Again I want to Thank everyone for their suggestions and respones.
Lenders know best what they are able to do and what they will do. Additionally, they know the law present and whatâ€™s new laws are coming.
I have two mortgage companies that I work with. We meet regularly and go over changes and programs, lately these meeting are happening on a weekly basis. I have a very good idea as to whatâ€™s going on with the lenders that I work with. However, when I give financial advice â€“ I tell the buyer to verify the information before deciding and usually I will verify to make sure the buyer checked to see if the information was correct or not.
I canâ€™t say the realtor was at fault or not because I donâ€™t know what she said. It could be a case of
Then again Iâ€™m not a big believer of the â€œI made a mistake so Iâ€™m suing youâ€ philosophy.
What was it that left you feeling she guaranteed this somehow. As Deborah said - the consequence of not completing these repairs will have what ultimate result? Showing that the agent was fully aware of the ramifications of her statement is crucial - but could be a case of he said she said.
I am not a lawyer - and hope that if your meeting with the broker does not go in the direction we all hope it does - then my only other advice would be to find a good real estate law firm. Always keeping in mind - verbal promises don't carry as much weight as written documentation.
Legal action is always better as a last resort - however, you must keep good records and maintain all paperwork in good chronological order. It sounds as if you may need this - if in fact there are dire consequences to not completing at least the minimum repairs.
The main reason I posted this is because this is a situation where people can loose their homes. I have no intention of sueing my realtor/broker however can she really legally state we will access and then retract a week after we actually purchase. I uderstand now that I should have checked further, but she kept saying we have good credit and it will not be a problem. I did check in to the mortage rates and they were good so we felt safe (life lesson learned) and we figured we would check the rate once she gave us one.
Thank you for the suggestions it certainly never hurts to try with anyone.
First, I would speak with the broker who manages the agent. There might be something the Broker can do to assist with repairs. While the Broker cannot make any lender write a loan, the Broker might have some contacts at other lenders who could help you. Alternatively, the Broker may be able to provide alternate suggestions for getting the required repairs as you outlined.
Depending upon the extent of the repairs and estimated costs, the options may vary. Is this $1000, $10,000 or $50,000? It makes a difference.
Most agents (not all) carry Errors and Omissions insurance. From the data here, I could not say whether this would be covered under such an insurance policy.
Gather your projected costs, documentation that supports the consequences and start with a meeting w/ the Broker.
I was disappointed to hear that your Realtor was a Broker. Since your primary objective at this time is to find a way to accomplish your required repairs, Ruth gave you a few good suggestions. You still may find lenders who would finance you at higher rates. Your options might include absorbing the high rate for the short term, and at a later time doing a re-fi to bring the rate down on your total loan balance 6 months down the road.
A suggestion for getting your electrical work done may be to reach out to an electrical supply distributor. There are a few approaches to investigate. The distributor, might know which electricians might be in a better position to work with you. Can you buy some of the materials directly from the distributor and will that help control costs?
As it is right now, Chrissy if feeling as if her reliance upon her Realtor for guidance failed her. I still stand on my recommendation that Chrissy gather her information and discuss the situation w/ the broker. The results of that discussion may be that the Broker tries to give Chrissy some suggestions on how she can achieve her best results from the given situation. The Broker may think that the agent was not in error, but communications led to wrong assumptions. The Broker may conclude that the agent was in error.
At this moment, I am not asserting that the agent was or was not in error. A buyer is feeling and believing she ended up in a situation other than her anticipated outcome as a result of the guidance of her Realtor. I am suggesting that, since the agent had no alternatives, referrals, contacts, etc., that Chrissy speak w/ the Broker for additional input.
When Chrissy approaches to the Broker to explain what "is required by the state to be fixed in 90 days", the Broker will want an understanding of whether these items are minor or major. Are the items that are mandated to be fixed estimated to be $1000, but the work Chrissy would like to do to renovate to her desired results totals $40,000? My suggestion that Chrissy have her information gathered, including estimates, is so that the advice and input the Broker may provide could be realistic.
At this time, I think Chrissy needs guidance, and find it appropriate for a recently closed buyer to rely upon the firm that assisted them in the sale. If this were completely Chrissy's error in interpretation, the Broker would still want to help a recently closed buyer in any way they could. Maybe it was Chrissy's misunderstanding, but perhaps the Broker can point Chrissy in a direction of a lender who may be able to assist and provide access to an equity line.
If it were an agent error, the decisons and course of action may travel a different road. There is no determination that either agent or Chrissy are 'at fault', but I do think that some input, advice, and support is due Chrissy. Only with substantially more information could one point fingers of responsibility.
I stand on my recommendation that a buyer who is recently closed can and should be able to look to the company that represented them for support and guidance.
If the state requires these improvements within the first 90 days, that (in my opinion) should have been addressed in the contract and negotiations. That would be the Realtor's responsibility and then it would be clearly defined in the contract for the lender to agree to or decline.
Chrissy, I really feel for you. I don't think it is your fault but unfortunately I don't think it is really something that you will easily be able to "blame" on your Realtor or lender. On of the reasons (in my opinion) I think Realtors get a bad reputation is because they are responsible for so many issues that they don't have authority over. They can't legally give legal or financial advice, "I'm not an attorney." "I'm not an accountant, tax adviser or loan officer" and all the other disclaimers. But yet they tell you that this is their job along with negotiating the best contract for you and that's why they get the commission check.
I've done a lot of creative financing and equity loans over the years and I learn something new every time. As I started reading your question, my first thought was that loans have to "season" for a year. But that really has more to do with using any amount of increased equity over the purchase price. Anything that would be planned before six months or a year would be done in conjunction with the original closing, even if it is a couple days after the closing.
I was alarmed at Deborah's response but completely AGREE! This is a situation that a responsible Broker knows that the agent messed up. But he/she also knows that your chances of winning a lawsuit or even bringing one about is slim to none. And the solution will probably have to be a creative one such as the real estate agent loaning you the money or finding someone to do the work in advance for future monthly payments. There are private lenders and the broker might just need to call in a favor to solve your problem.
Good luck and please keep us posted. If you don't mind, what state are you in? Was this an FHA or some other first time home buyer program? If you can provide a little more information we could probably a little more advice.
With regard to the mis-information, you really should have confirmed this yourself prior to closing escrow. You should still meet with with your agent's broker though...
Oh, Chrissy, I feel for you.
p.s. I really wish Trulia would let me preview my answer before posting.
This sounds like that same thing that has gotten this country into the whole mortgage and housing problem. Some everyday person like yourself wants to live the American dream and unknowingly gets in over their head. Buying a foreclosure is far more complicated than buying a house.
I would also contact an Electrical Contractors Union or Association. Ask them if they ever do anything like attorneys do with "pro bono" work. You never know, they may need a house to train an apprentice. Or even your local fire department. Offer the house as a real case training site for potential hazards in exchange for them paying an electrician to fix it.
Posting an answer was the best way to do this. Trulia needs to give a little more guidance on procedures.
I didn't get the impression that you were trying to "flip". This is your home and you want to live there, right? It's not as if you really can get out of it now? You have to move forward with solutions. I would contact your county housing authority for assistance. You might be able to get a grant or low interest loan.
Thanks so much for the additional information - and yes things have changed, and yes they changed quickly. My only real advice at this time is alternative financing. As Perry sort of alluded to - you could try to obtain a small construction loan - but if you are attempting to "flip" you may not be able to turn the property quick enough to make the interest payments.
Flippers usually take loans and flip the house BEFORE any payment is due. If your market is not experiencing a glut in inventory - and/or if there is a good market for renovated / refurbished homes; you might be able to do something.
Have you considered bringing in a second investor? You have to share profit, but you share expense as well. At least you will get working capital and sharing is better than owing any day!
Hope this helps - much luck to you and a big Thanks for following up with us! Make sure you keep us informed on your progress - as you can see, we really do care!
BTW-this can be expensive, up to 18% interest. Is it worth it? That answer is sometimes and you need to decide if that time is now.
I believe what most of you wanted was clarification. One thing I neglicated to indicated was the fact that our realtor was also our broker. She said we could come back in a couple of weeks and we will talk about getting the home equity loan. We did orginally go back to her for the loan and her only response after she looked for us was that the laws have changed! I understand that everyone has now told me I should have varified, but I really believed we would not have a problem.
We live in the state of Minnesota and the items that need to be changed in the first 90 days are primarily electrical. The house was forclosed and had been vacante for around 8 months.
I hope this answers most of the questions people asked. I appriciate everyones responses. Thank you!
This has sparked a great thread and I for one would really like to hear more.
I have to agree with most of the postings - and I believe, although Bill was harsh he is being realistic.
As consumer's we have to really be well informed because in the end we are the ones that must follow through & are responsible for understanding the transaction & it's ramifications.
A backup plan would've had to be in place for the "just in case" scenario. We can sit here and do the Monday quarterback plays - and tell you what you shouldacouldawoulda done - my main hope for you is that you get true resolution.
I am really hoping to hear if you met with the broker and what the result was.
Again, what state are you in? Was this an FHA or some other first time home buyer program? If you can provide a little more information we could probably a little more advice.
Second, when you say "the State requires to be done," what type of work are you referring to? I would imagine that if it is required by the state, it is important. Most states now have laws regulating the disclosure of material defects. It is important to know if all the latent defects were disclosed to you.
Third, agents owe a fiduciary duty to their clients, but they also (at least in most states) must be truthful to everyone. Whether intentional or not, untruthful statements are generally covered by the body which regulates the agents in the State.
This is another example of why agents should let loan officers do the talking when it comes to these matters. We are not loan officers, home inspectors or appraisers.
The 6 month term is called seasoning. Not all loans require this but the ones that are have great interest rates do. I've personally paid up to 16.25% to fix a house and then refi'd after 6 months. Don't forget to dig into construction loans from an independent banks as they have different loan requirements.
BTW- Not all realtors are good ones or know all the different loan programs out there. That doesn't make them bad, it just makes other better. Like all skills in life, some develop better than others.