FINAL WALK-THROUGH DAYS BEFORE CLOSING? BIG NO-NO!

I recently came across a post on another real estate site wherein the buyer had concerns about his final walk-through.

Here's the blow-by-blow:

Buyer was scheduled to close on his home on Monday. His final walk-through was scheduled for the previous Thursday. He would get keys on Tuesday, according to his agent, when the deed would be recorded, and the seller was supposed to move out on Monday -the closing day.

He was concerned because at the writing of his plea for help, the seller still had an enormous amount of personal belongings strewn about the home. The garage was even worse -he couldn't see anything in the garage for the glut of junk in there. His realtor's answer to his question about how to protect himself was a timid, "You can always go after the seller later if you need to", he said. And he added that she offered no concrete suggestions as to how he would do this.

YOU SEE, THIS IS WHY WE REALTORS GET A BAD REP!!!

FIRST: Why schedule a final walk-through 4 days before settlement??? ...Even if the law allows...

I have learned that in California there is a final Verification of Property Condition that can take place within 5 days before closing. But do you know how much can happen to a home in 4-5 days??? Even if the buyer requests it, I would fight it by enlightening him to the problems that could arise. Hey, it's your reputation and E&O deductible on the line if you don't protect your client-principal. This is potentially not just a matter of minor knicks and dings made to the walls during move-out -- one can live with that. Buyer cannot see into the garage at all. There could be major issues in the garage - and the rest of the home -that are beyond the realm of basic cosmetic repairs and will only be revealed upon a thorough final inspection of the empty property!

ROOKIE AGENTS: LISTEN-UP!!! (At least in NJ) This is why you would never want to schedule a walk-through so far in advance of closing. In NJ we have up to two days prior to settlement to conduct the final walk-through to assess property conditions; however, IMO, you need to conduct the walk-through on closing day. Ideally AFTER seller has moved out, if at all possible. In fact, I rarely do them more than a few hours before closing.

In this buyer's case - he's totally unprotected. Much can happen in an occupied home (or even an un-occupied home) between Thursday and Monday. IMHO, going to settlement 4 days after having last seen the home you're purchasing, is tantamount to closing on the home site-unseen. And in what book is that smart??? (We're not talkin' about a cash investor and a REO home here.) Hey, for all he knows, seller may be planning on leaving all that junk right there in the property - and what can buyer do when he finds this out after closing? Be mad at seller and at you, the Realtor, and call a dumpster company at his expense (or maybe at yours!) - that's what.

Worst yet, what if seller didn't leave at all! Never moved out as promised on closing day! "Aw dude, my new house ain't ready yet. Mind if I crash here for another coupla days, man."

SECOND: "...Go after the seller later, if you need to."

Sure! If you can find him! He could be planning on taking those sale profits and skipping off to Mexico to guzzle Tequila poolside - never to be seen or heard from again! And I'm not exaggerating -- this scenario described was taking place in CA - so it's a possibility!

Here's what I've done in NJ real estate in this scenario to protect the buyer.

Get something in writing either before or at settlement to address this. I have the attorney, or the buyer write up an agreement that states something to the effect that:

• Seller has not moved out of the property as of final walk-through. A full and complete final walk-through with a full assessment of the property has not been conducted as of settlement date because of the amount of personalty that seller has remaining in the property and its appurtenances.
• Buyer requires that seller escrow X dollars (maybe $1,000, maybe up to $5,000 or more.) with the title company/escrow holder until a final walk-through of the empty home is conducted on (date of move-out). If there are no damages, buyer will sign a release allowing the title company/escrow holder) to refund all monies to the seller within 24 hours of inspection.
• If there are damages, estimates will be obtained by buyer and the moneys will be remitted to the repair contractors after completion of work is satisfactory to the buyer.
• You also need to have a sentence that reads that buyer does not give up any rights to additional remedies to resolve the dispute, including mediation, arbitration or other legal remedies, should they be necessary.
• The escrow period should not exceed 60 days post closing, if possible. (Otherwise the seller may not want to sign the agreement if he/she thinks the money will be tied-up indefinately). 60 days should give the buyer enough time to assess any damage, get repairs made if there is damage, and approve the repairs.

I know that this agreement sounds biased to the buyer - but guess what?! It's the buyer's money and their huge investment! Case in Point...

Finally: The $800 WATER HEATER CAVEAT...

Agents, don't leave this to chance or you could be sorry! I will always remember the story that my first broker told me when I was a rookie agent. I had a few closings coming up in quick succession and didn't want to go to all of the walk-throughs right before each closing. He shared with me this story:

Broker X was busy with a lot of closings in a short time period and on one of them he did the buyer's final walk-through two days before closing. "What could it hurt?" he reasoned. The rules allowed it; seller had moved out, and home was vacant! They did the walk-through and everything was just fine.

Two days later they went to settlement. Within a half-hour of leaving the settlement table, Broker X got a telephone call from a now FRANTIC BUYER. The basement was full of water!!! She didn't know what was going on! She had been a 1st-time home-buyer and was now a first-time homeowner, knew nothing about such things, and was crying hysterically. Broker X jumps in his car, and drives over to the home. Turns out that the water heater had failed and was the source of the lake which now occupied the basement. She had limited funds, he felt bad (and didn't want the situation to escalate) - so he went down to the local Sears and purchased a brand new water heater for her.

So, that's my motivation for doing these walk-throughs at the last possible moment! I'm always striving to provide my client with a stress-free, guided real estate buying or selling experience - and I never want to pony up for the $800 water heater! LOL

Here's my disclaimer: - I am not an attorney and this should not be construed as legal advice. You should consult a local attorney who may help you with such matters. This is just my humble opinion as to how a buyer may be able to protect himself under these circumstances.

Kimberly Thomas; Voorhees, NJ Broker: www.KimThomasHomes.com; www.NJHomesNearPhilly.com; www.KimCanHelp.com