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Going through contract negotiations with questions about tax prorations and warranty

We are back and forth with a seller on some minor areas of the home-buying contract.  Our realtor is saying these things can be re-negotiated down the road once we get the seller to commit to the deal.  This being our first home purchase, I feel I don't know if we are being taken advantage of or if he is right. 

- The seller only wants to pay 100% prorated taxes on the house.  We wanted 105%...Our realtor said we can let the lawyers negotiate it out.  What do you think?  I know it's only a couple hundred $ we are talking about but it's still a couple hundred $.
- The seller doesn't want to cover the home warranty of $500.  Our realtor said that too can be figured out later on in the process.

I am a little concerned our realtor (and the seller's realtor) is just trying to push the deal through and these things, once agreed on the signed contract, are non-negotiable. 

Are these two areas of the contract still negotiable once we sign on the deal?  Are we being taken advantage of just because all parties know we love the house?  I understand the "are you willing to lose this house over $500 warranty?" argument, and I'm not.  However, I just don't want to be a victim of my own ignorance in this process.
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January 27 2012 - Countryside
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Answers (8)

Why would you want a larger proration?  Regarding the home warranty I would have negotiated it up front.  If they don't want to pay then you have a choice - stay or walk.
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October 29 2012
This is an old post from Jan 27. I think this buyer probably worked it out by now.
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March 09 2012
You can have the attorney renegotiate a few items on your contract after it has been signed, but why?  What if the seller still says "NO" and you are stuck with no home warranty and a different tax proration from what you wanted.  If you aren't satisfied with the outcome the attorney can kill the deal during their review period but then you lost out on the house.

I prefer to get all the terms of the contract negotiated up front so both parties are happy from the beginning especially with the items you are talking about....just because you may ask to change something during attorney review doesn't mean it's going to happen.

As someone else stated below if you aren't feeling comfortable with your agent you need to talk to him/her about it.

Good luck!
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March 09 2012
Profile picture for JohnWilt
I agree with Philip below.  105% is what you see in about every situation and you should negotiate it now up front before the attorney review period.  Otherwise, you will have 100% on the contract and 'expect' it to be negoiated to 105%. Upon your attorneys later request the Sellers attorney would reply 'No' as you had agreed on paper to 100% previously. Let your agent know you are not flexible on this.  You want the taxes and the warranty in the contract before you agree.  Put the burden on the other party to try to convince your attorney they made a mistake accepting your terms. Then when they ask for the reduction your attorney can reply 'this is what was negoiated'.   Good Luck.
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January 27 2012
It is common practice in most Burbs to give a 105% tax credit. In the city it is more common to see 110% BUT it is totally negotiable.
It is also somewhat common in the Burbs to ask, and receive, a credit for a home warranty. Most attorneys would be irritated to be requested to 'renegotiate' these items once agreed to on the contract although they can certainly bring it up. If they did  bring it up why do you think the result would change? In this market the buyer is almost always at an advantage so not sure why the seller is playing hardball on these to very minor $$$ issues.
I never tell a client what to do because if they did what I suggested and lost the house I would feel pretty bad, but it is my nature to play hardball so I would be tempted to tell you to walk away if they do not give it to you. That would put the most pressure on the seller to either accept or lose the deal. If the seller still does not cave in then they obviously do not care so you can always just go back the next day and change your mind and keep the deal going.
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January 27 2012
All these things are negotiable and as you said, you can simply boil them down to a dollar figure and figure out whether the net result is acceptable to you.  Usually these negotiations favor the less motivated party.  e.g. foreclosures are almost always at 100%.  

There is one other thing that I observe in this case, is that nit-picking on either party's part can lead to bad will, which can have a negative effect on the transaction too.  The transaction isn't complete just because the contract is signed; and once it is, both parties start to commit more skin into the game including paying for inspections/attorneys/appraisals, but also in coordinating the move, packing, arranging for the next place to live, etc.  So it may be in your best interest to watch your attitude as well.  The inspection could be a contentious matter, and who knows what else might crop up (something usually does) and you will have to work together with the seller to resolve it.  Yes, I believe your attorney can negotiate some aspects during attorney review (check with him/her).  A Tax escrow account is an alternative to the tax proration and I'm sure the seller would not prefer that!  Sometimes discretion is the better part of valor though so please don't let the negotiations sour what should be an exciting and life-affirming time for your family.

One last point.  If you believe that your Realtor is not acting in your best interests, tell him/her so.  One quick reminder may be enough to achieve the result you want.  We Realtors work on commission, and he/she doesn't want to lose the deal (and you as a client) over $500 either!  BTW, you can shop for less expensive home warranties too!

 
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January 27 2012
Profile picture for K.K. Yan
Your realtor is right. You can have the your attorney to negotiate for you after the contract is signed. Only item ur attorney can't change is the price. However, I prefer to agree with all the terms before signing anything. Even oral agreement or throught email. If you don't have an agreement, it won't fly eventurally. But there maybe some legal issues or prcedure that require attorney's attention, I will leave it open and have the attorney taken care of it.
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January 27 2012
Not sure what the practice is in Illinois but I've never heard anyone paying more than their portion of the taxes due. 

But the deal is the one that has your signature on it. I don't see you negotiating them to pay more after you have agreed to accept less.  If you want more funds to pay pre-paids and closing costs just request more funds and remove the warranty from the discussion. They will probably want to bump up the purchase price by the difference and then the discussion turns from are you willing to lose the house over a difference of $500 to a few dollars per month
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January 27 2012
 
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