Home Buying in Indianapolis>Question Details

Caitlin Finn, Home Buyer in Indianapolis, IN

Seller refuses to allow buyer to make repairs required by FHA

Asked by Caitlin Finn, Indianapolis, IN Mon Aug 20, 2012

I have a nightmare first-time buying experience. First, we had an accepted offer but then they ran the title work and found out that the sellers had signed over the deed to someone a coupe years ago...it took them about one week to straighten that out. Then we paid for an inspection and appraisal with some repairs that FHA required us to repair before giving us the loan. The sellers refused to do the repairs so we scheduled a contractor to go out and give us an estimate...the day before they were to go check it out, the sellers refused to allow access to the vacant home...is that even legal?! We spent $600 and now we just have to walk away!! I'm so frustrated!

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Answers

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It sounds like the sellers are attempting to derail your financing in a less than subtle attempt to get out of the sale. In most states both parties have to agree to a mutual cancellation of the purchase agreement. While it may be legal to prevent you from entering their home, they are clearly not bargaining in good faith.

Make sure you at least get your earnest money back. And you could push for the $600.00 out of pocket, but any legal action to pursue the money would cost far more than the $600.00.
1 vote Thank Flag Link Mon Aug 20, 2012
Caitlin,
I'm sorry your buying experience has been so difficult. One lesson we can all take from this is to clearly identify and agree to the timeline for all issues attached to the contract. One of my first steps upon contract acceptance is to lay out a set of dates for all time sensitive issues. In my contracts it gets tricky because some periods, 5 days or less from mutual acceptance, don't included non-working days like weekends & holidays, but periods of 6 days or more do.
Once I have the timeline set up, I send it to my buyer's so we know when a Title Contingency, Inspection Contingency or any others is coming due. It's also important to get the other office to confirm they are on the same schedule. I had a situation recently where the listing office had our acceptance date a day earlier than I did. I had a verbal acceptance of our contract on the day they indicated, but our contract actually starts upon delivery of the written agreement, which was a day later. We cleared that up and are closing on time, but had there been any issues as in your case, we would all be on the same timeline.
Sorry for the problems, I hope your next one goes better and you find a home you love even more than this one.
0 votes Thank Flag Link Wed Aug 22, 2012
Caitlin, any house you find and like enough to buy will become
your dream home ... where you lay your head and your babies
grow big enough for you to lean on.

I'm sorry you lost that one, but hey thank God and walk away expecting
better.

Best Wishes,

Marita
0 votes Thank Flag Link Tue Aug 21, 2012
The appraisal came in 1000 higher than the selling price but it was contingent upon the required repairs. I talked to my realtor today and she said we had 30 days to complete the repairs and by her count we still have 4 or 5 days remaining. But the sellers agent is saying we are out of time. At this point we are asking for our earnest money back and moving on...we are in a time crunch and they dragged us along for too long. We don't have any time to fight with them. We have to close by september 29. I did ask my realtor about filing for a grievance and she is going to check into it. It was my dream home but I have to be realistic at this point. Hopefully we will find another that we like and it will be a better experience.
0 votes Thank Flag Link Tue Aug 21, 2012
Hi Caitlin,

The FHA Appraisal does stay with the property for 6 months.
But not everybody goes 3.5% FHA.

Things are happening here that we as bystanders once removed aren't
seeing. And we aren't lawyers.

I recommend speaking with a lawyer. According to your scenario, the seller is solely responsible that the buyers responded late to the inspection. Does the law care who's to blame that the inspection response was filed late ... and was an extension offered by the buyer to bridge that time gap? Did your agent speak with his broker ... or to anyone on the grievance committee down at Mibor about this?

And remember, unfortunately, unethical is not always illegal ... but Mibor can speak to ethics, right?

The "as is" stuff seems a red herring to me. Sellers have a choice whether or not to make or allow repairs regardless of an "as is" which can be added and agreed to by the parties at any point along the way. But please, ask your lawyer about that too.

...Just out of curiosity, did the appraisal come in higher than the sale price ... has the seller already found another buyer?

I hope you check back in and tell us what happened.

Best of Luck,

Marita
0 votes Thank Flag Link Tue Aug 21, 2012
It looks like you are sharing an experience rather than asking a question. Your experience points out how deals can go haywire for a variety of reasons. Timeliness, problem solving ability and strong communication skills are always required in a real estate deal, perhaps even more so with unreasonable parties and their brokers.

The diplomatic skills needed to get a deal done include politeness, clarity, responsiveness, timeliness, knowledge and strength. A diplomatic approach means a highly professional approach and a refusal to be put off by the other side's sloppy practice.

One broker, at least, on each deal should be expert and highly motivated. Absent such a broker a deal can drift when it should speed.
0 votes Thank Flag Link Tue Aug 21, 2012
Just an FYI, many buyers these days go with an FHA loan. I believe that an FHA appraisal/inspection stays with a property for 6 months. So, if someone else were to buy that home, with in that time frame, and was being financed via FHA, they(sellers) will need to fix the problems in order for it to go to escrow. They may also need to disclose these issues as well(now that they know).

I could be wrong...but I am thinking that this is how it works. Wish you the best, and it really is too bad that you have to go through this.
0 votes Thank Flag Link Tue Aug 21, 2012
They are saying that we breached the contract by going outside of the 15 day time frame to get the inspection and repairs taken care of but they were the ones that delayed us by waiting to run the title check and then having to fix the title situation...my realtor has said that the agent is a broker and he has been very unprofessional throughout the whole contract. We tried to get a mutual release when the title work was messed up but they refused to release us. So when it was straightened out we went ahead with the inspection and appraisal...the property was not listed "as is" but then they refused to do any repairs. We decided to go forward with the repairs otherwise FHA would not give us the loan and now they have refused access to the property and said they want to move on to another buyer...I'm just so frustrated and confused how something like this can be legal.
0 votes Thank Flag Link Tue Aug 21, 2012
So to your first point - are your dealing with the real owner? Does your contract state that you'll be financing with an FHA loan? If it does, then the sellers agrees to all that entails. If the seller cannot be convinced that he's breaching the contract, then you have a good case in small claims court for return of all your costs.
0 votes Thank Flag Link Tue Aug 21, 2012
Get an attorney. This does not sound right to me and I would hesitate to give advice.
0 votes Thank Flag Link Tue Aug 21, 2012
Sounds too crazy, and I'm not going to blame the mystery selling agent...it doesn't sound like they could be of much help in this instance anyway. It sounds like it is all on the seller's side. I'm sorry to hear this, though I haven't seen this exactly, I have see really crazy scenarios.

Here's a thought. If you already have a list of repairs needed, give that to the contractor, and aske them to give you their best guess of what it would cost to fix. Tell the underwriter that the repairs will be done after closing, and that you would put that money into an escrow account for contractor. I'm not 100% sure that would work, but it would be worth a shot. Hopefully, the sellers will work with you if that solution is ok. Best if luck!
Web Reference: http://TheVearusGroup.com
0 votes Thank Flag Link Tue Aug 21, 2012
Hi Caitlin,

Sorry to hear about the problem seller.

Where is your agent in all this? This sort of thing has never happened
to a client of mine. It sounds like the sellers are trying to prevent your
closing. And I guess his agent isn't reminding the seller that if he
persists in this, he could owe the listing broker the full agreed upon
commission.

Hmmm. Could he be using a novice Realtor?

On your side of the table, your agent should be saying all this for you
and more .... When a repair issue prevents a loan from being issued,
the buyer should get the full earnest money back.

Now why would Mr Seller be willing to lose all that money over a vacant home?

Good Luck,

Marita
0 votes Thank Flag Link Tue Aug 21, 2012
Caitlin,
Read your contract. In most standardized contracts both parties are expected to cooperate to complete the transaction. Since they are not cooperating, you may have a breach of contract which if nothing else could allow you to sue them in small claims court for your expenses. Talk to your agent, review the contract and if they aren't sure ask to speak to their broker for further assistance.
0 votes Thank Flag Link Mon Aug 20, 2012
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