I am in the process of purchasing a Homesteps Freddie Mac REO. They have accepted my offer contingent upon inspection. My question is: if the

Asked by Mark, 60611 Sat Jul 24, 2010

inspection reveals a significant amount of defects/problems what are my options. I know I can cancel the contract,but what if I am interested in continuing with the purchase, but at a lower Purchase Price? Can I do this? Can I ask for a credit at closing, or do I have to cancel the contract and submit another offer and go through the whole process again? Advice from anyone with knowledge of buying Freddie Mac REO's would be much appreciated!

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Evelyn S. Fr…, Agent, Chicago, IL
Sat Jul 24, 2010
Hi Mark,

Your agent & your attorney can best advise you what to do. But, you may be able to counter offer and/or ask for more credits.

If the defects are going to cost you more than you're willing to invest you should consider walking away. Also, consider that whatever the "estimate" to fix is, it will more than likely be more.

Usually, HomeSteps Freddie Mace provide you with 3% closing costs, ask your agent and/or lender about these credits.

Hope this helps. Good luck to you!
1 vote
Robert Pratt, Agent, Chicago, IL
Tue Jul 27, 2010
Basically: Your lawyer and your real estate agent will best be abe to advise you and assist you in reassessing your transaction post-inspection.
Web Reference:  http://ww.dreamtown.com
0 votes
Wayne Beals, Agent, Chicago, IL
Mon Jul 26, 2010
Hey Mark,

I think the consensus is that you are going to have to decide how you want to approach this with help from your agent.

Repair credits are not unheard of, but it largely depends on if the seller feels that they could do better with another buyer. Your offer was the most competitive and that's why you currently have a deal.

I'm assuming you're going to use Homesteps financing for the property. As you know, they offer financing for necessary repairs. This is the good news, "Financing is available for the problems you discover!" It's a great opportunity for homebuyers, so I wouldn't recommend overplaying your hand if you love the home. I always do my best to assist my clients in estimating the potential cost of repairs before proceeding with an offer. This is no substitute for an good home inspection or actual hard estimates from contractors, but it does help me and my clients not burn valuable time and opportunities chasing down properties need to much work for the client or making offers that are too high.

Now, it never hurts to ask, but make sure you consult how you make your request with your attorney. Too forceful and they could bounce you for another deal. Bottom line is, if the problems you discover make the house a bad deal compared to your alternatives, ask and move on if no. If the deal is still good, even with the problems, why kill it?

Best of Luck

Wayne Beals
Keller Williams CCG
Web Reference:  http://WWW.WAYNEBEALS.COM
0 votes
Betty Clayton, Agent, Chicago, IL
Mon Jul 26, 2010
Mark, your agent and attorney are the best people to answer this question or you. The rest of us would be guesting based on what has happened in the past. The point is you never know because each bank and access manager operated a little different. But if the issue arise, you should make sure that they (agent and attorney) try renegotiate for you.
0 votes
James Gordon…, Agent, Hamilton, OH
Mon Jul 26, 2010
Mark the Homesteps home warrenty propgram is only good on what they consider to be a "habitable" property. If the property needs lots of repairs they will have you sign a form that states that you understand the home warrenty is not available.
0 votes
Peter Kedzior, Agent, Elk Grove Village, IL
Sun Jul 25, 2010
If the bank spend last 3 months waiting for an offer on this property, it will be more likely to give you some credit at closing versus if the home was on the market for just week or two and other potential buyers are lining up. My client was once able to negotiate $3,000 because the inspection revealed a carbon monoxide leaking furnace. This was pretty serious stuff - a clear safety hazard which typically raises all red flags, even with bank owned properties. Usually safety hazards is what makes the bank people turn their attention to the problem.
0 votes
Evelyn S. Fr…, Agent, Chicago, IL
Sun Jul 25, 2010
P.S. regarding Freddie Mac: "They are also offering home warranties and buyer closing costs to owner occupants."

Check out this link: http://www.homesteps.com/smartbuy.htm
0 votes
Matt Laricy, Agent, Chicago, IL
Sun Jul 25, 2010
As is means as is. You base your offer off of what work needs to be done. So if the inspector finds something wrong with it, you either accept what you got into, or get out of it. You can re negotiate as is. What will happen is you would cancel your contract. Then you would have to resubmit a new offer. The listing foreclosure agent will see its the same buyer, and probably advise the bank against moving forward with you because you already canceled once. It sounds harsh, but thats the reality of what would happen.

Matt Laricy
Americorp Real Estate
Brokers Associate, e-PRO
0 votes
Philip Sencer, Agent, Chicago, IL
Sat Jul 24, 2010
It is extremly difficult to negotiate credits and never the purchase price on a REO. They are just to rigid. It sounds like the property is in bad shape and you should have seen this coming or at least your agent should have. You can try to ask for a credit, but probably will have to start all over again with a new contract with new price.

0 votes
Dallas Texas, Agent, Dallas, TN
Sat Jul 24, 2010
Your buyers agent is the person you need direct all the questions to.

We don't have a copy of the executed sales agreement to render an opinion in your favor which governs what you can or can't do.

Most foreclosures are sold as is . If you don't like the inspection report "pull the plug and keep moving" a good buyers agent should be able to identify many of the visible problems.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
0 votes
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