Home Buying in 01453>Question Details

Mike B, Home Buyer in 01510

Closing on MassHousing Conventional Loan Contingent on Working Heat?

Asked by Mike B, 01510 Fri Apr 16, 2010

Hi, we are buying a Fannie Mae owned foreclosure "as-is". We have had the home inspection and passed the period of raising objections. However upon re-visiting the house it is evident that the oil boiler which supplies the heat and hot water to the home is seriously damaged and inoperable. There is oil all over the floor from what looks like someone trying to re-winterize / repair the system. The bank appraiser will surely take note of this. Its pretty obvious the system is not working even to someone with no knowledge of heating systems.

My question is will our lender red flag closing on the loan until the heat / hot water is operational? Should we expect the seller to pay for part / all of these repairs even though the house is as-is? What can we do if they will not but we are willing to pay to have the unit replaced? This home is in Massachusetts if that makes a difference.

Help the community by answering this question:


Well first what is your buyers agent saying about the situation? Do you have a buyers agent or are you working directly with the listing agent? In the absense of the advice of your buyers agent then you should consult your attorney for guidance in what is supplied for info in the purchase and sales contract. There are several issues to deal with. 1. The oil on the floor and potentially in the ground as well as outside if there's a sump pump or other openings in the basement floor. 2. The non-functioning of the heating system. You'd probably be best to get some estimates for the cleanup and fixing of the heating system. Have a licenced heating contractor familiar with oil heating systems in the area give you an estimate. This is one area where a buyers agent can be of assistance with known contractors. Once you have a better idea of the issues involved and the costs for their remedy you can make a more informed decision as to how to proceed.

Hope that helps,
Web Reference: http://www.MedfordHouse.com
0 votes Thank Flag Link Fri Apr 16, 2010
If the appraiser takes notice then no heat no loan
Web Reference: http://www.mdmrealtyinc.com
0 votes Thank Flag Link Sat Apr 17, 2010
Hi Mike:

A) Lenders generally require heat, but appraisers rarely test it.
B) An oil spill, as noted earlier, is a major problem, with great risk, as environmental clean-up is expensive, and needs to be done quickly. It's your money, and maybe it's the best house ever, but I'd look to my attorney to walk, since the bank is unlikely to resolve this issues satisfactorily.

Matt Heisler is a real-estate professional and owner of Heisler & Mattson Properties. He has been selling residential real-estate for over 10 years. He has given several talks on real estate, including presentations on first-time buyer tips & tricks, and profiting in real estate investing in Massachusetts. As a Vanderbilt University alumnus, he is proud to serve the communities of Natick, Framingham, Medfield, Millis, Holliston, Hopkinton, Southborough, Westborough, Northborough, Grafton, Marlborough, Shrewsbury, Worcester, Milford, Charlton, Northbridge, Sutton, Hudson, Sudbury, Clinton, Boylston, and West Boylston. His company website can be found at http://www.bjheisler.com, and his Metrowest Blog can be read at http://HomeSellingInMass.net.

*All information is posted in good faith and is assumed to be reliable, but may rely on third party information sources.
0 votes Thank Flag Link Fri Apr 16, 2010
Most lenders will not provide financing without a heat source. The bigger problem may be the oil spill. If it was a large quantity and is soaked into the floor and/or ground remediation can be costly and banks would most likely want further study. This would trigger your financing contingency.
A renovation loan may help bypass the heating system but the oil could be more problematic.
0 votes Thank Flag Link Fri Apr 16, 2010
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