Home & Garden Columns

About the House: You Broker It, You Fix It: Why Buyers Should Buy ‘As Is’

By Matt Cantor
Friday December 14, 2007

You’re in the last throws of the deal and it’s time for the home inspection. The inspector finds that the water heater is defective and needs replacement now. You’re a little upset, since you’ve just offered more money to buy this house than your parents have in their retirement fund. You expected the house to be perfect for that kind of money and you’re not about to shell out another dime.  

So, you ask the realtor to negotiate to have a new water heater installed prior to close of escrow. Being your diligent and obedient representative, he/she says fine, we’ll see if we can get them to put in a new water heater prior to closing of the escrow.  

Stop everything. Let’s run this scenario out to a likely conclusion before you choose this path. It is not unlikely that the seller will agree get this deal closed since it’s a relatively small item. But think about who they are likely to hire and what they are likely to buy … for you. Are they going to buy the best water heater on the market? Are they going to hire the top plumber in the field? Will they consider moving the water heater if that’s advised? Will they make sure it is placed on a stand, if this is advised or necessary?  

I can go on with at least another dozen considerations on this one kind of job, but you get the point. The seller, as fair and honest as they might be, is far more likely to get this job done fast and, well, let’s say economically. Of course, this is a broad generalization but I believe (with plenty of experience to stand upon) that this is, in fact, what happens the vast majority of the time.  

Any seller is likely to get the job done faster, cheaper, and with less consideration for long range consequences then you are as the new homeowner. The seller is not very likely to have a parental and deeply vested interest in the new owner’s well-being and that of the house beyond their ownership. With that in mind, who should be buying the water heater? Of course, it’s you the buyer.  

Now you can still seek additional funds from the seller. But you, the buyer will be using the money and getting the job done. This might mean adding some of your own money to the pot to get the best job done, but at least the seller’s money will be going to buy the better job, since you will be trying to get the best plumber you can afford as well as the best equipment. 

Another very good reason for you to be the buyer of any fixes that you feel are needed upon purchase of your new home relates to the nature of the contractual relationship between the client and the contractor.  

Let’s say that the sellers hire Joe the plumber and pay him to install the very finest water heater that mankind has yet to produce. He applies his greatest skill and makes a masterwork of installation that the city inspectors (three of them) come to see, bearing signatures, tags and words of great praise. The water heater works great. Everyone’s happy but surprise of surprises, the thing begins to leak from eight locations about 3 weeks after the sellers have moved to Malaysia. Not to worry, you have the name of the plumber and call him up.  

Joe (really a great guy) says how sorry he is but you are not his client and only his client can call in the warrantee. He’s right. You and Joe are not named in any contract as client and contractor and services on any piece of paper. Warrantees for roofs do transfer in the state of California but most workmanship does not transfer from one owner to another.  

If you attempted to take Joe to court to get him to come and repair his unconscionably bad workmanship, it is most likely that the judge would ask to see the contract for work and would find that you had not hired Joe at all and throw the case out.  

If, on the other hand, you asked for a cash sum or adjustment in the sale price of the house (or money held in escrow to pay for such a repair, which is a common tactic) you could hire your dear friend Joe and when the leaks began, you would be in a much better position to get him back to fix the repairs that you paid for. And if he turns out to be the scoundrel your cousin Vanessa said he was (they dated very briefly), you could take Joe to small claims and would likely find (remember to bring photos) that the Judge would like your case and force Joe to return some or all of your payment to him or force him to make good and fix the water heater properly.  

And here’s a word to the wise. If Joe is the one who screwed up you water heater in the first place, he might not be the best choice to come back and fix it. 

A final note regarding this whole issue of who gets the repairs done when houses change hands: Just a spoonful of money makes the escrow get done. When buyers request repairs as a requirement of closing, this sets the clock back as people start rushing about doing these repairs. Sometimes the repairs get done and get looked at and are disapproved and more time gets lost. Occasionally deals fall apart under theses circumstances. Mostly, it just leads to bad work and irritated buyers and sellers. So taking a sum of cash, or a cost adjustment or doing nothing at all may be preferable to receipt of this particular gift horse. 

Happy home hunting.