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Old 12-10-2008, 06:32 PM
 
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Quote:
Originally Posted by HappyTexan View Post
Coming into winter now..I hope the banks take care of those REO's that are just sitting although I'm leaning the other way and think they won't do a thing.

Come spring they'll have a lot of damaged RE that won't sell.
The REO stuff is generally OK when the lender is properly notified / smooth foreclosure.

The stuff that falls through the cracks of "jingle mail" or maybe even short sellers with a chip on their shoulder is more at risk.
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Old 12-10-2008, 08:24 PM
 
Location: NW Las Vegas - Lone Mountain
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This is likely a local thing. In Las Vegas I would consider very unlikely that the short seller will turn on the utilities. I generally do it using my own account. Have on occassion had trouble getting the electric on and had to get the listing agent to do it. But basically I pick up the utilities until the client transfers them. I bill the client.

Understand that the short seller often has large bills outstanding with the utility and is unlikely to be in a position to pay them current...which is what it takes for the utility company to turn them back on. With the exception of the electric company (sometimes) all the others turn it on and bill me. I do it as they don't demand deposits from me as I have a history and clients from out of town would have problems getting it all done in the timely fashion required for an inspection.

I always leave the house live until close and pay for it. Impractical and costly to shut down and turn back on in a month or so.

Note that the listing agent turns on the utilities for REPOs. It has never been a problem and they are left on.
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Old 12-11-2008, 12:58 AM
 
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Quote:
Originally Posted by chet everett View Post
Logic of BUYER having the only CASH MONEY to get utilities turned on and most LEGITIMATE stake at preserving the integrity of the place is sound, I would hope utilities would realize this too...
I don't agree that the buyer has the most legitimate stake or is the most logical party to pay. That logic would require the buyer to purchase HO insurance as well. Just doesn't make sense. Risk of loss almost always stays with the seller until closing. Not saying that the seller can be forced to turn on the utilities, but commenting on the logic which applies to other aspects of the transaction.
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Old 12-11-2008, 09:27 AM
 
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I think that maybe the HOI for a short sale ought to be covered by the buyer -- really the short seller has no real reason to keep that paid up either. This are people that are walking away from a property, it could even be argued they have a vested interest in seeing the value of such properties FALL as rapidly as possible so that they can get a better on rent / when they want to repurchase.

A "short sale mindset" can be a destructive (in every sense of the world) thing to have!
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Old 12-11-2008, 09:50 AM
 
Location: Cary, NC
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Quote:
Originally Posted by Racelady88 View Post
I just went through this. Seller turns on the utilities, buyer pays for de-winterizing and re-winterizing. It was clearly outlined in the contract.

The first house I tried to buy the seller's agent dug her heels in and refused to turn on the water. My agent sent a plumber out there and discovered that all of the pipes had burst due to the property being vacant. Too bad that info was not disclosed, I would not have wasted my time on that house.

The house I ended up buying the seller's agent actually reached into her own pocket to pay the outstanding balance on a utility so that they could be turned on for the inspection.

Here the utility companies turn the service on as a courtesy and nobody has to pay anything. Both of the houses were bank owned, not short sales.
" It was clearly outlined in the contract."

The Contract! What a bold and innovative concept!
Unless you can pin a legal responsibility on someone, everything else is "shoulda, coulda, woulda..."
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Old 12-11-2008, 10:03 AM
 
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Quote:
Originally Posted by chet everett View Post
I think that maybe the HOI for a short sale ought to be covered by the buyer -- really the short seller has no real reason to keep that paid up either. This are people that are walking away from a property, it could even be argued they have a vested interest in seeing the value of such properties FALL as rapidly as possible so that they can get a better on rent / when they want to repurchase.
I don't agree. Should be buyer pay for HOI while the bank is considering the offer? What if the bank rejects it? What if there are more than 1 offer being considered by the bank? Who pays then? What about before a buyer comes along? What if the buyer pulls out of the deal?

If the seller has no ability to pay for upkeep then the lender should pay to preserve their collateral.
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Old 12-11-2008, 10:42 AM
 
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Default No arguement -- lenders ought to step in. They don't...

Quote:
Originally Posted by Austin-Willy View Post
I don't agree. Should be buyer pay for HOI while the bank is considering the offer? What if the bank rejects it? What if there are more than 1 offer being considered by the bank? Who pays then? What about before a buyer comes along? What if the buyer pulls out of the deal?

If the seller has no ability to pay for upkeep then the lender should pay to preserve their collateral.
The short seller mind set is hurting a lot of decent properties and the lenders don't even have knowledge of the seller's desire to do a short sale until something falls on their desk. I do not believe the lenders have staff (or the will to contract with firms) to ensure that places are maintained -- in the case of simple foreclosures /REO that notification change is at least routine. Short selling is mostly a more desperate move, and desperate people do irrational things.

I completely agree that the risk of a seller paying for anything and then the deal falling apart is what prevents the seller from opening up their wallet to preserve the property, but as anybody who has had to deal with the damages that can happen from a frozen pipe, it would be a LOT cheaper to prevent that damage ahead of time...

I suspect that some lenders (not many) will build a system of contractors to keep on eye on the properties with troubled borrowers, but that will be enormously costly and I don't know if the mortgage system is going to be eager to have rates become that steeply tiered.
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Old 12-11-2008, 12:27 PM
 
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Quote:
Originally Posted by chet everett View Post
The short seller mind set is hurting a lot of decent properties and the lenders don't even have knowledge of the seller's desire to do a short sale until something falls on their desk. I do not believe the lenders have staff (or the will to contract with firms) to ensure that places are maintained -- in the case of simple foreclosures /REO that notification change is at least routine. Short selling is mostly a more desperate move, and desperate people do irrational things.

I completely agree that the risk of a seller paying for anything and then the deal falling apart is what prevents the seller from opening up their wallet to preserve the property, but as anybody who has had to deal with the damages that can happen from a frozen pipe, it would be a LOT cheaper to prevent that damage ahead of time...

I suspect that some lenders (not many) will build a system of contractors to keep on eye on the properties with troubled borrowers, but that will be enormously costly and I don't know if the mortgage system is going to be eager to have rates become that steeply tiered.
I don't believe that a potential buyer would even be able to purchase HOI, at least until they have the property under contract. You have to have an insurable interest. I don't know whether having the property under contract would qualify (probably would), but prior to that you certainly wouldn't.

With the escrows required by most lenders, particularly where the HO has little equity, the likelihood is that the bank has the insurance covered. And once the escrow account is depleted, the bank is going to be aware of the lack of insurance. Banks view failure to insure as a much more serious default than failure to pay.
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Old 12-12-2008, 02:11 PM
 
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My husband and I were in a similar situation. We are in contract on a house that is selling short. Based on the past few weeks, we have every reason to believe the deal is going to go through (lender already agreed to sell short at our offer price, contract fell through due to financing). Only big problem, the oil tank was bone dry and our lender wants to order an appraisal. Since we are getting and FHA mortgage, we need to be able to show that the heat works in order to qualify. (we know it does work, our realtor put 10 gallons of diesel in for our inspection) After much back and forth between our Agent and the listing agent, the owner has refused to put oil in. They have already walked away from the house and just want out. The listing agent won't lay anything out of pocket and the bank does not own the property, so they don't care either. The other issue is with the weather slowly reaching freezing temps, the pipes very well could freeze. In the end, we decided to suck it up and put 50 gallons of oil in the tank. The cost of the oil ($112) seems worth it to us to protect the house and be able to get the appraisal done. We did spend about a week debating if we should do this or not. The only reason we decided to in the end is we are almost 100% sure the bank will be approving the offer, based on our contact with the negotiator, and know are loan will be approved, provided that is we can show that the heat works.
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Old 12-12-2008, 02:30 PM
 
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One way that buyers can consider handling this is to put in the contract that if the seller fails to turn on the utilities or protect the house from inclement weather, that the buyer can do it and deduct the reasonable third-party out-of-pocket expenses from the sales price at closing. You could still get stuck with the expenses if the deal doesn't close, but once the bank approves the contract you are in the drivers seat and can force the issue at the closing table if it comes to that.

Of course, the bank might not agree to it. But if you don't get some protection you should be aware that you are taking the risk that the house could suffer severe damage prior to closing and then you will have to decide either to walk away or eat the repair costs.
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