Home Buying in Austin>Question Details

Scott_home, Real Estate Pro in Austin, TX

Can I negotiate repair costs in a short sale?

Asked by Scott_home, Austin, TX Mon Oct 12, 2009

I submitted an offer in a short sale. The house needs a lot of repairs (~30k). The owner has no cash to pay for any repair. The lender has not accepted my offer yet. If they do accept it, will they negotiate on the repair cost when the house inspection is done?
My friend bought a house in a short sale. He said there was a third party handling the process between the lender and the buyer. What is that third party? Thanks.

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Answers

5
You will probably not get any requested repairs. Repairs are something to consider prior to placing your offer. Is the home priced under market value and adjusted for needed repairs?

When a listing agent submits a packet to a lender for approval on a short sale, they will usually let the lender know of any needed repairs so that the price can be listed in accordance.

Although I work primarily in and around the Houston area, check out my blog for detailed information about buying and selling short sales.
0 votes Thank Flag Link Tue Dec 15, 2009
Dear Scott,
Unless your really patient and have a pile of cash to make repairs after the purchase a short sale is probably not the way to go. There are all kinds of great properties out there right now. Would you consider a duplex in Hyde Park? You could live in one side and rent out the other? Let me know if your interested.
Sincerely,
Betina

Betina Foreman Realtor
Keller Williams
1801 S. MOPAC, Suite 100
Austin, TX 78746
512-771-6318
0 votes Thank Flag Link Fri Dec 11, 2009
Short Sales are always "as is". BTW- While you are waiting for an approval on the short sale, you missed 10 other deals in the neighborhood that are better.
0 votes Thank Flag Link Tue Nov 17, 2009
Dear Scott,
Donna is on the money with her answer. Lender owned properties can be challenging.

The Lender is usually not aware of the specific property condition and won't give you a Sellers Disclosure either. These sales are always "As Is" without repairs. Usually the price is under market value so doing some repairs after the sale can still be a good value. I would make sure to have it fully inspected and if your concerned about the foundation have a structural engineer inspect it as well. It is always worth the money to have through inspections, so you know what you are actually buying.

Also please note that Short Sales are normally anything but short. Due to the number of entities involved it takes much longer to close the deal. Please let me know if I can be of further assistance.
Sincerely,
Betina

Betina Foreman Realtor
Keller Williams
1801 S. MOPAC, Suite 100
Austin, TX 78746
512-771-6318
0 votes Thank Flag Link Thu Nov 12, 2009
Hello Scott,

A third party could be an asset management company that the bank has hired to handle the transaction. When you are making an offer on a short sale, you should take into consideration the cost of reparis in your offer. The seller has no money for repairs and the bank is already taking less than they are owed on the property so there is no money for repairs. You should have the property inspected so you know what you are getting into, but there will not likely be any help on the repairs from the seller or the lender.

Patience is also critical when you are the buyer on a short sale. It can take significantly longer to process a short sale becuase of the volume of files the lender is processing, so it may take a while for yours to make it to the top of the stack. Hopefully you have an agent that is helping you throught the process, but if I can be of assistance, I'm happy to help. Best of luck to you.

Regards,
Donna Goode
Keller Williams Realty
0 votes Thank Flag Link Mon Oct 12, 2009
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