Nandi,

Further to mine below, if you already put in credits toward your closing costs, that could be why your agent didn't put in any other monies. You may have used up your max on closing cost credit. The max your lender will allow OR the max your appraiser may allow.

It might be worth letting your lender do the appraisal now, to see where it appraises and if the appraiser will let it fund at all, before you wait out the lienholder approval timeframe. It will cost you $450 or so, but may be well worth it. Plus you can use that to help get the lienholder approval if the appraisal comes in close to your offer price. It could speed up your response time.

Nandi,

Check your form 22SS. If you have the right to withdrawal the offer prior to lienholder approval (it's a checkbox) then you can rescind the offer and replace it with a new one.

My concern based on what you have said is the house may not be "fundable" by your lender. Unless you are buying all cash, repair monies in your contract will likely cause your purchase loan to fail. No carpets, no stove will not likely pass for your loan. No washer, dryer, fridge is not a home defect as they are personal property and not part of the real estate.

There is a limit to the credits you can get, and those limits are set by your lender, not the seller's lender. You can't just stuff a bunch of credits in, even if you are within "the limits", it may not appraise with the extra cash built in.

So far it looks like this place might have to have a cash buyer. What new lender would want it as collateral in that condition? I'm assuming you are not a cash buyer, as credits are never the remedy for a cash buyer, price adjustment is the remedy for cash buyer.

My best guess is this home is not appropriate for someone who needs a mortgage to buy it.

You might want to look into whether you can back out of the transaction at this point. It's somewhat apparent that you weren't well advised getting into this transaction. This should have been explained to you prior to making the offer.

On the other hand, the fact that you were going for a short sale indicates the timing of your move-in isn't that important to you (assuming you were advised of the likely delay). So perhaps if you're a first time home buyer eligible for the 8k tax credit, you could use that money for the repairs. I hear you can get that money fairly quickly by amending your 2008 return, but you should check with a tax professional on that. I've only heard that from unverified sources.

A short sale, as previously mentioned, is an "as is" purchase. When you first make an offer on a short sale the home should remain in the condition that you viewed it in. IF the home was gutted out like you said before you made the offer then all those details should have been taken into account when placing the offer. For example, the price, closing costs, etc.

Now, I know you said you are already under contract on this home. If you have yet to receive lender approval, you still have the option to renegotiate the contract. HOWEVER in doing so you will likely cause the short sale process to start all over again which in turn will delay your closing date.

I had a short sale that the lender took over 4 months to respond to the original offer. The BUYER eventually wanted to lower the price because the value of homes had come down quite a bit in that time. The Seller agreed to the price change and we ended up waiting another 3+ months to close. BUT all being said, they got approved at the lower price.

Peggy is correct in stating that the lender and seller will not likely do any repairs. However, you could ask for a credit in your closing costs to help offset those expenses some. But the amount of work sounds like it would exceed what you can ask for in closing costs.

Well I hope this information has helped.

Best Wishes,
Bryan Lovell
The Lamplighter

Nandi, you are purchasing a "SHORT SALE". A short sale by nature is a homeowner who is in distress, is late on mortgage payments and is facing foreclosure. In a short sale purchase the Realtors ( Listing Agent and Buyers Agent) are typically negotiating with a distressed homeowner. The agreement to purchase is between you and the owner ( contingent upon the lenders acceptance of all the terms specified)

Let me ask you a question? If the owner "ripped out the carpets, and took the stove,fridge, washer etc.." to drum up cash or a deposit to get a rental, and they did not respect their property, their promise to pay the lender and the neighbors how do you think you are going to get $ for repairs.

Also, what are you going to do when the bank responds a few months from now and changes the terms of your offer?