Ganttsrus, Home Buyer in Suitland, MD

Re-negotiating with a Ratified contract on a foreclosure....

Asked by Ganttsrus, Suitland, MD Thu Jul 22, 2010

We have a ratified contract which was ratified on 7/19 for a foreclosure in the amount of $150K. We won out on a multiple offer situation. They gave us 5 days to do the inspection of which we did yesterday and found numerous issues that would make our initial offer amount of that $150K impossible with about 46K of work needed. Therefore, we want to renegotiate down to $125K. I know this is usual with regular home sales, but with foreclosures and banks only thinking profit, is it possible for them to go down this much or at all? What is the likely hood of this happening?

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Ganttsrus’ answer
1) This house is worth it as once it is fixed up it will be worth 230 to 240K.
2) We have not done an appraisal as our contract was accepted 3 days ago.
3) We are doing a FHA 203K loan to fix the items.
4) We do not want the bank to fix the house just reduce the price.
5) We are offering 3k more than what they were initially asking and any other buyer would have the same issues.
6) We are 1st timers so we saw problems, but did not know that the basement will have to be gutted...how would we know that? So thinking 25K worth of fixes is what we thought...not 46K
0 votes Thank Flag Link Thu Jul 22, 2010
Scott is on point with his answer.

In addition though, if the bank is willing to renegotiate the sales price instead of making the repairs you need to make sure your lender will be willing to finance the house as is. 46k worth of work is a lot and I can only imagine there are some pretty major issues that your lender will not be comfortable with.

Of course all this is irrelevant if you are a cash buyer which I doubt you are since you paid that much over the list price.

Did the house actually appraise?
0 votes Thank Flag Link Thu Jul 22, 2010
Hopefully you had a due diligence period with the right to terminate following the inspection. I would be prepared to execute the termination. You can attach the inpsection report with it and if the bank wants to save the deal, they may open the door for the price adjustment. If not, just walk away. It doesn't sound like it's worth it!

Stacy Carter
Associate Broker
Better Homes & Gardens Real Estate Metro Brokers
678-641-6631
0 votes Thank Flag Link Thu Jul 22, 2010
Also..the initial asking price was $122,300 so we offered 28K over asking to get the property and the 125K is still more than their asking.
0 votes Thank Flag Link Thu Jul 22, 2010
Most banks will not renogiate after accepting a contract. The property is sold as is and any inspection is for the buyers knowledge, most banks and their listing agents will tell you this up front. The banks that will look at a renegotiation will only do so oin issues that you could not see with you naked eye. When looking at a foreclosure, anything you could see with yoru naked eye such as replacing carpets, painting, hand rails, broken windows, worn roof, missing fixtures should have been inclued in your offer by offer a lower price.

The things they may consider are hidden defects like the well, septic, termites or testing the plumbing, if teh water was on you should have ran all faucets to make sure the pipes didnt leak.

Your buyer agent should have guided you through this. Now it is always worth a try to ask the bank, but in most cases they will not make repairs. you are going to want to submit a copy of your report, pictures of what is wrong andbids on company letterhead to back the amount you are asking. Do not ask for anything cosmetic or anything they will say you should have seen before making your offer.

Good luck with working things out
Web Reference: http://www.ScottSellsNH.com
0 votes Thank Flag Link Thu Jul 22, 2010
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