From my experiences as a Realtor and even before being a Realtor, I have found that open lines of communication during a tense moment, disagreement, or conflict is the best way to diffuse a difficult situation.
This is why we have so many lawyers. When two parties have a disagreement and fail to communicate, each side will inevitably begin to assume the worst case scenario and take preparations and actions for that scenario. As a result, tensions begin to rise up and a somewhat challenging situation becomes much more difficult to handle and resolve.
Here’s a situation that came up recently and how open communication could have played out in the end.
The Buyer Inspection Notice Triggers Tension
When submitting the Buyer Inspection Notice (BINSR) to the Seller for their review, the Seller came back with a response that was a little surprising. The Seller, believing that the Buyer was now out of their 10-day inspection period, replied as to items they would fix and those that they would not and included language that talked to the Buyer being out of their inspection period and effectively at risk of losing their earnest deposit. The Seller was putting the Buyer on notice that they could cancel and the Seller was subject to the earnest money.
Part of the issue here was that the Seller was feeling overwhelmed by the nature of the extent of items the Buyer put forth. However, the Buyer was not unreasonable by any stretch. Acceptance of all the items wasn’t a deal-breaker in this case. As such, sometimes the Buyer and Seller have to roll the dice and see what happens. When doing this, it’s best to keep any and all emotion and sticky language out of the BINSR. Let things play out without complicating them.
In this case, here’s the language that was provided in the Seller’s Response…
Now, I don’t recommend this approach be done on the BINSR like it was. It’s better that the two Realtors talk between themselves if there is a belief that the timing is late and that this would mean that the Buyer is now obligated to pay the Seller for any cancellation.
The Seller Response Raises the Stakes
With the response above, the Buyer’s Agent (me) and the Buyer now have to raise the alerts that the Seller may be aggressive, unreasonable, and not acting in such a way that is conducive to successful close where all parties are satisfied. This triggers a need to be formal in tone and deliberate in response in order to ensure the Buyer’s interests are protected.
Communication here that talked to the question of timing verbally rather than on paper would likely have diffused this situation. Read on.
Defending the Buyer and Getting the Deal Back on Track
The Buyer considered the Seller’s Response in terms of accepted items to be acceptable. The Buyer was committed to successfully purchasing the home. However, the language in BINSR complicated matters and required a specific response to this statement, especially as it related to the notion of timing and the Buyer’s rights under the contract.
I put together the following response to become part of the BINSR document. By the way, I keep track of the timing for inspections given how important it is. Here’s what I crafted for the response.
Buyer Response to Seller Response from BINSR.
The Buyers reject the following language provided in the Seller Response to the Buyer Inspection Notice.
The Buyers Have Acted in Good Faith and Are Within the Rights of the Purchase Contract
The Buyers submit that they have and continue to act in good faith and the rights of the Residential Real Estate Purchase Contract. As such, the Buyers provided the Buyer Inspection Notice within the 10 day inspection period as detailed in the agreement. The following supports this.
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Counter offer number #2 of the Residential Real Estate Purchase Contract was signed on September 21st at 6:45pm by the Sellers. This was received by the Buyer’s Agent at 7:45pm later that evening.
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Per the Purchase Contract language, per section 6, lines 182-194, the Buyer’s Inspection Period shall be (10) days after Contract acceptance. This 10-day period allows the Buyer to perform numerous inspections and due diligence on the property inclusive of but not limited to a home inspection as discussed in lines 182-229 and reiterated in lines 230-233 regarding the nature of the Buyer Inspection Notice.
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Per Arizona real estate law and practice and as discussed in the Arizona Real Estate: A Professional’s Guide to Law and Practice by K. Michelle Lind, Esq. (General Counsel of the Arizona Association of Realtors), the 10-day inspection period is defined as consisting of calendar days that start on the next day after Contract Acceptance.
As referenced in this example on page 153:
“Question: Contract acceptance occurred on Monday. When does five days after contract acceptance expire?
Answer: The day of the act or event from which the time period begins to run is not included, so day one is Tuesday. The last day to perform any acts required to be accomplished within five days after acceptance should be completed by Saturday at 11:59 p.m.”
Based on the above, the Buyer Inspection period was to terminate on October 1 by 11:59pm. The Buyer delivered the Buyer Inspection Notice within this timeframe.
Special Note: The Seller had last inspections to be conducted on September 30th in order to allow for the submission of the Buyer Inspection Notice sooner. The possession of the HVAC report by the Seller complicated this goal as the Buyer’s Agent was first told that the Seller did not have this report only to find out that the Seller did after substantial inquiry with Chas Roberts Air Conditioning and a second inquiry with the Seller’s Agent.
Additionally, the paragraph cited above calls out that an inspection was performed on September 25th and so that the Buyer Inspection Notice should have been received five days after that. Per lines 230-233 of the Purchase Contract, the Buyer Inspection period allows the Buyer all forms of inspections and research to be performed on the property inclusive of but not limited to a home inspection and provide the Buyer Inspection Notice prior to the expiration of the Inspection Period. The Buyer was well within their contractual rights to perform inspections as they did when they did without any basis for scheduling of the termination of that period when a particular inspection may have been performed. Lines 230-233:
“Inspection Period Notice: Prior to expiration of the Inspection Period, Buyer shall deliver to Seller a signed notice of any items disapproved. AAR’s Buyer Inspection Notice and Seller’s Response form is available for this purpose. Buyer shall conduct all desired inspections and investigations prior to delivering such notice to Seller and all Inspection Period items disapproved shall be provided in a single notice.”
Summary
The Buyers continue to act in Good Faith and intent with regard to the purchase of the property, reject the assertion that they didn’t provide the Buyer Inspection Notice within the required timeframes, and assert that they are fully acting within the rights and obligations of the agreement as stated above.
Afterwards
I sent this on Friday night. This is one of those issues that dips into the legal framework of the Residential Purchase Contract and so demands the full intensity of my attention. It’s not something I like to have to deal with on a Friday night but it was very important. 
On Monday, I received an apology from the Listing Realtor that there was a mistake on the timing of acceptance and that the Buyer here was correct. She asked that I pass the apology on to the Buyer which I did.
As well, the homeowner called my client directly and apologized. Both talked. It turns out that the Seller was overwhelmed by the whole process and sorry about what happened. There was a reasonable Seller and a reasonable Buyer on the phone. Both were content at the end of the conversation as I have been told.
By the way, the homeowner’s effort here to talk with the Buyer to apologize was classy. I appreciated it because it really signaled an effort to diffuse the situation and get back to what was really important - that the Buyer and Seller both really wanted to successfully conclude the transaction together.
Communication is Key
Again, communication is what broke down here. I believe better communication would have kept this from coming up altogether and using up everyone’s time and energy. When there is some level of disagreement without open conversation, both parties will likely begin to prepare and act based on the worst.
As such, it is often a role of the Realtors to see a potential issue with a transaction, not exacerbate it, and try to take it head on before it can gain any steam or ‘legs.’
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