Facing Last-Minute Buyer Demands? Critical Steps for Sellers in Escrow
Jan 20, 2025
Marketwise column for the Bay Area News Group and its flagships The Mercury News and East Bay Times
Published: December 8, 2024
By Pat Kapowich
Question: Our Silicon Valley home sale is in a critical state. We have movers scheduled, and the out-of-state replacement home purchase hinges on the cash proceeds from our current Bay Area home sale. The situation is urgent and requires immediate attention!
We have two home sales with all contingencies removed. We signed off with our escrow officer on Friday. Yesterday, the homebuyers of our current residence refused to sign the escrow sign-off paperwork. The escrow officer claims the homebuyer has never seen the Natural Hazards Disclosure [NHD] report.
This afternoon, the homebuyers unexpectedly demanded a price reduction or cancellation of the contract, which has left my husband and me in a state of shock. The NHD report has disclosed that our current home is located in a 'Potential Flooding by Dam Failure Inundation Zone.' The NHD report also reports an 'Earthquake Fault Zone' near our property. We have lived here for forty years without a problem.
The listing agent we hired is on vacation, and the realty agent in her place is of little assistance. We are at a loss and urgently need guidance. What course of action should we take at this point?
Answer: Call the real estate firm handling your sale and ask for the sales manager or broker of record. That person supervises your seller's agent and can provide guidance.
According to representatives of Bay Area Natural Hazard Disclosure (NHD) firms, whom I consulted, three to five percent of disclosure reports are requested just days before escrow closes.
I spoke with Mailana Mavromatis, a Vice President and General Counsel of the Property I.D. Corporation, for her perspective on delivering NHD reports in the final days of a home sale. She is a sought-after speaker on the Natural Hazard Disclosure (NHD) reports.
According to Attorney Mavromatis:
- CA CIV §1103 is clear that "A seller's agent for a seller of real property … shall disclose to any prospective buyer" the natural hazard disclosures. California Code, CIV 1103.
- As required by law, a seller's agent (not the Transaction Coordinator, not the Escrow Officer, and not the Home Warranty representative) SHALL provide the NHD to "any prospective buyer." A prospective buyer is anyone looking to make an offer. Providing the NHD to any prospective buyer BEFORE they submit an offer, and requesting the NHD be signed by the buyer and submitted with their offer complies with the law and avoids giving buyers an extra five days to terminate the contract.
The sales manager will consult with their in-house legal department and require a five-day "cool off" period. That is in your best interest, too. The homebuyer has five days before removing their contingency based on the new seller disclosures in the Natural Hazard Disclosure (NHD) report.
These homebuyers have concerns such as insurance implications, restrictions on construction and improvements, hidden costs, property value concerns, safety worries, and financial surprises.
Home sellers are often the primary target in post-sale litigation. Additionally, when a home sale falls through, the property typically sells for a lower price upon relisting. As a result, negotiating a strategic price reduction may work in your favor
Do you have questions about home selling or buying? Full-service Realtor Pat Kapowich is a Certified Trust and Probate Specialist, Certified Real Estate Brokerage Manager, and career-long consumer protection advocate.
For Housing Market Data in your area, visit my website for trends: https://www.siliconvalleybroker.com
Realtor Pat Kapowich, Kapowich Real Estate is based in his hometown of Sunnyvale, California. Office: 408-245-7700; Broker# 00979413 [email protected]
