You already should have the upper hand in this situation, provided your attorney has conducted the approval and inspection period of the contract correctly. Typically, the attorney's approval and property inspection contingency period continues until all repairs are made to the satisfaction of the purchaser.
The buyer's attorney should make this request before the buyer's mortgagee calls in the appraiser to determine the home's value. Any other order of events would just waste time and money.
If the repairs are not made by a certain date, you can try to agree with the seller on a cash settlement amount to cover the cost of the repairs. I usually recommend this method to my buyer clients, since they then can select their own contractors and have the work done to their own satisfaction.
Sellers also oftentimes prefer this method to having repairs done before closing, to avoid any disputes about workmanship. Make such a proposal to the seller if you still want to save the deal.
My question to you is this: what is the value of the repairs you requested? Is it in the hundreds, thousands, tens of thousands? Depending on the answer to this question, you may be better off doing the repairs yourself (if the seller won't give a credit at closing for the cost), if you really like the property and expect to stay in it for a longer period of time. With property values now rising in Chicago at a steady rate, the increase in equity you'll experience will probably outweigh the repair costs, as long as they're not in the tens of thousands.
As for your mortgage rate lock, look at the time it will take to recover the extra fee by comparing your current rate with the new (probably somewhat higher) rate. How much will the mortgage company charge you to keep your current rate? What is the difference in the proposed monthly payments under the current rate and new rate, and after paying the fee, how many months would you have to keep the current rate to break even, given the difference?
So the most important question for you is -- how much do you really like this property? Is there another one that could meet your needs that might have fewer repairs (or a more agreeable seller)?
Once you can answer these questions, you'll know what to do. I agree with my colleagues that litigation is not a good idea. Reserve that option for only the most serious of financial grievances. This doesn't seem to be one of them.
Don Pasek, CIPS, TRC, ADPR
Omniterra Real Properties
They most likely cannot walk away from the deal. If the fixes are too much and you do not want to bear those costs then you should be able to walk, but like many others have pointed out, how much do you want the home and can you find a better deal? Remember to factor in the higher loan costs.
Patrick Jeffrey Realty
Sohail A. Salahuddin | Founder and Team Leader
Innovative Property Consultants Group | Sales and Leasing
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