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John Morton

Advice

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Should/could buyer (me) pay for repairs prior to closing on short sale?

Found a house that I liked a lot, but it is a short sale. Offer was accepted by seller and seller's lender. Home inspector gave it a good bill of health noting only a few things, one of them being the roof. It has some old shingles and is showing it's age. I was aware of this and planned to fix it in the spring.Things were moving along. There was a hiccup where the seller was going to be $1400 short and so the deal we worked out was I would accept less of a tax credit for 2012 taxes. Not awesome, but I can deal. The the appraiser came along two weeks before closing. He noted that the roof is at the end of it's economic life. Now my lender won't underwrite the loan. They say it has to be fixed and the seller has to fix it. The seller has no funds. Nada. My lawyer suggested I could pay for it and utilize an escrow holdback so the repairs would be done after closing. The bank didn't go for it. I'm very tempted to just go out to the house this weekend and put a new roof on it. My lawyer would advise against this I'm sure. Is there any precedent for this? I'm guessing I'm at risk that closing could fall through for some other reason and I'm out all the time, effort, and money I spent on putting a roof on a house that I don't yet own. Is there any provision that would cover me? The only other option I'm seeing so far is to start the process all over again with a 203k loan, but that's not a short process and will cost me more in interest and I have to have the repairs done by a certified contractor. Is there any way to override the appraiser's opinion? Per the seller's lender we were supposed to close by August 16. Any "outside the box" solutions would be great! Thanks for listening!

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Gift Giving & Ethics

Response

Good point. Unfortunately for my Realtor, I'm something of a social outcast and few of my coworkers have it together enough to buy a home.

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Gift Giving & Ethics

So I'm on the lookout for a home to buy and have been out once with my Realtor already. I think I found one I like, but it's going to be a hassle as it's a short sale in need of repairs and if I go through with it I'll be going FHA 203k, etc. Anyway, the list price is pretty low and I feel like my Realtor will be working pretty hard for a pretty paltry commission. Is it appropriate to give the Realtor some sort of gift/thank you for their time? I was a lousy Realtor once upon a time (and not for very long) and remember what a pain it could be to do all this stuff and never sell anything. I also remember there was some rule about things you could accept payment for and things that were services or something. For instance, a Realtor can't charge  you to look up the tax information on a home, but there were some services they could charge for. What do you think? Does this happen? Is it common or should I forget about it?

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Zillow Asks: How do we improve listings quality?

Response

I'd love it if there were a feature to search my MLS number. Zillow often has the best/largest pictures for some reason and I the built in payment estimator works better for me than at Realtor.com. Sometimes a home I know about just doesn't show up in the search for whatever reason and if I could plug that MLS number in, it might narrow it down better.

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Seeking improvements on a short sale

Answer

Small update: Talked with the lender today and a FHA 203k sounds like the best route. First I'll have a contractor or two make some estimates, then maybe an offer. I was pleased to find that I could even use the improvement funds to finance a washer and dryer since the home doesn't come with them. Still tentative, but it looks like a FHA 203k is the best way for someone to do this.

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Seeking improvements on a short sale

Answer

My loan officer has mentioned the possibility of a FHA 203k loan to include improvements, however, I'll then be paying mortgage insurance and have a higher monthly payment. I haven't ruled it out, but it isn't really the path I want to take.Why am I interested in this home? It's just the one that speaks to me. I was a Realtor some years ago (not for very long; it wasn't for me) and one thing they told me to watch for with buyers is when they start arranging furniture in the home and picking colors for walls, that's when you know your client has found the home for them. Of the seven I looked at, this is the only one I started to do that with. Making an offer contingent on a home inspection sounds like it is more common in some areas more than others. It happens here often with so many homes being sold as-is.

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Seeking improvements on a short sale

I went looking at homes with my Realtor this last weekend and to my surprise the one I liked best was the lowest priced one, a short sale in need of a little TLC. I've done a little reading on the short sale process and I know that most of these are "AS-IS" and can take some time to process. Here's where it gets weird.The issue that concerns me most is the leaky roof. It leaks through the wall in the kitchen. Haven't made an offer yet and haven't had a home inspector look at it so I don't know if it can be patched or if the whole roof needs to be replaced. So let's say I put an offer in today and it takes four months to close. What I'm worried about is how much worse that problem could be if rain continues to come in over the next four months.My loan officer said "please know that if there's an issue with the roof, it will need to be addressed prior to closing in most situations." My Realtor (and research) tells me that most short sale sellers aren't going to put money into a home because they are already selling it at a loss. If my bank won't approve the sale of a house with a leaking roof, does that mean I need to find another bank or another house? Who else is going to be able to buy this house and why wouldn't the bank let me buy it? I plan to use a conventional loan, this is a first time home purchase, and I'll be putting 20% down.How realistic would it be to offer more (up to the cost of replacing the roof) than asking price with more earnest money than usual to convey the seriousness of my offer, but also stressing how important it is to my lender that the roof isn't leaking? I'm open to other possibilities too. I could probably afford to fix the roof myself with some handy family members after the fact, but like I said, I hate the idea of three of four more months of rain coming in through that wall not knowing how bad it is exactly.

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