Foreclosure in Columbus>Question Details

Bigbadbull, Home Buyer in Columbus, OH

We have an accepted offer on a bank owned home. The roof is currently leaking. The offer is contingent on inspection. Will they negotiate this??

Asked by Bigbadbull, Columbus, OH Sat Jan 15, 2011

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Bigbadbull normally the lender owned homes are sold as is where is.

If you knew the roof was leaking when you made your offer what makes you think that they will repair it?

Depending on your lender you can escrow up to 5k in a 203b loan for repairs. You also can do a 203k loan for up to 35k in repairs. The property must appraise for the purchase price and cost of repairs for the loan to be approved.
I have done many 203k type properties with buyers in my area and if you can't end up with 20% equity based on a CMA my recommendation on fixer uppers is to look for another one. Appraisals are crazy with FHA and 203k loans. My best buyer story is a purchase price of 165k, repairs of 27k for a loan of 192K. Appraised price for ARV came in at 195k, One year latter when the owner refied out of the FHA loan a blind appraisal came in at 485k on the property.
5/3 bank in your area will do 203k loans. A particular loan officer may not do them so ask the l.o. at 5/3 for a name of someone that does.
1 vote Thank Flag Link Sun Jan 16, 2011
Everything Jason said is accurate. FYI - Banks have been much more willing to negotiate on price than in the past (they will rarely, if ever, do the repair unless its a health hazard such as a gas leak) , so definitely get the estimates then ask for the reduction. They really want to close the deal nowadays with so much inventory on their books. Just ask for it and provide the quotes and I bet it goes through.
1 vote Thank Flag Link Sat Jan 15, 2011
Just depends on the bank. Some banks I have worked with have been happy to get the house off their books and others just didn't seem to care. The good thing is, you have a continency on the inspection. If the wording of the contingency allows you to release the contract if you can't come to an agreement on repairs, then you have the option to walk away or go ahead and purchase the property if you feel it is still a good investment to make the repairs yourself.
Web Reference: http://teresabutler.com
0 votes Thank Flag Link Mon Jan 17, 2011
Hello Big,

There are a lot of things here to consider as you proceed with your purchase. The most important thing is your willingness to walk away if you do not get the terms you want. You are in control. Please, pease keep that in mind so as not to get lost in the emotion of having to get this home. There are a lot of homes for sale in this price range with out the baggage of being bank owned or in foreclosure. And feel free to mention that in a tactful way to the lender. They will get the message. Since I don't have the comparables to see if your offer is in line with the market in your area I will only say that if the bank bought it at 280K and your offer is at 318K they should be shaking your hand and doing whatever it takes to get the home sold. I don't know if there is a deficiency judgment in this case but usually the lender has a fiduciary duty to the lenders shareholders to bid at the Sheriffs Sale what is owed and other cost on the property so the lender may well have only 280k wrapped into this. As other REALTORS have mentioned most bank owned homes are sold as-is. But it never hurts to ask, and besides if the inspection report does show something major with the roof the bank has to figure that any other potential buyer will find the same thing and may walk away. Hang in there and get the terms you want. And if they do agree to make repairs make sure to have a contractor that you want to use. And always get legal advice. The cost of using a real estate attorney in a transaction like this is well worth it to head off any costly issue that may arise at a later time.
All the best,
Jefrey Paeltz, SFR
0 votes Thank Flag Link Sun Jan 16, 2011
Bigbadbull the bank did not purchase the property for 280k no one bid more than the judgement amount. The bank owns the property for the amount of the loan that went bad, plus the cost of forclosure, plus any advances for taxes, insurance, maintance etc.
Have your roofer check if the builder used metal valleys or if they did the southern thing and did a weave valley. Metal valleys cost a little more but most roofers in our area use them as they are more durrable in winter weather I have been told.
0 votes Thank Flag Link Sun Jan 16, 2011
All,
Thank you very much for your input. We didn't know the roof was leaking when we went into contract. At time of contract/offer, we noticed one small spot in an upstairs bedroom, but it looked old and repaired. The leaks look to be a result of ice buildup in some of the valleys. We are having our home inspection next week, and I am bringing in a seperate roofer in addition to the normal inspector.

The bank purchased the property back at a sheriff's sale for $280k in September '10. The orig. purchase price was $417k in 2007 (new property). Our current offer is $318k, and it is the first time the property has gone into contract. My hope is that the bank would rather negotiate with us on this point than let the property go back on the market.

Thanksk again, and I will let you all know what the outcome is.
0 votes Thank Flag Link Sun Jan 16, 2011
I have read through these responses and agree wtih most of what has been said. However, I have had a great deal of success with getting fixes done on bank owned. It really does depend how close margins are for the lender wether or not they have room for repairs. I do not think it would hurt for your agent to make the request. All they can say is no.
0 votes Thank Flag Link Sun Jan 16, 2011
With a bank owned home, you should include anything that needs repair in yoru initial offer, most banks will not re-negotiate after accepting an offer. Now you can certainly try, some banks may, but some will hold firm. The biggest fact will be if it was leaking when you made your offer or just happened after you made yoru offer, if so you have a good case to get it fixed or credit to fix it.

Please see my blog for tips and advice on buying a bnkk owned home
0 votes Thank Flag Link Sat Jan 15, 2011
Bigbadbull,
Any bank should know it's hard to get a loan for a home with a bad roof. Depending on the rest of your terms, there is no harm in requesting this be addressed at their expense prior to closing. I think your chances are good.
0 votes Thank Flag Link Sat Jan 15, 2011
Hello Bigbadbull,
As with any offer contingent on inspection- you may ask for a new roof. I have successfully negotiated many brand new roofs and had little or no difficulty in getting them. Ask your agent to make the effort. All they can say is no and of course you have the option to walk. You really have nothing to lose. You already have the contract and can always decide to just continue with the deal. Let us know what happens.
0 votes Thank Flag Link Sat Jan 15, 2011
All Bank owned properties are sold in As-is condition, which does not prevent you from doing a home inspection. However, the bank is figuring you got the home at a discount price based on overall condition of the home. You can try to re-negotiate the price if there is severe damage, however the bank will probably be unwilling to re-negotiate.

If you do not agree on the overall condition, you can cancel the contract (i.e. inspection contingency).

Best of luck,

David Jaffe-SRES, CDPE
Realtor-Coldwell Banker
0 votes Thank Flag Link Sat Jan 15, 2011
We put an offer on a Homepath Fannie Mae property. The asking price is $344.900 and we bid on it $375,000 cause we love the house!!
The bank accepted our offer. and now after we hired an inspector, we found out there a problem with the Roof (water leak in the roof to one of the bedrooms) also there is Mold, and other issues. Will the bank lower the price or give us credits to fix these issue problem?
my email is suzanne.nuri@yahoo.com

Thanks.
Flag Wed Oct 9, 2013
It depends on the terms of the accepted offer. There should be a paragraph that addresses repairs and who is responsible for them. Usually the bank is selling as-is where-is. The only exception to that position I have seen my clients make is when there are lender/appraisal required repairs. Even then I have seen the seller put the repairs on the buyer to get done. Just depends.
0 votes Thank Flag Link Sat Jan 15, 2011
Every Bank deal is unique in nature. I have dealt with many - even the same bank will give a different answer to the same question- from one deal to the next! Frustrating but true! It is quite true that the banks offer bank owned properties as 'as is'. You should be consciousof your inspection deadlines, in the event that you want to opt out.
Recently I had a bank deal with the same issue - bad roof. We were able to negotiate the entire cost of the roof with the bank. Rather than take it off the sales price (which would only have reduced my buyer's payment slightly-where as paying for a new roof is a lot of out of pocket change!), we negotiated a 'new roof ' prior to closing. We made it contingent on buyer's approval of the roof by buyer's inspector (don't think that the banks don't take short cuts on repairs-- be very aware - you have less recourse!) We emphasized to the bank the value of the home would continue to degrade with this leaky roof - mentioned black mold issues etc..the bank saw the light.
0 votes Thank Flag Link Sat Jan 15, 2011
Bank owned properties are almost always offered in "AS-IS" condition which simply means you are welcome to have inspections performed on the property to determine it's condition however, the bank will typically refuse to make any repairs or improvements to the home ad instead you will have the option of deciding if you wish to move forward with the purchase after you've done your proper due diligence. The banks will typically an addendum which they will require prospective buyers sign and this "AS-IS" condition should be outlined in this document. That said, if the roof is leaking and if this is a rather major repair expense you're looking at what I would suggest you do is get repair estimates from no less than two, preferrably 3 local roofing companies. I would then draft an addendum to the contract requesting that the purchase price be reduce by an amount equal to the lowest bid and I would submit these bids with the addendum. Time is of the essence here as this must be done before the expiration of the Request to Remedy Period which is usually 5 days but should be stated in your purchase contract. The bank will have he option of accepting your proposal, countering it, or denying it and in turn you can then determine if you're interested in moving forward with the purchase.

Jason Opland
Web Reference: http://www.JasonOpland.com
0 votes Thank Flag Link Sat Jan 15, 2011
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