This is a common question in today's market. Here are several options you may want to consider:
- If you are obtaining FHA financing, there are plenty of lenders that will allow up to a $5000 repair escrow on a property. This means you can close in the as-is condition and then the lender holds back an escrow equal to the approximate repair cost plus 10% for cost over runs. Your contractor gets their money once the repairs are complete and an appraiser documents that the repairs are sufficient.
- Have the seller make the necessary repairs in advance of closing while you increase your earnest money by the amount of the repair. This way the seller knows he will be reimbursed for the repairs if you back out and don't close.
- Fix the repairs yourself. Many sellers and listing agents may not let you do this and as you stated, you are fixing a home that is not technically yours yet. But if the repairs are truly minor, say less than $1000, then the cost of the appraisal you likely paid for and your home inspection are costs that roughly equal cost of repair.
So if f this sale were to fall through you are out an equal amount of money.
Timothy Brown | Senior Loan Officer
Academy Residential Mortgage, Inc.| firstname.lastname@example.org
11380 Southbridge Pkwy, Suite 200 | Alpharetta, GA 30022
678.468.5626 x110 | fax 678.935.1156 | cell 678.467.9959