Short Sale Lender ever make repairs?
After 7 months my buyer's offer was accepted on a cute house built in 1906. Home inspection was done last week and the Inspector became very upset with the construction under the roof. The house has had several additions over the years, enclosing porches etc.Inspection shows there are not any trusses holding up one end of the roof. The work was done long ago but is not safe because the support of the roof is attached to 1x6 boards every few feet laid along the attic floor.
After having a licensed contractor come to look he said the trusses were cut in half and 1x6 boards are attached which are not enough to support all the weight being held. The contractor said there is $20,000 worth of work to get up under the roof in the attic space and actually create trusses.
My first time buyer is freaked out about the expense. I am going to submit the home inspection and contractor report to the listing agent to ask for the repairs to be made. The buyer wants the bank to do the repairs in case more issues are found.
Is there ANY hope of repair getting done on a short sale??? BofA has already pitched in $10,000 to Citi's 2nd.
Thanks,
Robin
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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The lender is not going to do repairs. They don't own the house and are not going to spend any money on it.
They may reduce the price accordingly or allow a credit to the buyer at time of closing. If you want to attempt this then you need to have the buyer sign a revised offer and submit this to the seller with 2-3 estimates for the repair and the inspection report. If the seller agrees to changing the terms and conditions of the contract they would sign it then the request would go back to BofA. this process could take weeks or months.
OR the buyer can check with their lender about doing a FHA 203k financing. This type of loan would allow the buyer to place the repair costs into their financing on top of the purchase price. they could include other repairs and improvements in this.
I hope this helps
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Permalink Reply by Robin Bianchini on
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Thanks Bryant.
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Permalink Reply by Smitty on
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Why aren't you just reducing your offer price the amount that the repairs need to be made? This is why inspections need to be done up front before submission to the bank. If the inspection was done then your buyers could have reduced the amount that was needed to repair the home.
On the flip side I've seen BOA allow a payout at closing to a contract, but this is because it was state law that certain items needed to be fixed before the sale.
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First time buyer doesn't want to spend money on inspections before having bank acceptance. The reduction in price still leaves the buyer needing to have money for the repairs.
I'm submitting two bids for repair with the home inspection report.
I'd love to follow up on SSS with a successful result!
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Permalink Reply by Jeff Payne on
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Robin, regardless the buyer is going to pay for a home inspection. If they inspect up front and find the issue or if they get their offer accepted and then have the inspection done, it is the same either way, they still have to pay for the inspection. This is something that you as an agent need to educate them about.
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Hi Jeff, My wording was from the past, the buyer did have and pay for inspections but it was as soon as we had SS approval. Fortunately, all other short sales I've done have not had such major structural issues. Knowing the banks don't want to make repairs nor give credit for repairs I'm going to try any way.
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Permalink Reply by Tara Samney on
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You are wasting yout time and hurting your client going in this direction. Try getting your buyer to switch to a renovation loan and understand he has to make these repairs in it. The bank is not going to pay for it....perhaps you could get price reduced and them add that into the rehab amount.
If your buyer will not use a renovation loan it is dead.
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Permalink Reply by Kimberley Kelly on
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Having a home inspection before the offer is a great idea. Many short sale buyers will not do it however..
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Robin -
With regards to buyers doing inspections and providing earnest money upfront serves a few purposes that maybe you could look at a touch different. This way you will be able to avoid situations like this. I have all buyers do their inspection upfront on short sales whether I am listing agent or selling agent. When listing agent I do this for 2 reasons:
1. I do not want to work on the file for 12 to 16 weeks, get it approved, but then still have the buyers approval on inspection to get through. If buyer walks due to inspection that wasted the sellers opportunity for 3 or 4 months and my time. Have buyer do inspection upfront make sure they are happy and then proceed. Once approval is obtained you simply move to a closing very smoothly. I have buyers agents balk at this reuqest all the time. I simply say then this is not the home for your buyer if you are not willing to do the inspection up front. When I take the listing I tell the seller I will not take the listing unless we are on the same page about the buyer requirements when receiving an offer. A bad buyer now is a bad buyer later and rather know it before I put all my time into it.
2. Once buyer does inspection up front, now they too have skin in the game and they are less likely to walk from the transaction due to a "better deal". They now have spent 400.00 and I have their earnest money - it locks the deal down tighter for the approval duration and is doing a great service to your seller.
on the selling side I have the buyer do inspection up front so that we dont waste 3 or 4 months and they walk only to find out in an inspection what they could have learned a long time ago. If they do it up front, yes they spend the money, but the wasted time has value to ( interest rates, other homes, your time) - it makes smarter business sense from your perspective to encourage the inspection so that you able to guide the buyer better. You are actually doing them a service by encouraging this action up front.
just my 2 cents - but I have never had a buyer walk on any short sale transactions ( well over 100 transactions).
Hope it works out for you.
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No. Why would the bank make repairs on a house the bank doesn't own?
You needed to have educated your buyer more on short sales before making an offer. The seller (who has no money owns the homes) not the bank.
You could have your buyer switch to a renovation loan and go that route though. Your buyer will have to pay for repairs then anyway.
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