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Question for those who bought a foreclosure
DH and I are in the process of trying to buy a foreclosure (a Fannie Mae property specifically). We had the inspection this week and now I'm afraid that things might fall apart. The water heater and heat pump are not working. We are willing to buy a new heat pump after closing, so that's not an issue. However, the water heater must be in working order before the appraisal (we're using an FHA loan, so stricter requirements). The listing agent has a reputation for playing hardball during negotiations and she claims that the property is listed 'as-is', that there's no point in asking the bank for repairs. I'm wondering if we have any hope of this getting through.
For those of you who have dealt with buying a foreclosure, did anything big come up during the inspection? And if so, did the bank end up making the necessary repairs? I know every situation is different. Just curious!
Re: Question for those who bought a foreclosure
We were able to negotiate some repairs with the bank--some of which would have been issues with an FHA. However, we used a conventional loan so we did not have to worry about the issues of an FHA in regards to repairs, etc.
Your buyers agent should present the list of requests to the listing agent who will then submit them to the bank. The listing agent does not have anything to do with the bank's decision in regards to the repairs--so worrying about him/her is really a moot point. Some banks are willing to make some repairs...others are very strictly selling as-is.
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This is true in some situations, but not all depending on your market. There could be back up offers with conventional financing or more money down. Homepath homes go fast in our area because there aren't very many and there is a lot of demand for affordable houses. We looked at one on the 4th day it was listed and it was already under contract with six back up offers.
Hopefully you're in a calmer market where people aren't resorting to 2006 home buying tactics. I'd think that the bank would want to try to work with you and make the deal go through given the fact that they're eager to get the houses of the books.
As a last resort, could you offer to up your price to cover the cost of the water heater? If you were going to pay for it anyway, it might seem like a good solution to the bank.
Unfortunately, this is our situation. We saw the house within a few weeks of it coming onto the market. When we put in our offer, we were facing a multiple offer situation. If we threaten to walk, I'm sure there are other offers out there. Our realtor is hoping that they'll agree to do some repairs since the water heater affects financing. She said so many people are going the FHA route, so it might be harder for the bank to find a buyer if they refuse to cooperate on that end. Hopefully this is the case and the bank realizes it!
I would work on the assumption that they won't lift finger if listed As Is - though there is no harm in attempting to negotiate, just don't count on it. FHA standards are also pretty strict. If your bank really won't accept the loan without the a working water heater & heat pump, you might want to ask your lender about a 203K simple program. Basically, you additionally mortgage out for the additional money to make necessary repairs to get the house in working order. AS long as the money is under $35, there's not much extra paperwork (over $35K is a whole different ballgame)
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We bought a HomePath that was listed as "strictly as-is condition." After inspection, there were a few items that wouldn't pass FHA (about $1000 worth). The selling agent offered to let us pay for the repairs before closing. There was no way we were putting money into a house that was still owned by anyone else. We laughed, refused and said we'd walk if the items weren't fixed. All items were suddenly repaired and we were cleared to close.
It doesn't hurt to ask, at all. The worst they can say is no, and then you have to decide if you are willing to pay for the repairs (with the chance of still not finishing the purchase), look into a different loan, or walk.
You could look into an FHA 203k loan, if you think the inspection is going to show stuff that the FHA conventional will not allow to proceed.
We got a short sale, and we were told that everything was as is, so the point of the inspection was to get an idea of our costs down the line. Of course, since the inspection, the sellers let the house fall into further disrepair, so we still got surprised by extra stuff that needed attention after we moved in. I still think we got a good deal, but it's still extra headache added to the normal headache of moving and unpacking.