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We're buying a house that needs some work (well, trying to). First problem is that the appraiser came in with a number that was 14% less than our purchase price, but the bigger issue is that his number is based on repairs to the house - so that means the lender is requiring that the work be done. This house is being sold as-is, so the seller doesn't want to do the repairs. Just when we thought we had things divided up between what we were doing and what they were doing, the underwriter came back with another list of things that are required repairs - much more extensive and much more expensive. Some of it conflicts with what was shown in the home inspection. An example is that the home inspector found the basement/foundation to need a French drain, but that the walls are structurally sound. Lender wants an engineer to certify the structure. Another is that there are two railroad ties acting as a retaining "wall" by the driveway. It's about three feet in length, and less than a foot high. Lender wants that approved by a structural engineer as well, even though the inspector has no issue with condition.
Does anyone have experience with as-is sales/purchases? We're either going to have to find another lender, with no guarantees that the same thing won't happen again, or walk away and lose money. Neither is making us very happy, but we're trying to figure out what will cost us the least in terms of both time and money.
The lender wants to cover themselves in case the new buyer, you, were to stop paying the mortgage. They want to lend on a unit that is structurally safe, sound and saleable. What they are asking for is reasonable and a fair chance the new lender might ask for the same. These are specifically the risks of as-is sale. No wonder a vast majority of as-is sale are all-cash purchases.
Code usually calls for retaining walls in excess of 3' to require approval from a professional engineer. 2 railroad ties is not 3'. I would call them out on that.
That being said, they are lending you the money, and making stipulations, if you dont like them, go find another lender.
The 14% isn't/wasn't a major concern for a couple reasons. First was that the appraiser called it a three bedroom, when it has four (yes, the fourth has a closet and egress windows), so all the comps he looked at were three bedrooms. Also, every one of the comps was in a neighborhood that goes to a different school and is on the other side of town. One of the biggest reasons for choosing this house was the school zone, with access to the park for the kids. Lastly, he did a rough measurement and said 1,330 sq. ft. while the more detailed measurements I had taken to give to the architect were 1,475.
I don't know that a different appraiser would matter at this point, since the bank (loan originator and underwriter) now have it in their heads that this house is a step away from needing to be torn down, despite the info from the home inspector saying the house is structurally sound.
We're looking into seeing if the seller will come down in price in exchange for a cash offer. If not, I guess we'll walk.
a lot of people want to sell "as is" and yet they still want to get full market value on the property. they are just being obnoxious because they want to sell the house without headache (like everyone else in the world). the lady I bought my house from did the same thing. luckily, nothing major was needed but for the little things she couldn't just get away with "I said its as is" she had to either fix it or credit me the money for it.
Thanks Captain. The seller is willing to do some of the repairs required, despite the as-is nature, but now the underwriter is requiring more, and a lot of it contradicts what the home inspector found. I just emailed them, quoting from the inspection report. I did see that they said in their requirements, certified by "professional engineer or a qualified licensed contractor" so maybe even if they don't consider the inspector a "professional", at least we won't have to bring in a structural engineer. We had to do that for a house in PA, and it was so expensive! We'll see what they say.
On an unrelated note, I've been enjoying some of your educated responses to a certain argumentative thread.
Thanks Captain. The seller is willing to do some of the repairs required, despite the as-is nature, but now the underwriter is requiring more, and a lot of it contradicts what the home inspector found. I just emailed them, quoting from the inspection report. I did see that they said in their requirements, certified by "professional engineer or a qualified licensed contractor" so maybe even if they don't consider the inspector a "professional", at least we won't have to bring in a structural engineer. We had to do that for a house in PA, and it was so expensive! We'll see what they say.
On an unrelated note, I've been enjoying some of your educated responses to a certain argumentative thread.
no problem. I actually had an issue where I needed to get a professional to evaluate something. a previous owner of the home (not the seller) replaced the columns in the basement with a steel I beam and I had no documentation on the work. the seller paid to have it evaluated and it was cleared and the deal went through. it really only becomes a big issue if the professional doesn't give his approval. then you need to work it out with the seller or walk.
All that aside, the cheapest expense of the lot may be a new appraiser. Those mistakes he made are serious. If the lender balks at you hiring a second opinion, the notes in the first appraiser's report are all the ammunition you need. If I was particularly pissed, I'd file a complaint against that appraiser. How do you miss a bedroom? Sheesh! I've had both extremes over the years. One parked on the street and never left his car (and magically the value was determined to be the same as the last rough comp). Another measured every nook and spent a couple of hours going over the entire property. A third actually asked me how much I needed to get the loan. I've never had a lender require engineering involvement, but I've never been in an as-is transaction.
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