HELP, The A/C units were stolen.....

I have a B of A, FHA short Sale. The seller is out of the country and the house is vacant. I noticed that around the middle of December the 2 A/C units had been stolen. The seller has maintained his home owners insurance so we called and filed a claim. We also filed a police report. Seems that this is happening a lot in this particular area lately.

Just found out yesterday that the insurance company denied the claim because of a provision in the policy about theft or vandelism while the property is vacant. The property is under contract waiting Short Sale approval with a buyer that is getting a USDA loan. So just like FHA the A/C will have to be operational at the close of escrow. The seller does not have the money to fix it out of pocket.

Has anybody had any experiance with something similar? Any suggestions. I know I will have to call the bank on Monday and make them aware of the situation.

Looking for ANY feedback, suggestions, comments.

Thanks

Deb Nichols

HomeSmart

Phoenix Arizona

Replies

Debora Nichols January 7, 2013 at 8:54am

Thanks everybody. I will let you know how it goes.
Wayne Brooks January 7, 2013 at 4:20am

230k's are great for major rehabs, but the fees/costs might get a little steep for such a small amount such as A/C. It's not easy, but if the seller's lender won't do the repair/replacement they'll b stuck with only cash offers from here out. It's not like the banks/asset managers pay their vendors within 2 weeks any way, so they wouldn't actually be out of pocket any monies if they replaced it, and costs came out of the closing.
Bill Sloss January 6, 2013 at 9:34am

This may sound strange but did you see the denial and the coverage in black and white? Frequently an insurance company makes a quick denial because its easy. Id get that first and then start with the owners insurance agent. Sometimes they can get things covered especially if they know the owner or want continued business. Then Id check with the police and see if there is a county victims advocate. Finally Id start looking for used units. You might swing the deal quoting used units
- Debora Nichols > Bill Sloss January 7, 2013 at 3:29am
  
  Thank Bill, I did get a copy of the denial letter and coverage. The seller is out of the country and does not have a relationship with the insurance agent. I didn't think about used units. But I do have to wonder where they would come from and if they had been stolen from someone else.
  - Bill Sloss > Debora Nichols January 7, 2013 at 3:45am
    
    Do you know what SEER is? Its a Federal energy standard. There are tax credits for upgrading. When people upgrade the old standard was like 10 its 13 now but there are 23 SEER on the market. The old units have to go somewhere. Id check around. But if you have to spend the money make sure you get what the standard is now so you wont have any FHA troubles.
Bryant Tutas January 6, 2013 at 3:58am

I would see if the buyer can switch over to a FHA 203k rehab loan. They could then finance in any needed repairs and improvements. These are great loans for distressed properties.
- Debora Nichols > Bryant Tutas January 7, 2013 at 3:25am
  
  Thanks Bryant, that will something we will look into this week.
- Janis Schade > Bryant Tutas January 6, 2013 at 6:18am
  FHA 203K's are used a lot in Missouri. We suffer from Copper Thieves. One thing I have had to do in the past was to get an estimate for the copper and/or AC replacement to see if we can get a reduction in the offer. After all, it will be a problem with a new buyer if the contract offer buyer walks. You always have to look at whether the appraised value after repair makes the home a great deal, even with a traditional buyer.
  - Debora Nichols > Janis Schade January 7, 2013 at 3:26am
    
    Thank Janis. I will be calling the bank today. I hope they will allow for a price reduction. I am trying to get two estimates to substantiate the price reduction.

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