contract to close escrow to get a deed to the home.
Note: Many investors buy homes at foreclosure sales to “flip” the homes to “mom and pop” buyers. These investors rarely have access to the home before the foreclosure sale. Although these investors do not have an inspection, the “reduced” purchase price (similar to your “reduced” purchase price of $30,000-$50,000) generally justifies the risk to the investor.