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Hello I have a question about a potential cash back situation. I don't have experience with this at all so here goes.
My situation.
I'm the buyer.
A house is currently on market for $214,000, and that's what I offered. After inspecting, found a lot of stuff. According to my agent, there may be (not sure amount yet) $20,000 in repair costs. Since the seller doesn't have money to do repairs before selling, the idea came up to get cash back at closing to cover costs after it's determined what all the costs are.
I was initially thinking I'm still buying for $214,000 (i.e. If I was putting down $15,000, I'd owe $199,000 to my bank, etc).
But Now my agent is saying it will appraise for the extra price so at $234,000 to account for repairs to be made, so at 15k down, I'd be financing $219,000.
They are saying the reason it was $214,000 initially was to price it in as-is condition but $234,000 seems high to me. The high for that sq ft and the area seems to be $230,000 from what I've seen so far.
Would the added value really be the amount of the repairs? Can I offer less than $234 ?
Does this sound right or should I be questioning my agent about this??
I could look at more houses but I'm not opposed to the idea of having a lot of things brand new as I move into the house.
So the seller accepted your offer but is refusing to compensate you for any repairs that were discovered by the inspection you paid for. Were you aware, prior to making your offer, that the seller was selling "as is"?
I would be expecting to negotiate cash at closing to compensate you for x% of the repair estimate, not increasing my offer price to pay for the repairs.
I believe the seller is willing to do the cash back thing but they are saying they'll only do it at a higher selling price 234 with cash back, not 214 with cash back.
Even after all the repairs done, I don't know if I want to go above 230 for that house in that area, I was initially interested in it due to the price and size, not knowing it needed as much work as it did.
If you are getting a mortgage on the place, your lender is not going to allow you to get cash back from the seller after closing. It needs to be negotiated upfront as something the seller can have done and THEY pay at closing. Talk with your loan officer more about this.
If you are getting a mortgage on the place, your lender is not going to allow you to get cash back from the seller after closing. It needs to be negotiated upfront as something the seller can have done and THEY pay at closing. Talk with your loan officer more about this.
I think it goes into escrow to be paid out to the contractor doing the work.
Do you think the lender won't accept this?
And My agent told me that the appraisal that they're going to do will take into account the proposed repairs once they are all quoted.
I put an inquiry with my lender a few days ago but they haven't gotten back to me.
The reason the seller hasn't already done the repairs is because they don't have the money to.
There are several things about this post that scare me. First of all your agent has done a terrible job of explaining this situation to you and consequently you have questions that are not being adequately answered. Only someone that really knows the details of your situation can give you a straight answer, everything else is hypothetical.
Secondly, "I put an inquiry with my lender a few days ago but they haven't gotten back to me." scares me. I would have very little confidence in a lender that hasn't gotten back to you in a couple of days.
Bottom line, the seller is not willing to give you any cash towards repairs. Their way of making this work for you is having YOU increase the offer price to $234K and THEN the seller will give you $20K back at closing for repairs, so the seller is still netting the sales price at $214K. This is why they are selling the property AS IS. Problem with that is you are paying $234K for the property and not $214k! You're basically borrowing money for repairs and the seller really isn't giving you anything!
If you want the house for $214K with a loan for $199K then you tell the seller you want the house for $214K WITH $20k in escrow for repairs. Essentially making the net sales price $194K.
Otherwise you walk and find another house. That's what I would do if they don't want to budge. Sounds like your realtor is not on your side either, BTW! She should have told you upfront that the house is being sold AS IS which means the seller is not willing to give anymore money off towards repairs.
If you really like the house, I'd counter first with splitting the difference. Offer $224K with $20K going to an escrow account for repairs.
If they say no, and you are uncomfortable with $234K but willing to go to $230K, offer them the $230K with $20K going into an escrow account for repairs, but make sure your realtor expresses that this is your best and final offer.
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