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We have been through an enormous hassle on buying our foreclosure. Now our deal is about to fall through for something completely absurd, (in my opinion).
We submitted an offer for the house on 9/16, the countered the next morning with a higher price and a closing date 1 month later than we requested. We countered back agreeing to the higher price but requesting our initial closing date of 10/7. They accepted verbally, on 9/17, we then had to wait for the addendums needed for our final purchase agreement, we called every day to find out when they would arrive and heard nothing back until they finally showed up at the end of the business day on 9/24, requesting the docs be returned, signed in 24 hours. We signed them and returned them with our cashiers check for the EMD within 45 minutes. Then, we waited until the they returned the signed contract, they signed the contract on 9/27 but it was not returned to us until the end of day 9/30, at this time we had 3 days for the bank to go through their final underwriting on our loan and make a commitment. We had the appraisal completed in 24 hours and our lender was ready to go on 10/3 except that the seller had not turned the water on so the appraisal could not be finalized. Our appraisal was based on the water being in working order, they would have to verify this.
We had been asking them every day since we got the signed contract when the water would be turned on but never heard a response. I finally called the water company myself and found out that the home had a "sizable lien" against it that would need to be satisfied before water could be turned on and the lender had not attempted to satisfy it. Due to the lack of water, we were not able to inspect the property or finish the appraisal before our closing date.
We requested a price reduction and a new closing date because we will now have to find temp housing because we were delayed by them, they rejected the price reduction, (fine, it was worth a shot). Their attorney said that we needed to return the amendment without the price reduction and that the we had been out of contract for 2 days and the seller was ready to put the house back on the market. Mind you, the water was still not turned on!
We returned the amendment to them without the price reduction, but we asked the attorney about our due diligence home inspection period which is 10 days. They said that it was going to be over today and the water was also coming on this morning. I was not able to line up a home inspector for a same day inspection no matter how many I called.
Our realtor was with the water man this morning when they turned the water and they found a broken pipe on the first floor that is flooding one of the wall cavities and dumping water into the basement. We have an inspector coming to the house tomorrow but we will not have the right to walk away from the purchase or request a reduction at that time. Our timeline ends today and we have to decide now.
I am flabbergasted at all of this, I have no idea how anyone can buy a foreclosure if this is how it is supposed to work. We have done everything we could and they have done nothing, we have made every concession, they have made none, and now they are blaming the screw-up and delays on us. Is there something I am missing here, our attorney has not responded to us after these latest developments.
I am flabbergasted at all of this, I have no idea how anyone can buy a foreclosure if this is how it is supposed to work. We have done everything we could and they have done nothing, we have made every concession, they have made none, and now they are blaming the screw-up and delays on us. Is there something I am missing here, our attorney has not responded to us after these latest developments.
Many people who buy foreclosures are cash buyers and take the property as-is. If the water doesn't work, so be it. They will fix it after they take ownership. Banks dont care about your issues, they just want a check.
Your contract should have specified when the due diligence period starts and ends. Most contracts say something like "when signed contract is delivered to buyer" etc.
Our due diligence starts when the contract is delivered, BUT it also stipulates that the water MUST be turned on, how can they turn it on and notify us on the last day of our due diligence period.
It is true that SOME who buy foreclosures have cash, but in our market, all there are is foreclosures, out of the 11 houses we have looked at, not one was owner occupied. Not to mention, this is not exactly a re-hab house that will attract a cash buyer, it was built 7 years ago and just had new carpet installed, trim redone and walls re-painted. If they wanted a cash buyer, the bank would not have gone through having those re-done.
We have been through an enormous hassle on buying our foreclosure. Now our deal is about to fall through for something completely absurd, (in my opinion).
We submitted an offer for the house on 9/16, the countered the next morning with a higher price and a closing date 1 month later than we requested. We countered back agreeing to the higher price but requesting our initial closing date of 10/7. They accepted verbally, on 9/17, we then had to wait for the addendums needed for our final purchase agreement, we called every day to find out when they would arrive and heard nothing back until they finally showed up at the end of the business day on 9/24, requesting the docs be returned, signed in 24 hours. We signed them and returned them with our cashiers check for the EMD within 45 minutes. Then, we waited until the they returned the signed contract, they signed the contract on 9/27 but it was not returned to us until the end of day 9/30, at this time we had 3 days for the bank to go through their final underwriting on our loan and make a commitment. We had the appraisal completed in 24 hours and our lender was ready to go on 10/3 except that the seller had not turned the water on so the appraisal could not be finalized. Our appraisal was based on the water being in working order, they would have to verify this.
We had been asking them every day since we got the signed contract when the water would be turned on but never heard a response. I finally called the water company myself and found out that the home had a "sizable lien" against it that would need to be satisfied before water could be turned on and the lender had not attempted to satisfy it. Due to the lack of water, we were not able to inspect the property or finish the appraisal before our closing date.
We requested a price reduction and a new closing date because we will now have to find temp housing because we were delayed by them, they rejected the price reduction, (fine, it was worth a shot). Their attorney said that we needed to return the amendment without the price reduction and that the we had been out of contract for 2 days and the seller was ready to put the house back on the market. Mind you, the water was still not turned on!
We returned the amendment to them without the price reduction, but we asked the attorney about our due diligence home inspection period which is 10 days. They said that it was going to be over today and the water was also coming on this morning. I was not able to line up a home inspector for a same day inspection no matter how many I called.
Our realtor was with the water man this morning when they turned the water and they found a broken pipe on the first floor that is flooding one of the wall cavities and dumping water into the basement. We have an inspector coming to the house tomorrow but we will not have the right to walk away from the purchase or request a reduction at that time. Our timeline ends today and we have to decide now.
I am flabbergasted at all of this, I have no idea how anyone can buy a foreclosure if this is how it is supposed to work. We have done everything we could and they have done nothing, we have made every concession, they have made none, and now they are blaming the screw-up and delays on us. Is there something I am missing here, our attorney has not responded to us after these latest developments.
Walk away. If they never told you about the lien, or the broken water pipe, can you imagine what other problems you will find? Don't do it.
Frankly, I think foreclosures are for the rich with cash at the ready. It's just not worth all the hassle, the months of negotiation, the money spent on inspections, the money you will spend on repairs, etc.
It is pretty hard to tell what has happened, because we do not have a copy of the contract, with addendum, that you agreed to. In general the due diligence period starts on the day the that signed, executed contract with addendum is delivered to you or your agent. But again, contract terms and local practices may prevail.
As for the water being on, the contract should stipulate who was responsible. I know that here in AZ most water companies will turn on for 24-48 hours (for inspection purposes) for a fee without transferring the account. Some home inspectors will test water systems using compressed air in the absence of water availability. That is how HUD homes are tested.
Buying an REO foreclosure is always risky because the previous owner probably did little to maintain the property and the bank has little or no knowledge (and does not want any knowledge) about the property. It is not a home to them, but an asset that needs to be liquidated.
I do not want to blame your agent, or you, but I see several errors that were made here. First of all, your COE date was too short for a foreclosure, banks do not work that fast. Inspections should have been scheduled quicker so you had time to react, waiting until the last day is too late. Knowing utilities were off, including water, you could have investigated this while you were waiting for the bank to sign. Having the appraisal done without utilities on was a waste of money. I just think you tried to do too much too fast.
I am not sure how you will proceed, but I hope that it works out for you. Sometimes these things look bleak in the short term, but eventually work out once the dust settles.
I don't know it works in your market, but here, an inspector or appraiser is not allowed on the premises without a signed contract. Here in our area, the water company will not allow a buyer to turn the water on, even for an inspection under contract, due to the liability of what may happen when the water is turned on. Also, the attorneys insisted that we could not pressurize the system from another water source, we had to have the seller turn it on.
Our realtor has said that she has never had an reo seller work so slowly on a non-short sale.
As for the appraisal being wasted money, it has now been completed because we documented the water on, our lender simply needed to see that the water runs out of the faucets, they do not have a problem with a leaky pipe.
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