Home Buying in 60707>Question Details

Dippedin67, Home Buyer in Chicago, IL

We're scheduled to close on a REO "as is" 4/1/10. Tomorrow will be a week away and we haven't heard anything about the location

Asked by Dippedin67, Chicago, IL Wed Mar 24, 2010

of closing. Furthermore, the water has not been turned on so we haven't been able to get a "full inspection" of the property. The property has a sump pump/sewage ejector in the basement that we believe is faulty. Our Realtor and the Agent for the house have been cat fighting because supposedly the Agent for the house never gave our Realtor clearance to get an inspection, which we had done 3/6/10; and I think it started with our Realtor being upset about not getting half of the commission. Also, our Inspector took a pix of a possible sewer under plywood in the backyard (who should I call about that, to report, the H2O Dept., Dept of Sewers?) Where would I go to get disclosed info on this property, preferably before closing? I never thought this home buying experience would be an unpleasant one....I love the house but hate that sump pump setup in the basement, it gives me the creeps!

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Philip Sencer’s answer
It sounds like somebody did not do their homework. If you are 1 week from the closing on an 'as is' purchase, as all REO's are, and your attorney has not keep on option for you to back out of the deal, then I think you are stuck with whatever problems there might be.
I find it hard to believe with an inspection on 3/6 you are still jerking around trying to figure out what problems you might have. You should have told your attorney that there were possible 'issues' with the inspection that needed resolution so he could protect your options. Your agent does not sound like the sharpest tack in the box either from what information you give, but there is probably more to it than that.
You need to talk with your attorney to find out your legal options, if any asap.
3 votes Thank Flag Link Wed Mar 24, 2010
Dippedin,

First of all, if you remember the sump pit in the basement, look to see if there are two discharge pipes leaving or one. If two (and there's no battery backup system nearby) it is a sewage ejector or overhead sewer. If it is just one pipe it is a sump pit and handles excess moisture/water/drain tile. Is the plywood covering an old catch basin in the back? Those were installed mid century to help lessen the workload on sewer systems as they remained undersized in relation to the capacity they were handling (population booms). They were there to catch grease and other fun things and allow remaining effluent waste to head back to the sewer system.

Where is your inspector in this? Have you reached out to him/her for a little handholding? It sounds like this deal has plenty of chiefs and needs a few indians. There are certain risks inspecting any home with the water shut off--was it winterized? There is a lot of missing information for us to help you out and I certainly feel your anguish in the process. Keep us posted...
2 votes Thank Flag Link Wed Mar 24, 2010
Government loans will not do a complete appraisal without all utilities turned on. Typically REO properties state very clearly all utilities are turned on with their approval but at the cost of the buyer and the buyer assuming all costs to repair and return the property to winterized status. Some will move forward to get all approvals except that, but if there are issues, they are going to be part of the loan package to repair to get the loan or possibly depending on the situation a repair might be negotiated in.

If you are intent on moving forward, the Realtors involved are communicating fully with the asset managers and everything is spelled out in writing, the dates can be extended and the per diem waived. All critical information for a decision to be made must be made available to the asset managers so they are able to have all factors available when the file is open on their desk to process the decision.

Again REO's can be a good buy in a depressed market, but they take effort or commitment from the buyers and Realtors involved.
1 vote Thank Flag Link Tue Mar 30, 2010
A closing can be scheduled a few days prior to your closing date. Lenders usually require atleast 48 hours to have your loan package ready and sent to the title company. Have your agent check with your attorney to find out the status.

You can request that the water be turned on for your inspection so that the inspector is able to perform a "full inspection". Your inspection contingency has a date in which the issues are to be addressed.....call your attorney.

What disclosed information are you looking for? Bank owned homes are sold with no disclosures and are being sold "AS/IS".

All of your questions should have been answered while you were going through the buying process.

I would recommend that you call your attorney ASAP to get all of your concerns addressed and provide you with answers and options.

Good Luck!

Laura Karambelas SFR, CREN, RCC, CNHS
Short Sale & Foreclosure Resource Agent
Baird & Warner
1 vote Thank Flag Link Thu Mar 25, 2010
Usually on foreclosures its "as is" and there are not any disclosures. Why would you not be able to get into the property? Also, you will have to take the sump pump as it is.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
mlaricy@americorpre.com
708-250-2696
1 vote Thank Flag Link Thu Mar 25, 2010
Good morning Dippedin67

First of all, read your purchase agreement documents. They make up the legal agreement in this transaction. I think some of your concerns/issues were answered below by the home inspector and lender as far has options available to you but you end by saying "I love the house". If you are intent in moving forward with the purchase sounds like A LOT of communication needs to take place. Unfortunately in a REO transaction there are Asset Managers out there representing the banks that are dealing with many FILES (which is all this is to them) Sometimes the communication doesn't trickle down to the agents involved as clearly as it should if the agents have not worked with REO properties before....REO's are notorious for having very little information and it is truly a BUYER BEWARE market. Typically an inspection is at the COST of the buyer with the approval of the REO Asset Manager. I'm going to assume you are paying cash as most appraisals would require the utilities be turned on. Bottom line, talk to your Realtor.....if you feel she is upset about not getting half of the commission find that out and if it is an issue speak with the Broker to work through that. REO's have Fannie Mae guidelines addressing the commission not being able to be cut on properties so I'm not sure what part that is truly playing in this scenerio.

Bottom line.....COMMUNICATION and ltos of it.

Good Luck
1 vote Thank Flag Link Thu Mar 25, 2010
I agree with Philip. You need to talk to your attorney ASAP because the contract & home inspection should've been reviewed a long time ago! Also, don't forget that if the financing falls through, then you won't be stuck with that home. A good loan officer will be on your side looking out for your best interests. He/she should be able to move the loan from an approved status to a suspended/denied status relatively easy. You may be out the earnest money or a few hundred bucks for inspection & appraisal, but it's better than being stuck with a house you didn't want. Hope that helps!

Michael Cline
mcline@enterprisemortgagefunding.com
1 vote Thank Flag Link Wed Mar 24, 2010
Can you give us an update? We are scheduled to close on an REO soon as well. We needed the water to be turned on as well but now the home was vandalized and copper pipes have been stripped. What a headache!
0 votes Thank Flag Link Mon May 24, 2010
On 4/1 we signed a Hold Harmless Agreement asking for access to the property to make 3 minor repairs per the VA appraisal which also included that the gas and water be turned on. The property appraised out, BUT, if we receive approval from the seller to make the 3 repairs, the property still won’t pass the VA appraisal because the water is still not on and it seems as though, it won’t be turned on.

On 3/29, our realtor sent an email to K, the agent for the house inquiring about the water being turned on and the response from K…. “If they turn the water on and it spills all over, which it will due to pipe damage, are they willing to take on that responsibility? The water can be turned on at the main but WILL spill all over if not shut off right away. This cannot be done by your client or any other representative without a Hold Harmless.”

THE NEXT DAY, 3/30, our realtor rcvd. a call from C, a different person from that office stating that the house had been dewinterized and that repairs were made and the water WAS ON; I was dumbfounded. Later that day, we met our realtor at the house and THE WATER WAS NOT ON. A little water came out of the basement bathroom sink but that was it. Our realtor let us listen to the voice message and then she called C to let her know that the water wasn’t on, blah blah blah. C denied leaving a message, but clearly on the message you can hear her begin by saying her name…. During the conversation, our realtor told us that C asked if we would be occupants of the house and she responded, yes…..our realtor said that C’s response was, “I hate those”. I guess what C meant was, non-investors? I guess investors would pay cash for the house, not have to deal with passing an appraisal, make the repairs and pocket a profit after resale……

SO DEPRESSING……Per our mortgage broker, we’re ready to go, our VA financing is ready to go. I guess, go out the window. Furthermore, we are first time homebuyers, need I say more. DEADLINE=4/30/10

Any comments would be much appreciated!
0 votes Thank Flag Link Mon Apr 5, 2010
We found out today that the water will not be turned on due to plumbing issues, eventhough our realtor states that in weeks past, she was told something different when she called the agent's office on different occasions; I'm sure it was planned to inform us of this a few days before 4/1/10 that the house would not be dewinterized as there has been plenty email communication between our realtor and the house agent. The only UTILITY which was turned on was the gas but all along it was supposedly being said that the UTILITIES would be turned on.

Also, the VA will not back us without a complete appraisal, meaning if we are going to move forward, my husband says we'll have to go unconventional.

Per the VA Appraisal which was done 3/18/10.......
There is currently no heat and water in the house.
Items to be repaired as follows:
1. Turn heat on
2. Turn water on

This weekend a request to postpone closing until 4/16 was submitted by our attorney; minus the $100/per diem.

I guess we need to hire a plumber before moving forward...to determine how much $ we may be out.
0 votes Thank Flag Link Mon Mar 29, 2010
A plumbing problem has been brought to light and the agent for the property has stated that the property can't be dewinterized until the plumbing repair is fixed; which is surprising to me because....."as is". I'm under the impression that games are being played. Furthermore, we are refusing to pay the per diems as stipulated in the contract, $100/day if not closed on 4/1......I will f/u.

@ Laura K. - Thanks for "A closing can be scheduled a few days......"
@ Matt L. - re: sump pump "as is" - Correct, so why are we being told that the water can't be turned on until.....
@ Linda R. - Thank you.....REO's are notorious for having very little information and it is truly a BUYER BEWARE market. Typically an inspection is at the COST of the buyer with the approval of the REO Asset Manager. I'm going to assume you are paying cash as most appraisals would require the utilities be turned on.....
(Yes, the VA Appraiser has been out twice)
@ Ross N. - I'll send you a few pix of the sump pump
@ Michael C. - Our loan officer, has been the most help
@ Philip S. - I agree with the majority of what you stated.....esp. about still jerking around on others' part, not ours. That's why, I say, "People are playing games" and this has been an unpleasant experience. I wasn't expecting perfection, but.......
I will f/u......Thanks much!
0 votes Thank Flag Link Fri Mar 26, 2010
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