Home Buying in Orange County>Question Details

Maryw, Home Buyer in Orange County, CA

Reduce price after inspection?

Asked by Maryw, Orange County, CA Sat Sep 12, 2009

We put in an offer on a short sale property above asking price after only a drive by. (The listing agent had it listed as "Drive-by only, offers contingent upon inspection".

The LA called back and said that our offer was sent to the lender and we can do an inspection on Monday. If the house is not in perfect condition, would it be wiser to reduce the offer around 10k now or after we get the professional home inspection? (house is in 400k range).

Also, the LA told me that the house was about to go to forecloser a couple weeks ago, but "they" got an extension. What's that mean? Am I in a better position to negotiate since the bank does not want the house to go into forecloser?

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Hi Mary,

Ok...lots going on here!

First....often when there is a tenant or some other condition where they don't want to be inconvienced by a lot of showings from people who might not be serious...they write the listing as "drive-by, write offers subject to inspection." So the first thing is to get in and see the home quickly and then write your "real" offer based on what you now see in the home. I would do this very quickly because once the bank goes through the short sale process and they have a price set....it's very difficult to get the negotiator to come down off that price. Base your offer price on the things you can see and notice for yourself.

Next...hopefully you wrote the offer with a Short Sale Addendum which makes all this contingent on bank approval....so you are going to start incurring your own costs (like the home inspection) ONLY after you have an approval from the bank....not before. When you have your inspection, assume that the home will be as-is....but if you find a major problem, like mold...then you can ask for a concession in the price or perhaps even a credit to repair. Only major issues which are going to affect all future buyers would be considered...and in short sales, they are tough to get. So be prepared for that.

Finally you asked about the postponement....once you submit a request for either a loan modification or short sale, they will automatically put the auction on hold in order to give everyone time to review. It's not necessarily a desire on the bank not to foreclose, if you have the only offer and it's significantly underpriced, they will just foreclose anyway. Your all-cash is definately a plus :).

Hope this helps...

Karen
0 votes Thank Flag Link Sun Sep 13, 2009
Answer: after you get a professional inspector.
The offer that you made should have a short sale addendum (C.A.R Form SSA). I suggest item B-1 should be checked which starts the clock ticking on the inspections once you receive notice the “bank” has given consent for the deal. If B-1 is checked just wait for lender consent, do your due diligence per the inspection dates in the executed purchase agreement. That’s a good point to negotiate cost related items. By the way, it’s a good idea to have B-2 checked too.
Answer: Extension on the trustee sale.
Go to http://www.lionssharerealty.com/foreclosure.html for more details. More important question is why the extension?
Answer: Not necessarily in a better position to negotiate because it’s a short sale rather than a foreclosure.

Be careful, this one could get messy, tom
0 votes Thank Flag Link Sun Sep 13, 2009
The lender has already has an appraisal and knows the value of the home. That is reflected in the price that they will accept.

Are you delaing directly with the listing agent? You don't have your own buyers agent? If not, ask the listing agent what the approved price is from the lender on the home.

Chances are they will not drop below that.
Web Reference: http://shortsalesheep.com
0 votes Thank Flag Link Sun Sep 13, 2009
Cindi Hagley,…, Real Estate Pro in San Ramon, CA
MVP'08
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Also, our offer is all cash. The LA requested proof of funds and credit, and we sent it to him.
0 votes Thank Flag Link Sat Sep 12, 2009
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