Home Buying in Lehigh Valley>Question Details

PinkLady, Both Buyer and Seller in Allentown, PA

FHA bank loan required us to complete repairs before closing because it was mentioned in the offer. Deal may fall through, can it be recovered?

Asked by PinkLady, Allentown, PA Thu Feb 25, 2010

We are buying a home. In offer contract seller disclosed that something that needed repair. Our FHA bank financing people said we MUST have that repaired before the closing, or they would not lend us money (wells fargo). So we pay $1000 and do the repair. Then the appraisal gets done and comes in 20k below purchase price. Seller may back out and this deal might fall through. Is there any way we can get any kind of money back on that $1000 repair we just made to the guy's house? Or does he just get to walk away with a free repair? Should our realtor have advised us better in this whole mess?

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In these types of situations repairs prior closing for buyers expense I don't recommend it. Have seller do the repairs on their dime and you IF necessary reimburse at closing. You are at risk if deal does not close.

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0 votes Thank Flag Link Fri Feb 26, 2010
Your Lender or Realtor should have told you to hold tight on the repairs until you got the appraisal report back. I would like to think that everyone in the industry knows that HVCC has made some appraisers a tad bitter and it now reflects in their reports so why take a chance on fixing a repair until you know that value will be there. Further all sales contracts should include a small $500 to $1,000 repair contingency budget to handle repairs required by the appraiser.
0 votes Thank Flag Link Fri Feb 26, 2010
You are stuck.

You should have been advised that your money was at risk until a full commitment from Wells Fargo - including satisfactory appraisal was received.

You may have recourse against whomever advised you to pay the money up front - but unless you have something in writing - no recourse against the seller.

With an FHA loan - the case number - and appraisal will stay with the property address. If you are in an primarily FHA market - it may be advisable for the seller to reduce the price to appraised value. See if this is a possibility.

Unless they DO consider working this out with you - they will face the same problem with any other FHA offer that comes in.

Good Luck!

Gerard Dunn
0 votes Thank Flag Link Fri Feb 26, 2010
Well the best advice I can give you is contact an attorney. I probably would have adviced you not to make the repairs until the appraisal came in and all contingencies were met. But how did FHA find those issues? The appraisal is the one that inspects the house for FHA? An attorney may advice you to contact the PA Real Estate Recovery Fund.

0 votes Thank Flag Link Fri Feb 26, 2010
I would ask your loan officer and real estate agent why they did not explain this all to you and ask them to pay you the money.

If they don't do it, complain to the real estate managing broker and even file a complaint with the local board of REALTORS.

Then, once you get your deposit back, find a new real estate and mortgage broker.
Web Reference: http://fredglick.com
0 votes Thank Flag Link Thu Feb 25, 2010
Unfortunately, you should have proceeded with caution before making any repairs to home that you did not own at that point--what does your contract state--were the repairs mentioned and if so does it provide for any reimbursements--what is your agent advising--you may also wish to consult with an attorney who specializes in real estate if a resolution isn't forthcoming and check out your options--most professionals do offer a free consultation.
0 votes Thank Flag Link Thu Feb 25, 2010
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