Cynthia Park…, Real Estate Pro in Rincon, GA

I am using a 203K loan for a bank owned property. The home doesn't have a CO. What if I complete the repairs and the bank decides not to sell?

Asked by Cynthia Parker, Rincon, GA Wed Aug 4, 2010

My lender says I need to put up a non-refundable deposit to cover the repairs($13,000). I trust my contractor, but what if the repairs are completed and the bank doesn't honor the contract. What recourse do I have? They have a new house and I am out $13000.

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4
Georgiarealtor something doesn't sound right with this deal. With a 203K you complete the sales transaction before you start doing any work. Also the the deposit money is only what is necessary to cover the downpayment for the home and nothing should be given to the contractor as a deposit from you. The only money that COULD be available would be if you were doing a 203K streamline at which 50% of the repair money would be available for deposits from the closing agent.

Let me know if you have any futher questions. If you wan detail from FHA on how the program is suppose to work you can call 1-800-225-5342 for the FHA Resource Center
0 votes Thank Flag Link Thu Aug 5, 2010
Although the bank, as a Seller does require a lengthy addendum indemnifying them from almost anything, they are still a SELLER.

Have your attorney look it over and add some verbiage in regards to your 203K rehab loan and the repairs you'll be making.

Banks aren't in the business of selling real estate or "making money" at your expense. They are HAPPY to have a buyer, and want the property GONE.

In fact, when you're dealing with a bank, you're dealing with a bank employees that makes barely a living wage, sitting in a cubicle overwhelmed with 150 to 200 files (houses) on her desk.

Sixty percent of my sales in the last 12 months were bank repo's, so this I know....

Believe me, they want that property OFF their books, regardless of condition.

Good Luck with your venture!! *** ENJOY ***
Web Reference: http://idahoidahoidaho.com
0 votes Thank Flag Link Wed Aug 4, 2010
Hi there

Good question. The bank will honor the contract.
But start the work after your agent gets you assurances in writing.
If you are already in contract and the bank has made it a condition that you fix the property beforenthey close the deal, then you have it on paper and in writing.

As long as you are busing a good lawyer and or a god Realtor you are going to be fine.

If you are doing this by yourself and mis read the contract or so, then good luck with the $13k.

Regard
perry
0 votes Thank Flag Link Wed Aug 4, 2010
Dear Home Buyer,

If you are financing the home with 203K financing there is no need for a $13,000 deposit. Is the contractor requiring this money? The 203K program is great but not every contractor is willing to work with the payment schedule.

You may trust your contractor but I would never give $13,000 upfront to anyone. If it is needed for materials then I suggest you meet with the material supplier and pay the bill directly. The invoice should specifically reference delivery to the property address and you will have control over the use of the funds. The materials should not be custom ordered items and should not be delivered until you actually own the property. You are correct, if the bank backs out, you are out the money without any recourse. There are too many great deals available to put yourself at that kind of risk.
Web Reference: http://www.FrankRuzicka.com
0 votes Thank Flag Link Wed Aug 4, 2010
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