We're paying cash for short sale in Jacksonville, FL. Water damage, fallen ceilings, needs roof. Paying near full appraisal price. Any closing?

Asked by Buyer, Jacksonville Naval Air Station, Jacksonville, FL Thu Feb 24, 2011

advice? The house is owned by bank. We had loan application with lender that hesitated to lend on damaged house. We opted to pay cash. Don't know pitfalls of our decision? Advice?

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Carol Zingone’s answer
Carol Zingone, Agent, Atlantic Beach, FL
Thu Feb 24, 2011
Dear Buyer,

As all the agents have pointed out below, a solid home inspection with an ASHI certified inspector is a must, as is a complete WDO (wood destroying organism) inspection.

There are two timeframes for inspections with short sales: either your timeframes for inspections started when the SELLER, which would have been roughly 10 days from date of acceptance, OR, the timeframes for inspection run from when BANK approves the short sale, in which case, they are still possible.

As mentioned above, if the property is still seller owned, and a short sale, then the property does not yet belong to the bank. If, however, you opted to purchase a foreclosure, your timeframes started with the effective date of acceptance.

I strongly recommend you have a talk with your Realtor to gain a better understanding of your inspection rights, timeframes, and results ASAP. If you are not working with a Realtor, you may want to revisit the inspection results with your respective inspectors to get their input and/or their recommendations for contractors to help fix the issues.

Additionally, if you are military, which you may be as you state NAS, you may have on-base resources to help you with this situation.

Both short sales, and foreclosures/bank owned properties typically convey/sell in "As Is" condition that the seller will make any repairs, making the inspection timeframes very important.

Good luck and if I can help, please let me know.
Carol ZIngone
Broker Associate
Prudential Network Realty
Web Reference:  http://www.carolzingone.com
1 vote
Donald Price, , Orange Park, FL
Thu Feb 24, 2011
shipmate, you put yourself in a bad position. you need to hire a home inspector and a license florida pest inspector. the home inspection will give you all the information from the roof to the ground and everything in between. pay attention to the five areas: roof, structure, plumbing, electrical and ht/ac. the pest control inspector(wdo) checks for wood rot and termites. I hope you are working with a good realtor on this because this purchase could turn into a money pit real fast. i am a realtor and a real estate appraiser, feel free to give me a call 904-962-8089.
0 votes
Donald Mcamis, Agent, Jacksonville, FL
Thu Feb 24, 2011
Because you are paying cash for the house, there is no requirement that the price you pay cannot exceed the appraisal. Whether you want to pay more than the appraisal depends upon whether you consider the house to be an investment or a personal residence or home. People who buy a house for their personal residence will look at intangibles when making their decision rather than just dollars and sense. But before you can make an informed decision on this issue you need to have an accurate estimate of exactly what it will cost to make the necessary repairs. Appraising is an art and not a science and, in my opinion, may not give you the information to make a decision. In today's market, appraisals on a particular parcel can vary significantly. Home inspectors may well be able to diagnose and tell you what the problems are, but I think that reputable builders are the most likely source to be able to answer the questions you need answered so that you can make the best informed decision.
0 votes
Kmbrennan, , Florida
Thu Feb 24, 2011
While a home inspector can point out the deficiancies and needed repairs, he cannot tell you an accurate cost rehabilitate the house. I suggest having two, or more, fully licensed contractors inspect and review the property and submit bids to make the repairs. The cost is the key issue to you in this decision.
0 votes
Alma Kee, Agent, Tampa, FL
Thu Feb 24, 2011
I'm confused... you first say it is a "short sale" but later you say it is owned by the bank. A short sale is still owed by the borrower and not yet foreclosed...

Either way, you MUST get an inspection to verify you're not buying a property that has serious issues, like a sinkhole beneath it!

Most importantly when paying ALL CASH is that you MUST hire an attorney to review the title insurance policy and any closing documents. It shouldn't cost too much for the review and the title company doing the closing can email all of those documents to the attorney before you sign at closing.

Good luck on your adventure with fixing up this house.

All my best,
0 votes
Sharon Juhasz, , Jacksonville, FL
Thu Feb 24, 2011
I agree with Lynn. Your best investment prior to purchasing this home is to have a home inspection and WDO inspection. You need to know the cause of the damage and since it was water related, there could be mold involved. Are you buying this home to live in yourself or purchasing for an investment? Closing costs on a cash sale are minimal for the buyer, perhaps a few hundred dollars, depending on purchase price. If you have further questions or need inspector references let me know.
Gwen Whittington
Coldwell Banker Vanguard
904-705-5848 Cell
0 votes
Gloria Crosby, Agent, Jacksonville, FL
Thu Feb 24, 2011
STRONGLY recommend a professional home inspection so that you will have an "eye-wide-open" understanding of just what you are buying. The home inspector can tell you the pitfalls based on the evaluation. Call me for the contact info of some very reputable inspectors at 904/887-3598 BEFORE you buy.
0 votes
Tony Gonzalez, Agent, Tampa, FL
Thu Feb 24, 2011
You should have several options but I need more information to fully understand your situation and give detailed advise on it.
When buying any short sale you are buying in " AS IS with right to inspect" Which mean the seller isn't going to make any repairs but you have the right to walk away after your inspection period for any reason: Your inspection period normally begins as soon as you receive the approval letter from the Third party(the bank). It is common place to re-negotiate with the bank after your inspection if you uncovered items that clearly affect the marketablity of the property. If your inspection period hasn't ended I would go back to the bank with photos of the damage and tell them that you are going to walk unless they will reduce the agreed upon price.

On the other hand did the appraisor take into account all of the damage? Was the appraisal done by an appraisor or was it a BPO done by an agent? In most cases the appraisor will make price adjustments for the damage and discount the property . If you have a copy of the appraisal you will see the adjustments made to the properties that are being compared to the one your buying.
0 votes
Kmbrennan, , Florida
Thu Feb 24, 2011
The pit fall is if the cost to repair exceeds the cost of a similar home in good condtion, Have you had a contractor ( or two ) make an estimate to repair?
You can possibly finance using a construction loan. Why did the bank decline to lend? Did the appraised value after construction not match the cost to buy and repair.

i do FHA203K loans, as well as conventional construction lending, and have many reputable contractors I work with. Feel free to contact me - I am willing to answer any questions you have.
0 votes
Lynn Brier-De…, Agent, Jacksonville, FL
Thu Feb 24, 2011
Good morning Buyer,

Did you hire a licensed home inspector? That may be your best bet, so that you know what condition the house in truly in. I can recommend several ASHI home inspectors in the Jacksonville area. You can reach me at 904-343-8586.

Take care,

Lynn Brier-De La Cruz, REALTOR, LMC
Coldwell Banker Vanguard Realty
0 votes
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