Buying Short Sale: Negotiations after home inspection
Since posting two months ago, our buying process of the short sale property is slowing moving forward. It is in Broward County, FL, next to Miami-Dade county. There is only one lien on the house, not multiple ones as is common in short sales. We were told the bank has suspended any potential foreclosure proceedings in the house and the owners are moving out at the end of April. I was asked this past week to provide proof I had the down payment, and I had to respond the next day. I was uncomfortable because that bank account has more than the down payment, and I didn't want them to know. Any thoughts? I gave it. I've been told now it is going to processing, and that this processing is outsourced offshore.
Since my relocation plan pays for the home inspection, and more if needed, and because the home inspector will do other houses for half price, I went ahead and did the home inspection. A great roof, but a few problems with the pumps on the pool, some smoke detectors, a few electrical GCFI issues, and they noted that the dishwasher and the A/C are old. My contract says I have 15 days after the effective date to cancel based on the home inspection. We do like the house a lot, but are concerned about these issues.
Can I negotiate for a lower price (thinking about $4,000) based on the home inspection, and if so, at what point? Also, given that it has been 2 months, and it is now processing, what is the chance the bank will ask for more money? I'm nervous about that since my bank statement showed more than the down payment in my bank account. We had made an offer at their full list price. The house had been on the market for close to two months at a higher price. Our offer was about a week after they lowered the price. As far as we know, there were no other offers. There are three other houses with the same model, same neighorbood for sale for about $40k more, and been sitting on the market for awhile. There's another unapproved short sale of that model asking $20k lower that has an old roof (based on what the owner told us).
My agent does not have a lot of experience with short sales, but she talks to someone else in her office who does. The seller's agent has a lot of experience with short sales and said she is very confident the bank will accept the price (and she also knows the seller's financial situation).
Replies to This Discussion
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Permalink Reply by Bryant Tutas on
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Asking for a price reduction due to repairs can be done but will certainly slow things down. My suggestion would be to get estimates for what needs to be done. So you know exactly where you stand. chances are the repairs are a lot less than you think. They usually are. Once you have a figure you can decide whether or not to submit a new reduced offer
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Permalink Reply by Rudy on
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Actually, our home inspector included estimated costs in his report. They total of $3600 of current repairs (some of which I can fix), and $13,000 of potential, of which only $5000 is of concern to me. So my $4000 number is much less than that. I'm actually not in a rush as the lease on the place we are renting goes until the end of August. My agent is under the impression right now that they could approve the sale in 10 days, and then we'd have to close within 30 days, which about 3 months overlap on our rent, more than I want.
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This is one of the reasons we require inspections up front, before the contract is submitted to the bank. The reports help justify the price. If you get an approval, then go back and ask for a lower price, it is much more difficult. The repairs you have are fairly minor though...pool pump issues, GCFI's, etc. Old, but functioning systems, won't be considered as a reason for a price reduction. But, if you want to try for a price reduction, do an addendum and submit it now, before they finish the review process. Sounds like you're dealing with Ocwen, so I wouldn't be concerned about it being approved too quick. The bank doesn't care if you have $30k or $300k in your account, it won't make them raise their counter because of that, they'll base it solely off of sold comps. Realize that the asking price, and other for sale prices, are irrelevant to the price the bank is willing to accept.
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