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Short sale approved but major damage before Closing.

Hey guys, hoping that I could get some help here...I was in the process of closing on a short sale for 175k..the bank approved it, but 3 weeks prior to closing the radiator in the bedroom burst and water leaked into the basement flooding it..6 inches of water...none the less...I paused on the closing, had a contractor come in and estimate the damages...I sent the lender a list of the major damages that would need to fixed, and requested a reduction in my offer to 150k..to cover for the new damage repairs..each day we wait..the home remains empty, with pipes still broken and water still dripping from some pipes...at this point I'm not sure that even the bank approves 150k, I still want to go forward with this...has anyone come across a similar situation?? 
  • February 23 - North Bergen
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Answers (4)

You have done what you can do, make sure the bank has a defined time frame in which to make their decision to close for $150k or you need to move on... Im not sure if you already have your commitment letter or not (id steer clear from making them aware of anything if that be the case) or you might not be buying anything (even if you wanted to).
  • February 26
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Hello. The challenge is that the current owners still hold the deed to the home on a short sale, not the bank. Therefore, they are required to have homeowners insurance. If they are behind on the mortgage, they may have also let the homeowners lapse. The bank will not likely perform the repairs, since they do not own the home yet. That means they have to coordinate the inspection with the homeowner and decide who covers the cost, or they may drop the price and let you fix it. That could take weeks or months, which means further damage to pipes, wood rot and/ or mold once it gets warmer. I would likely give them a deadline of 7-10 days then move on.
  • February 26
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I have come across this situation in the past, unfortunately I don't know if there is a quick fix to your issue because the bank  will need to send out an inspector to assess the damage and re-determine the property value.  If they have insurance to cover the repairs those repairs will most likely have to be completed before you can close if you are financing the transaction because this house is not habitable with no heating system.  If you are financing, the mortgage company may need to get a 2nd appraisal if they are informed of the issue as well.
  • February 25
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Profile picture for Outer Banks N C
I have come across finding problems prior to closing but not the extent you have. A bank short sale already has them losing money so to ask them to lose more will take time while the bank has meetings about it. Likely they will come back with a counter. I am guessing they have now asked the listing agent to get an estimate since they will not trust yours. Have you agent ask if that is what they are doing and wait. They might have insurance that they can draw on to have the repairs made.
  • February 23
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