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Buying a SS! Help:)
Hi Ladies! I haven't been able to be on this board in a while:( I know SS are talked about quite a bit on here and would appreciate any help you can give!!
We put an offer in on a SS. The seller accepted, the bank wants to counter a tad, we are willing to do it. So if we sign the counter papers, we have it pending inspection. The seller cannot afford to fix anything. This whole process makes me nervous. We have come up with the below questions. Is there anything else you would add or know about SS?
Thanks a MILLION! This process is quite interesting:)
The offer has earnest money attached to it. Understanding that the seller does not have any money to do any fixes with regards to anything that may come up with the inspection, what happens in the following situations based on the inspection:
a. Major defect in the structure (concrete)
b. Water issues in the basement
c. Mold
d. Plumbing or electrical issues
e. Roof defects
f. Chimney defects
Basically, what happens if we find enough items/fixes that we either want a remedy on, or a decrease in the price?
Would we be able to go back to the bank and negotiate a decrease in the purchase price knowing they?re not going to fix the issue?
Would we get our earnest money back if we can?t come to an agreement, or would that be lost?
If we have this type of situation where we don?t think we?ll get our earnest money back if there are defects, are we able to decrease the amount of earnest money we?re willing to put down?
What is the process we would take if we do accept their counter-offer?
What is our timeframe for getting back to them and either accepting or not? Can we have the weekend to think about it?
Has there been a lien search to make sure the title is free and clear if we buy the house? I want to make sure the house isn?t put as collateral on any other debt the owners may have.
Are we able to find out how much is owed to the lender? I believe there is only one lender, correct?
Re: Buying a SS! Help:)
As long as your contract has an inspection contingency (which you said it does) you have a vlid excuse to walk if needed. You can absolutely try to negotiate if there is something major, the worst they say is no! If they do say no, you will still get your earnest money back as the contract is contingent on the inspection being good. So you will not be out that money.
I would strongly recommend you get an owner's title insurance policy. Your bank will get a title insurance policy that protects them, but you will have the option to buy an owner's one (in a lot of cases it will be $400-$1000). Buy it!! It will save you if someone comes back later on for back taxes, or lien, etc. Since you know they have money issues this is especially important. The policy will protect you and will settle any claims that come up after you buy.
Answers vary by location and it seems all SS are a little different. That in mind:
If the inspection reveals big $ problems you can ask the bank for a price adjustment - I think they'd be more likely to give you the $, but some people have negotiated actual repairs with the bank.
If inspection is awful and you can't come to terms with the bank you should get your earnest $ back. It should be in your contract, your lawyer should be watching out for you on this. Our seller required 3% earnest money - it was not up to us to decide how much. Just make sure your contract says you get the $ back if there are inspection issues.You do have a lawyer, right?
The bank will prob tell you the time frame for making decisions and closing and such. You can try to ask for more time but be prepared to close ASAP - have all your financial documents in order, do your mortgage research now, have it all ready to go to.
The sellers bank and your lending bank will look for other liens and title issues on the house BUT you should get your own title insurance to CYA.
When the sellers submit their short sale hardship package to their bank it will include this information. There may be a second mortgage, HELOC or other liens on the property - the bank eating the SS will investigate this.
In our case, the seller owed the bank 407K for mortgage and HELOC, our offer was 310K and the house appraised for 310K. We walked on the sale after 4 months (decided we wanted to live in a different part of the state) and the house is now listed for 289K
how did you figure out how much the seller owed the bank? we were able to figure out what the seller bought it for in 2005, but were told we would never know what was left on her mortgage...
I think we found out because the sellers attorney sent a copy of the seller's hardship package to our attorney. The financial information was part of the package. The sellers owned the house since the mid 90s, they pulled out maximum equity right before the market tanked, so a large part of the gap was due to the HELOC.