Home Buying in 80233>Question Details

Penwen, Home Buyer in 80233

IN A SHORT SALE, CAN A LENDER MAKE YOU FIX UP A PORPERTY BEFORE YOU CLOSE

Asked by Penwen, 80233 Mon Jun 1, 2009

SITUATION MADE OFFER FIRST OF MARCH, A WEEK LATER THEY OFFERED THE CONTRACT. WE PAID FOR INSPECTION, AND APPRAISAL. PUT DOWN THE ESCROW MONEY. OUT FIRST CLOSING DATE WAS 21ST OF MAY, THEN THEY (LENDER) TOLD US THE BATHROOM (2ND) HAD TO BE TOTALLY REDONE, SO THE CLOSING WAS RESCHEDULED, UNTILL THE 29TH, BATHROOM WAS COMPLETED, AT OUR COST AND WE STILL HAVE YET TO CLOSE.

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15
Penwen and Rocy. I also would like to know how that all worked out. There are 3 main reasons I would never advise a buyer to fix up a property. First of all, the short sale bank has no loyalty to you and could back out at any time. Second, If things did not work out with the repair, the seller could hold you responsibile even if the deal did not go through. Third, FHA will not allow you as a buyer to do this and neither will most conventional lenders. I would better advice from your agent's managing broker and also get some legal advice. Finally, This is just not a good idea to do no matter how much you may love this particular home.

Robert McGuire - Denver
Your Castle Real Estate
rpmcguirejr@msn.com
1 vote Thank Flag Link Tue Dec 8, 2009
Hi Penwen,

I would recommend that yoou not put money into a short sale property unless you have closed on the property and the title to the property is legally yours. If a bank asks you to do this, I recommend telling them that you will not, and if they insist that you do it, walk away from the deal. There are many other properties in short sale or REO status that the bank will not ask the buyer to do this.

To see other available Denver Metro foreclosure properties, you can go to my website:

http://www.denvercoloradorealestatenow.com/page/94496/Forecl…

Thanks,

Ethan
1 vote Thank Flag Link Wed Jun 3, 2009
Yes. They can. You can tell them no, and they can do the same to you.
0 votes Thank Flag Link Wed May 21, 2014
Do you have bank approval?
0 votes Thank Flag Link Wed May 14, 2014
I had a short sale (the last stage before foreclosure), but I found a buyer that offered what the bank accepted. I had holes punched in the walls (angry teenager) and carpeting was bad (pet damage) above a cement slab family room, and both of those conditions had to be fixed (either by me or the buyer - I let the buyer do it, as part of their inspection-I had no money). This was a pre-condition to an FHA loan, as they have specific habitability requirements before lending. Other than that, I don't think there is any reason to expect the home owner to upgrade anything before selling on a short sale - I always thought that the property had to be listed as-is.
0 votes Thank Flag Link Sat Oct 19, 2013
I've seen that occur before.
0 votes Thank Flag Link Tue Oct 8, 2013
You say the lender, but are you referring to your client's lender (BUyer's Lender), or the Seller's Lender.

The Seller's Lender cannot cause this to be done, and you should never under any circumstances make repairs on a home you don't own.

If the BUyer's lender requires certain repairs to be made, then that is another story. In this even, you have to work this out between your client and the other agent to get to a compromise, concession, or rebate for the repairs to be completed in escrow. Never have a client pay up front. If anything falls through you have them hung out in the breeze.
0 votes Thank Flag Link Wed Oct 2, 2013
Being a second bathroom unless the appraisal was completed subject to the bathroom being finished you should have been ok closing so long as it was not an FHA loan
0 votes Thank Flag Link Wed Oct 2, 2013
This doesn't sound right. The Seller's lender would not ask a buyer to repair a property. It is never advisable to make repairs or modification st o a property you don't have title to. It puts your money at risk. I would like to better understand the situation though. I have never had a lender for the Seller i a short sale ask a buyer to make repairs. If the lender doesn't approve the sale you will be out the money you put into the home. In addition, transactions involving a short sale have a short sale addendum which allows the buyer or seller to back out of a transaction.

I would have to review all of the paperwork on such a transaction. I would never recommend to one of my clients to make repairs to a property they didn't own., though.

Lou Farris, MBA, Realtor®, CDPE
Your Castle Real Estate, Inc.
The Colorado Deal Makers Team
http://www.coloradodealmaker.com
TheColoradoDealMaker@gmail.com
0 votes Thank Flag Link Sat May 18, 2013
Hello Penwen & Rocy,

First of all, i must say that I have closed almost 90 short sales in the past 12 months and I have not come across a bank asking a buyer to invest in fixing up any part of a short sale property before closing. That said, i am wondering if you have a FHA loan and upon appraisal they determined that the subject bathroom needed to be finished to meet FHA criteria before they would fully approve your loan? If that was the case, this would have been a seller obligation to fix up the bathroom to ensure that you could close on your loan and therefore the sale, ensuring that the seller potentially avoid foreclosure.

So to summarize, from my experiences it would be unusual for a lender to require you to fix up a bathroom before closing.

Michael Turner
Lead Properties
720 300 0889
0 votes Thank Flag Link Fri May 17, 2013
All these brokers are right. I would like to know who that lender is, for future reference. Also, did your real estate agent advise you against putting money into a house that you don't own?
0 votes Thank Flag Link Wed Dec 9, 2009
hello penwen my name is rocy and i would like to ask u how did that deal ended up???
did they answer did u close????
im in the same situation and we have not fix anything yet but we really want the house the only thing is that really makes me worry!!!
0 votes Thank Flag Link Mon Dec 7, 2009
I would never advise a client repair a property they didn't own. I would like to review paperwork for such a transaction, as this is highly irregular. You risk losing your money, and in a short sale in COlorado, either party can terminate the transaction, based on the terms of the short sale addendum.

Lou Farris, MBA, Realtor®, CDPE
Your Castle Real Estate, Inc.
The Colorado Deal Makers Team http://www.coloradodealmaker.com
TheColoradoDealMaker@gmail.com\720.255.7148
Flag Sat May 18, 2013
I agree with Joetta on this one. But here's another thought. Did you sign a lien waiver for the work you had performed on the bathroom. If not, and depending on the addendums that the bank may have required you to execute with the contract, you may have some leverage to get your deal done quicker and/or to make sure it gets done at all.
0 votes Thank Flag Link Mon Jun 1, 2009
You need to read your contract, especially paragraphs 6 and 10.4. If this deal doesn't close, you've given a nice gift to the seller, or the bank if the foreclosure goes through. The lender will probably have to send the appraiser out again, to verify the work. There could be many reasons why it still hasn't closed, but that could be one. Do you have an agent? Did they try to get the seller's lien holder to pay? They should be able to explain to you what's holding up the closing.
0 votes Thank Flag Link Mon Jun 1, 2009
Tell me if I have got this straight.
Your lender said that the bathroom had to be redone prior to closing as a condition of the loan. And, you redid the bathroom, at your expense, prior to closing.
What is holding up the closing? Is it scheduled now?
I advise my clients to never make repairs to a property they are buying prior to the closing. So many things can happen....
0 votes Thank Flag Link Mon Jun 1, 2009
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