Refusing to Fix Items for Appraisal (agent, mortgage, mortgage, sales)
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I have a Seller who is having Seller's Remorse who is refusing to do any repairs in hopes that my financing falls through so can put it back on the market for more money (I’m willing to go all the way and even sue for specific performance if necessary). This is a conventional loan. If the upcoming Appraisal causes the lender to require repairs, then what creative alternatives could I propose to my lender? Like, putting money in escrow and having a week or 90 days to get the repairs done or… I don’t know, let’s brainstorm some creative ideas!
Virtually all conventional appraisals are done " as is" ( no repairs) . Unless there is something hugely obvious, like a hole in the roof or standing water in the basement, the conventional appraiser will not call for repairs.
Have you had a home inspection done? Is that where you have the idea in your head that repairs are needed ? Have you presented those repairs to the seller and he has refused to do any ? What does your sales contract say about repairs - anything ?
Unless your contract states that seller is responsible for x amount of repairs or a particular repair how can you sue for specific performance ? Repairs are generally a negotiated item and it's not usually required that a seller do any unless it is in writing somewhere in the contract that the seller has agreed to and signed.
Thus, don't depend on the appraiser to back up your repair list. It's probably not going to happen.
The lender is not going to know about needed repairs unless you hand them the home inspection and there is usually no reason to do that.
You can try to get your real estate agent to put pressure on the selling agent to get her seller to do a serious repair because it's going to come up in the next sale if you back out.
But if they feel they could get more on the house later and assuming they are correct, why should they do any repairs? As mentioned, unless you have some verbiage requiring some certain amount of repair work, they can refuse all day and your recourse is to by the house if you still think it's a good deal or walk. I've never heard of a contract that gave someone the right to get an excellent deal AND have the house repaired to new or like new condition.
Our house had an old-school "tuckunder" garage that was literally the basement. You opened the door and drove into the basement and parked your car. No firewall, nothing.
The appraiser required the sellers to either 1) build a firewall or 2) remove the garage door and build a wall in its place or they would refuse to underwrite the mortgage. Our only option, if the seller were to refuse to fix it, was to walk, as we obviously couldn't afford to pay cash for the house. The seller's only option was to fix it, as the problem would have to be disclosed to any future buyer if we walked (and the house had been on the market for a few months, they wanted to get it sold). I could see some recourse that way, but there were plenty of other things about our fixer the appraiser wasn't thrilled with but weren't deterring him from underwriting the mortgage (no main level kitchen, stairs not up to code but grandfathered in because old house, etc). So I'd say if there's something you anticipate being a major safety issue that would prevent underwriting from moving forward with your loan, it might be worth discussing with the seller. But if they're already having seller's remorse, they might just walk anyway, even if they have to disclose the problems to the next buyer. If they think the house is worth more than you're under contract for, even with the repairs, then you're likely SOL. I think you have very little control in this situation.
If the lender requires certain repairs, and the repairs are refused, the deal falls through because you are unable to obtain financing. So its your fault.
You can still pay cash for it and the deal will go through.
My guess.....If you sue... and you can.... you will loose. And the judge could award the seller lawyer fees as well. So you will loose your legal fees, his legal fees and possibly punitive damages due to the house not being able to sell while this lawsuit was going on.
Virtually all conventional appraisals are done " as is" ( no repairs) . Unless there is something hugely obvious, like a hole in the roof or standing water in the basement, the conventional appraiser will not call for repairs.
Have you had a home inspection done? Is that where you have the idea in your head that repairs are needed ? Have you presented those repairs to the seller and he has refused to do any ? What does your sales contract say about repairs - anything ?
Unless your contract states that seller is responsible for x amount of repairs or a particular repair how can you sue for specific performance ? Repairs are generally a negotiated item and it's not usually required that a seller do any unless it is in writing somewhere in the contract that the seller has agreed to and signed.
Thus, don't depend on the appraiser to back up your repair list. It's probably not going to happen.
The lender is not going to know about needed repairs unless you hand them the home inspection and there is usually no reason to do that.
You can try to get your real estate agent to put pressure on the selling agent to get her seller to do a serious repair because it's going to come up in the next sale if you back out.
This
Generally the appraisals that require repairs are FHA appraisals where they give you issues about sidewalk cracks and handrails
If you're not FHA, you're likely in the clear, but there are no guarantees until its done.
I have a Seller who is having Seller's Remorse who is refusing to do any repairs in hopes that my financing falls through so can put it back on the market for more money (I’m willing to go all the way and even sue for specific performance if necessary). This is a conventional loan. If the upcoming Appraisal causes the lender to require repairs, then what creative alternatives could I propose to my lender? Like, putting money in escrow and having a week or 90 days to get the repairs done or… I don’t know, let’s brainstorm some creative ideas!
This sounds a bit paranoid and also a little naive. How do you know that's what the seller is doing? (Refusing to make requested repairs after the contract is signed is quite normal). Are you confusing the 'Property Inspection' with the 'Lender's Appraisal'? (These are two different transactions: One done to assure you there are no major, hidden defects --- and the other to assure your lender that the value of the property justifies the mortgage. If you are a qualified buyer - and believe you bought the property below market value, the appraised value is unlikely to be a problem, even if repairs are needed).
The time to negotiate 'repairs' was before you signed the contract. At this point, your best bet is to wait it out and see what happens. If there is a gap between what you are paying and the appraised value, you will likely have an opportunity to put more cash into the deal (but, the question would then be, "Why would you want to pay more than the appraised value for the property?")
- If, on the other hand, you fail to qualify as a buyer (income, debt ratio, work history), that's a different issue that has nothing to do with the house or seller. (In that case, the seller is the one at risk, having removed the house from the market, pending the closing).
This sounds a bit paranoid and also a little naive. How do you know that's what the seller is doing? (Refusing to make requested repairs after the contract is signed is quite normal). Are you confusing the 'Property Inspection' with the 'Lender's Appraisal'? (These are two different transactions: One done to assure you there are no major, hidden defects --- and the other to assure your lender that the value of the property justifies the mortgage. If you are a qualified buyer - and believe you bought the property below market value, the appraised value is unlikely to be a problem, even if repairs are needed).
The time to negotiate 'repairs' was before you signed the contract. At this point, your best bet is to wait it out and see what happens. If there is a gap between what you are paying and the appraised value, you will likely have an opportunity to put more cash into the deal (but, the question would then be, "Why would you want to pay more than the appraised value for the property?")
- If, on the other hand, you fail to qualify as a buyer (income, debt ratio, work history), that's a different issue that has nothing to do with the house or seller. (In that case, the seller is the one at risk, having removed the house from the market, pending the closing).
How do you know what repairs to request until after the inspection, which isn't obtained until after the contract is signed?
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