Buyer’s Inspection Notice Seller Response (BINSR)
The BINSR is one of the most important but delicate items of the Escrow. I want to spend some time discussing this. It’s important that if the property is the right property that the Buyer and Seller walk away with a Win-Win situation. Too often the Agents get in the way of the BINSR. Ijust had a property cancellation and the inspection was not anything that could not have been overcome. Mostly small items!
When the Buyer has completed their due diligence during the inspection period it is time for the BINSR to be prepared and submitted to the Seller.
Please note that the BINSR is not part of the contract and when this negotiation is completed, there may and probably will be an addendum to the Purchase Contract will be signed. The BINSR is typically not sent to Title or the Ender but the Addendum to the Contract certainly is.
First, it is important to understand that no matter when the BINSR is submitted that the inspection period is now over. This means that the Buyer needs to have all of the due diligence completed. Remember that his DOES NOT mean appraisals or loan but rather books and records along with physical items. There is a list on the Buyer Advisory and the face page of the residential contract.
Secondly, when the BINSR is submitted (either Commercial or Residential) the Seller has five days to respond. IF the Seller does not respond, this means that the Seller will not do anything. Once the Seller responds (unless they agree to everything) the Buyer has five days to either continue to negotiate, accept or cancel the contract with full refund of the Earnest Money.
When submitting the BINSR for multifamily, often we are looking for the Buyer a credit at cose. One of the important items that our referral partner provides is a SOPC which can help give the Buyer the number to work from. I cannot stress how this is helpful for two reasons. First, this gives me a number to place in front of the Seller that is a third party. This also delineated Health and Safety and Immediate needs. The Seller thereby has material knowledge of the Health and Safety and Immediate needs. IF they will not agree to the number or the repairs and the Escrow cancelled due to this, the Seller and the Listing Agent now have to disclose this knowledge going forward.
A word of caution,do not wait until the very last minute to respond. Last year a Buyer’s Agent who was self representing himself, waited until 11:59 to send the BINSR to me. His email failed and he sent it at 12:01 AM. The inspection period was up and his Earnest Money was at risk-clearly. His 10K was either forfeited or he had to close. He closed. If he had sent this earlier, he could have cancelled and gone on.
It is important as in any negotiation that the Buyer be reasonable as well. Last year, I had a Buyer that asked for very unreasonable items to be repaired. Remember that if it is not broken the Buyer cannot ask for replacement, especially on items that according to the inspection would last at least another 5-8 years. Here is a saying that I think about-Pigs get fat and Hogs get slaughtered. Something to think about.
Also, on all of my transactions, the Title company issues a Critical Dates Letter. This is important to review and it will give the dates of the end of the inspection period.
I hope that this helps and if you have any questions, remember that I answer my phone!
Have a great day!
Excellent thoughts, Linda – I appreciate that you highlight the fact that the buyer doesn’t want to wait until the last minute to act on the BINSR, as putting earnest money at risk isn’t a great strategy!
Very well explained. I feel that this is such an important and tense part of the process as buyers and sellers true colors seem to come out at this point. When clients are well educated by their representation this process should go much smoother. Thank you Linda for your insight.
Many agents do not take this part of the real estate transaction seriously in my personal opinion. I can contest that Linda is a great negotiator when she represents the buyer. It is best to obtain a credit from the seller and let the buyer do their own repairs during a real estate transaction. Otherwise, one can run the risk that the seller will hire a non-professional who could delay the closing due to faulty repairs.
You are in good hands with Linda.
The devil is in the details! It’s so important to be guided by an experienced and knowledgeable professional with such an important document.
Such a critical part of the process for both parties. Its always great to have someone on your side that knows how to deal with this and can guide you through the process. Great information!