Home Buying in Sacramento>Question Details

Ron, Home Buyer in Sacramento, CA

How do you ask REO properties for credits for repairs after a home inspection was done?

Asked by Ron, Sacramento, CA Mon Mar 31, 2008

The repairs were more then I expected.

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7
Ask your agent to submit a request to the bank for you. Most banks require that properties be sold "as-is" and also require that the financing be based on an "as-is" sale so the lender cannot require repairs either. If it is a problem that has happened since you wrote a contract on the property (such as a theft) then they will usually cover it. If it's just something the home inspector found that you weren't expecting, don't expect the bank to cover it. Good luck!
1 vote Thank Flag Link Mon Mar 31, 2008
Hi Ron. As the others said, REOs are sold "as is" and the banks usually will not make repairs or give credits. However, if you can't get financing because of a property condition, the bank may be willing to take care of it because the condition will affect financability for future transactions. Thus, if they don't work with you, they'll most likely have to deal with the same issue with the next buyer. You can always submit a written request for repairs, but don't be surprised if the bank rejects it. If the bank does not work with you and the property condition is worse than what you want to take on, it's time to let go and move on to another property. Good luck.
0 votes Thank Flag Link Mon Mar 31, 2008
Ute Ferdig -…, Real Estate Pro in Newcastle, CA
MVP'08
Contact
Even though the banks claim to have no knowledge about the condition of the property when they list them, therefore justifying their exemption from disclosure forms; they have usually have a broad idea of the condition of the house. Supposedly they took this into consideration when they accepted your offer.

Repairs could be more than you expected either because you underestimated the cost of rehabilitating the house, your inspector found hidden damage, or both. If I were the banks asset manager, I would be more negotiable if the problem was with new discoveries than if it was just the buyers early optimistic underestimate of project costs turning pessimistic.
0 votes Thank Flag Link Mon Mar 31, 2008
Jim Walker, Real Estate Pro in Carmichael, CA
MVP'08
Contact
Bank owned properties, or REO properties, are negotiateed just like other properties in this market. While the original assessment is that you're buying an REO 'as is', more often than not, it's still negotiable on any items that a bank is willing to give credit on. That's one of the key reasons you use a realtor who represents the buyer (YOU). The bank has already committed to paying the full commission on listing the property, and if you don't have a realtor representing you, then the whole commission is paid to the listing agent. So it's then you negotiating on your own behalf against seasoned negotiators (the bank and the listing agent).

The amount of negotiations a bank is willing to do is different depending on many factors: bank policies (which when you're negotiating many deals a realtor begins to know how negotiable specific banks are), and the type of negotiating item that you're referring to. For example, if it's that the appliances are missing then they're more likely to give you credit. If it's that the sprinkler system doesn't work....I guess it's a toss up. It never hurts to ask. The difficulty on many REO transactions is that they sometimes tie a penalty to missing your COE (close of escrow) date and these negotiations can delay things. SO ASK, but do it as quickly as possible, It's as simple as submitting a 'request for repairs' addendum, and be ready to decide what you'll do it they agree, or disagree, to giving you the credit.
Web Reference: http://www.suearcher.com
0 votes Thank Flag Link Mon Mar 31, 2008
Banks are definitely looking out for their own bottom lines--but they're not unreasonable.

While most banks have buyers sign a long document that amounts to an "as-is" addendum, this is intended to protect the lender AFTER THE CLOSE of escrow in the event that new issues arise or unforeseen liens or balances due appear. If a buyer discovers new problems DURING escrow (through a home inspection) and they're still within their inspection contingency period (and watch carefully how banks handle inspection contingencies), it may be possible to go back and request additional credits. There are standard real estate forms issued by the California Association of REALTORS® designed for requesting a credit.

Your REALTOR® should be able to recommend a strategy for requesting a credit for additional work that needs to be done on the REO property you're in contract on--one that's specific to YOUR situation. The information I've provided here has been intentionally vague and isn't intended as a course of action for you, only a real estate professional who is aware of the details of your situation can make more specific recommendations.

Rob McQuade, ABR, REALTOR®
McMartin Realty
http://www.forsaleinmidtown.com
0 votes Thank Flag Link Mon Mar 31, 2008
In writing, and ASAP. Hopefully you are working with an agent? Generally REO properties are sold as-is. What types of repairs are you referring to? Many times, a bank will foot the bill for large "catastrophic' items, like replacing stolen/missing breakers in the main electrical panel, replacing an air conditioning unit was stolen, or something like that. Otherwise, you may have a tough road ahead of you asking the bank to do minor repairs. You might ask for a credit to cover repairs...or back out of the deal all together. Much will depend on what bank you are dealing with. Good luck to you...
Web Reference: http://www.erinattardi.com
0 votes Thank Flag Link Mon Mar 31, 2008
Erin Stumpf, Real Estate Pro in Sacramento, CA
MVP'08
Contact
You complete a Request for Repair and send it to the bank. Do you have a real estate agent helping you? Right now, many banks are insisting that homes are sold in "as is" condition, and few are willing to do repairs. That doesn't mean you can't ask, though.

Fortunately, for you, your contract contains an inspection period, during which you have the right to do a home inspection, among other inspections, and you may cancel the contract if you are dissatisfied. Bear in mind that some banks use southern California escrow companies, so when you cancel the transaction, they have 30 days to return your deposit. Many of them take that long to process it.
0 votes Thank Flag Link Mon Mar 31, 2008
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