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Sarah, Home Buyer in Fort Bragg, NC

Appliance dispute

Asked by Sarah, Fort Bragg, NC Fri Nov 14, 2008

We put a bid on a home that listed ALL APPLIANCES STAY. When we went on another walk through all the appliances were gone. The seller obviously abandoned the home and took the appliances with them but we still want to have the home. However, how do we address this when we write up the contract being as we are asking for 6% concessions from the sale for repairs that need to be made to them home. Is an appliance allowance seperate from the concessions?

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Hi Sarah...First of all, most lenders won't allow for the seller to contribute more than 6% to the buyer, 6% is the highest, so you could buy appliances with part of that. Some lenders will allow a separate appliance allowance as well as your 6%, and others won't, it depends on the type of loan you have, ask your lender about that. You could write an addendum (additional conditions) that states "all appliances included in the sale as per listing profile sheet" , they can be either the appliances that were in the home, or the eqivalent, per buyer approval of them", that keeps them from just putting in some old, maybe even inoperable appliances. When writing a purchase agreeement you want to be specific as possible to ensure that you get what you thought you were getting. Are you working with a Realtor? If not, I would recommend that you do, a buyer's agent will know how to make sure your interests are protected. The listing agent is the seller's agent, so they are protecting the interests of the seller. I hope this answers your questions, please feel free to contact me if you have further questions. Elayne Tiller, Real Estate One, Traverse City, 231-632-0035 or elaynetiller@realestateone.com.
1 vote Thank Flag Link Fri Nov 14, 2008
You say you BID on a home ~ most auction purchases are AS IS & have little recourse for the buyer but if the home was listed on a licensed real estate service, like MLS, the appliances should have been detailed therein. I always use an addendum for appliances in question, usually washers & dryers, sometimes ceiling fans or water treatment systems, and also specify in the contract. This was helpful on a closing when the washer became an item of dispute & we were able to show that we specified in the addendum that it was a "repair" issue as well ~ my buyers got their washer repaired by the sellers and were VERY grateful that i had made the point.
1 vote Thank Flag Link Fri Nov 14, 2008
Regardless of the determination of the appliances you have larger issues. if the loan is being held by a lender as a Portfolio Loan this may not apply. If the loan is being written to Fannie Mae and Freddie Mac standards or FHA you have a problem.

The Seller contributions are meant to pay for expenses associated with the purchase of the property. These are items covered in your Good Faith Estimate like Origination fees, Title Insurance, Underwriting etc. They can also cover Inspections, Homeowners initial policy and escrows associated with taxes and insurance. The MCC tax credit may also be paid out of this fund. In most cases, unless the home is in the below $80,000 range these items can be covered by utilizing about 3% to 4% seller contributions. This would include a normal 1% origination fee.

Contributions are allowed 3% (new FHA Guideline).

5% down 3% allowed.
10% down 6% allowed.
20% down 9% allowed.

The term that you are using "Concessions" means something different. It is considered that if you are getting a concession from a seller that this is an undue influence to the sale and the loan amount would need to be adjusted downward to cover this discrepancy. If the purchase price was $103,000 and you were getting a 3% down loan your loan amount would be $100,000. If you negotiated a 3% "Concession" your new loan amount would be $97,000.00 and you would need to bring $6,000 as down payment rather than $3,000.00.

If a seller is to participate in the restoration of the home by paying for repairs, those repairs would need to be itemized and competitively bid. The highest bid would be used as the number to establish an escrow account which would be increased to 1.1/2 times the bid amount to ensure that the works gets done in a workmanlike manner. The escrow account is usually administered by the Title Company and will normally last no longer than 30 days after closing. The work should be completed by then. This work is considered part of the total deal and is itemized on the purchase agreement as an integral part of the transaction.

If you want to negotiate the appliances be sure that they are on placed on site prior to closing and include them in the offer. The offer, not the listing card determines the contract.

Hope this helps.

Roger Danielski, Loan Officer
Lake Michigan Credit Union
616-242-9790 x 9275
0 votes Thank Flag Link Tue Mar 16, 2010
Sarah,

We are not lawyers, and you would get accurate advice only from a lawyer.

Because we cannot see your purchase agreement, I suggest talking this over with your agent. Refer to specific language within the agreement only. Most information available in the Multiple Listing Service sheet will have a disclaimer at the bottom something along the lines of "all information not guaranteed accurate"

You might want to ask about this program, I was told by a MSHDA rep at Great Lakes Green that this included energy star appliances. You would have to qualify.

http://www.michigan.gov/mshda/0,1607,7-141-49317_49323-187374--…
Web Reference: http://mi-living.com
0 votes Thank Flag Link Fri Nov 14, 2008
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