(Some)Buyers in Multiple Offers Pull Their Punches

Inspection Addendum: “Buyer Shall Cap Any Inspection Requests at $500”

[Editor’s Note:  The views expressed here are solely those of Ross Kaplan, and do not represent Edina Realty, Berkshire Hathaway, or any other entity referenced.  If you need legal advice, please consult an attorney.]

How do Buyers competing in multiple offers differentiate their offers?

By offering the most money, strongest financing, and most desirable (at least to the Seller) closing date.

So, how else can Buyers make their offer stand out?

By contractually limiting their post-inspection requests.

Illusory Protection

In theory, a Seller who enters into a Purchase Agreement that includes such a clause is protected from any Buyer fishing expeditions, right?

Sort of.

However, if the inspection uncovers previously unknown, material issues, it’s highly unlikely that the Buyer is going to stay in the deal without a commensurate price reduction.

A Seller who stands fast, invoking the cap on inspection issues, is likely to receive a Cancellation instead.

Which leads to my take on such clauses:  they ultimately don’t offer Sellers much protection, so don’t rely on them — or, in the case of multiple offers, don’t select a winning bidder based on them.



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