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Trulia Dallas, Home Buyer in Dallas, TX

Can a buyer demand repairs after signing the "As Is" addendum from the bank?

Asked by Trulia Dallas, Dallas, TX Wed Mar 6, 2013

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Events can change the condition of the property after executing a contract. It often results in the owner (the bank) offering cash at closing to compensate for the changed condition.

For example, the buyer inspected the property, signed an offer, the bank accepted the offer, then someone stole the A/C condensor unit. The bank had a casualty loss, but can't hold the buyer to the contract, since it is no longer in the condition when contracted. The bank normally will offer several hundred to cover the loss, even though it experienced the loss, too, because the market value has dropped.

Other examples can happen, too, such as discovering that the lot is contaminated with hazardous waste, or a buried gasoline tank is found on the property. These hidden defects can subject the seller to liability later. The seller cannot just sign off all liability by saying "as is". If found early enough, the buyer can often negotiate after finding problems, but there is no guarantee.

From the bank's point of view, it is better to negotiate with the buyer who is now aware than put the property back on the market, disclosing the discovered defect. Remember, while the foreclosing entity is under no obligation to supply a seller's disclosure document, it is dangerous under deceptive trade practices act to hide a defect that is known by claiming an as-is sale.

The defect that ordinarily would not be found is what we're talking about, not something that anybody who visits the property can see the holes in the drywall or the missing stove or bad flooring.

It is best in these circumstances to consult a real estate attorney for advice, not a Realtor, if you discover a defect that is not obvious or the bank refuses to negotiate on a casualty loss.
1 vote Thank Flag Link Thu Mar 7, 2013
One word of caution. While you may end up with a foreclosure where all parties abide by the contract, I've purchased many foreclosures over the years from VA to HUD to FNMA, and not all play by the rules of the contract. Sure, in theory, I can sue them when they breach the contract in a big way, but in reality both sides understand it's not not going to happen as I don't have endless amounts of cash for attorneys and our government certainly does. For instance, on a recent FNMA purchase, I sent them the entire inspection report showing material latent defects justifying a price reduction. The inspection report was sent right back to me with a note that the report was not viewed and that FNMA has no knowledge of any information contained in the report and that they will not accept any inspection reports. Only the government can get away with this behavior.

Don't ever go into a foreclosure purchase believing the other side will honor the terms of the contract or you might be sorely disappointed, just I have been on many occasions.
1 vote Thank Flag Link Thu Mar 7, 2013
You can always request repairs depending on what the inspection turns up. Many times depending on the issue the bank will actually take care of them or reduce the price accordingly. It depends on a lot of factors and each home stands on its own so I cannot say for certain.

The bank does not have to do the repairs nor does any seller. Home buying is a negotiation process and major issues will most likely be considered by lenders as they want to move the property and sell it as quickly as possible.

Hope this helps.

Don Groff
REALTOR® | Mortgage Broker
Austin Real Estate Pros | 360 Lending Group
o 512.669.5599 m 512.633.4157
listings@dongroff.com | http://www.AustinListed.com
1 vote Thank Flag Link Thu Mar 7, 2013
They can, but they will not get very far.
0 votes Thank Flag Link Thu Mar 7, 2013
Yes you can during the inspection period but most bank usually wont do any repairs. Its usually sold as it.

0 votes Thank Flag Link Thu Mar 7, 2013
Buyer can "demand" anything. Banks usually do no repairs on foreclosures. Usually an inspection is to determine whether to walk or to buy it.
0 votes Thank Flag Link Thu Mar 7, 2013
A buyer can demand anything they wish...the real question is what options does the buyer have if the bank refuses. Most bank contracts give a buyer few options to exit the contract, so read the contract thoroughly.

Keep in mind that AS-IS language is legal language that protects the the seller from future litigation over the condition of the property and does not mean that repairs will not be considered, although with bank foreclosures this is usually the case.
0 votes Thank Flag Link Wed Mar 6, 2013
If the contract allows for buyer to walk away based on the inspection' results, that will be his/hers way out.
Buyer may ask, after the fact, for repairs/seller to cover some of the cost to repair damage found, etc. but seller doesn't have to accept.....

With enthusiasm,

Meir Aloni & Team

CRS (Certified Residential Specialist)

CDPE (Certified Distressed Property Expert)

RECS (Real Estate Cyberspace Society)

Successfully selling Broward County since 1986!

Direct phone# 954-338-5220 http://www.WeSellBroward.com
0 votes Thank Flag Link Wed Mar 6, 2013

Turtle Creek Realty
0 votes Thank Flag Link Wed Mar 6, 2013
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