I have been talking septic systems a lot lately, and I think I know a thing or two about them. Not how they work, but how to “deal” with them when negotiating a RE transaction. Septic Systems are quite a topic these days. With all the rain we’ve had lately, a number of dormant septic system problems have come to the surface, literally and figuratively. Old and new, there have been problems, and this is what you need to know.
Buyers:
If you are negotiating to purchase a property served by a septic system, make sure your special stipulations require a “clean” septic letter from the seller. What this means is that a professional septic service provider will pump the septic holding tank, inspect the system, and complete any necessary repairs prior to issuing a letter. Basic services run anywhere between 250.00-500.00 minimum, depending on the system’s size. A perfectly running system just requires a pump and inspection for a letter to be issued.
But here’s the kicker: If the seller agrees to deliver a clean letter, this means that whatever needs to be done to have the system functioning properly will be at the expense of the seller. The clean letter stipulation demands it (seller beware!). This is a very big deal, buyer, so don’t back off this stipulation unless you are willing to pay out of pocket during your due diligence period to have the system pumped and inspected. If you find concerns at that point, the contractor can’t issue a clean letter until the concerns are addressed. And if the contractor is already on site for the day, it is kind of hard to whip up right then and there an amendment to address concerns to determine if the seller will make any required repairs. See? Just have the seller deal with the whole thing.
If the seller balks at the prospect of paying for a clean letter and swears the system is just fine, one thing you could do is tell them you will pay for the basic service and the seller pays above and beyond for any required repairs. Who wants to buy a house where the plumbing ain’t workin’? And finally, the biggest component to this process is making sure you stipulate who is going to do the septic servicing. This is key! I could find you a number of septic companies who would issue a clean letter on a system that needs replacing. Your honest and well-connected realtor will help you there. DO NOT LET THE SELLER PICK THE SEPTIC COMPANY!
And for you, Sellers…
If you didn’t read above because you are a seller, not a buyer, stop now and read above. Be very cautious about agreeing to a septic letter stipulation. You may not fully understand what you are getting into. I have had seller clients say, “No problem, I’ll do a septic letter…they’re only a couple hundred bucks.” Perhaps. But if you agree to it, and the system is not properly functioning, you could be on the hook for 35 times that couple hundred bucks. No kidding. If you want to work with the buyer in this, just be careful how you approach this stipulation by writing in any counteroffer that you agree to have the system serviced up to a certain amount and no farther. If concerns are discovered during the inspection, make sure all relevant parties are available/on-call that day for a quick round of negotiating, if needed. Where do you go in that negotiation process and how do you keep the deal going? Ask your experienced, savvy realtor to dig you out. That is where we earn our money, by keeping you from spending all of yours. Finally, DO NOT JUST AGREE TO THE BUYERS SEPTIC PROVDIER CHOICE. Make sure it is a reputable firm.
Next Post: Septic Systems in the Foreclosed Home
Hi All. 
Excellent piece on short sales on NPR today. Hits the nail squarely on the head, and at this risk of sharing this with the millions of readers of this blog, resulting in a grinding halt to the economic turnaround currently being propelled by the 8000.00 fed tax credit and the new 1500.00 state tax credit, I will share it with you now. But please, if you choose to avoid short sales after this, go ahead, but don’t avoid the market altogether! The country needs you, buyer! 
The Georgia Homebuyer Tax Credit Has Arrived!
I thought you might be interested to know that as of yesterday, Governor Perdue signed House Bill 233 into law essentially freezing all property tax assessments in Georgia for 3 years. Effective January 1, 2009 through 2011, counties may not increase the value of any property, even when that property is sold, subject to a few exceptions:
If you listen to the talking heads in the media these days, you’d think there were foreclosures on every corner of every neighborhood, like gorgeous low hanging fruit in mid-summer. Let me set the record straight: Nothing could be farther from the truth.
In the Athens area, the buyers purchasing in the 100-200k range are driving the market, due in part to incredibly low interest rates and the 8000.00 tax credit. Fortunately, I have been working with a number of buyers in this range this Spring. That’s the good news. But here’s the challenge: finding my clients good properties to call home. Make no mistake about it, there homes out there, to be sure. A quick MLS search in the Athens five county area shows 833 single family properties listed between 99900.00 and 199900.00. And this doesn’t include FSBO’s. But too many of these properties are not worthy of consideration in my opinion. Many are very risky foreclosures. Then there are the un-maintained homes that need roofs, HVAC, water heaters, interior/exterior paint, updated baths and kitchens. 
Despite all the not posting I have been doing, the world continues to present an increasing number of interesting topics worthy of comment.
